Online casino operator Golden Nugget Online Gaming Inc (GNOG) has reported its financial results for the second quarter and first half of 2021 (H1 2021), showing revenue ahead – albeit with a net loss of $1.6m in Q2 versus net income of $0.1m year-on-year.
GNOG declared revenue of $31.7m for Q2 2021, a 27.7% increase when compared to the $24.8m during Q2 2020. Revenue for H1 2021 increased by 38.6% to $58.4m compared to H1 2020’s $42.2m.
The net loss of $1.6m includes a gain on warrant derivative liabilities of $8.9m and stock-based compensation expense of $3m, whereas no such gain or expense was recognized in the previous year period.
H1 2021’s net income came in at $68.1m, a massive improvement on net income of $4.3m during the prior-year period. Net income for H1 2021 includes a gain on warrant derivative liabilities of $90m, a gain on the tax receivable liability of $1.2m, and debt extinguishment expenses of $2.2m associated with the early repayment of $10.6m of the company’s term loan during Q1 2021.
Adjusted EBITDA for Q2 was $(3.8)m compared to the $8.5m recorded during Q2 2020. For H1 2021, adjusted EBITDA was $(7.4)m compared to adjusted EBITDA of $14.4m for H1 2020.
GNOG noted that the decline in adjusted EBITDA compared to the prior year was “primarily attributable to growth investments in new markets such as Michigan”.
Chairman and CEO Tilman Fertitta commented: “We are proud to have achieved another solid quarter driven by the strength of our new customer growth both in our established and newer markets.
“Golden Nugget Online Gaming continues to successfully execute on our national expansion, while concurrently strengthening our capabilities and product offerings with key partnerships. “
During the financial period, GNOG signed a partnership with Boom Entertainment, a provider of online gaming and sports products in the US, which includes a minority equity investment, preferred and exclusive content, bespoke game development, and market access rights in Ohio.
In New Jersey, the operator continues work on the 1,800 square foot expansion of its Live Dealer Studio, which will increase its table capacity from 18 to 33. The studio expansion is expected to be live by the end of Q3 2021. The state also saw a successful migration to an advanced technical stack and hosting facility on July 21, 2021.
In Michigan, GNOG deployed 103 new games from nine different suppliers on the web, iOS, and Android. Three new suppliers were launched as well including IGT, AGS, and Inspired Gaming. The state also successfully launched a Live Dealer on July 22, 2021, among the first wave of operators, growing its online casino offering.
Fertitta added: “In Michigan, we grew market share and are very pleased with the trajectory of growth in the early quarters of our operations. We expect similar trajectories for our planned launches in Virginia, West Virginia, and Pennsylvania later this year.
“In addition, our partnership with Boom Entertainment will only strengthen our award-winning content offerings. We are increasingly encouraged by our results and look forward to executing on the significant and growing market opportunity available to us.”
President Thomas Winter stated: “GNOG continues to show strong growth with our results in the first half of this year. In Michigan, we more than tripled our market share since launch which validates our steady, ROI-focused growth investments.
“In the second quarter, we grew gross gaming revenue, or GGR, 99% over the first quarter while the rest of the market only grew 35%. In July, the positive trend continued with GGR over $5.3m, a 32% increase over the monthly average in the second quarter, making GNOG the fifth-largest igaming operator in the state, with a market share of 5.7%.
“In New Jersey, where market revenues had been boosted by the pandemic last year, we were still able to grow net revenues by 8.9% in the first six months of 2021 compared to the prior year period.”
GNOG also entered into a definitive agreement with DraftKings Inc during the financial period, under which DraftKings will acquire GNOG in an all-stock transaction with an implied equity value of approximately $1.56bn, subject to approval by GNOG shareholders, receipt of required regulatory approvals, and satisfaction of other customary closing conditions. The transaction is expected to close in Q1 2022.