Q2 2021 Gan Ltd Earnings Call

Greetings welcome to the Gan quarter, two 2021 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Please note. This conference is being recorded I will now turn the conference over to your host Robert Shore, Vice President of Investor Relations and capital markets you may begin.

Thanks, John again second quarter 2021 earnings release was issued today after market and is posted on the company's website at <unk> Dot Com with me today are chairman, President and CEO and chair Flores CFO. Please note that we provided a set of Powerpoint slides to accompany our prepared remarks, you may access these slides on the Investor Relations section of our website and we will start.

On page two with our safe Harbor disclosure.

We'd like to remind you that except for the factual statements say today. The information contained in this conference call, including any financial and related guidance right. It consists of forward looking statements that involve risks uncertainties and assumptions that are hot.

Or to predict where it's expressions, reflecting optimism satisfaction with current prospects as well as statements in the future tense identify forward looking statements, but their absence does not mean a statement is not forward looking forward.

So we're looking statements should not be interpreted if a guarantee of future performance or results such statements are subject to risks and uncertainties may cause actual performance or results to differ materially from those <unk>.

<unk> in or suggested by the forward looking statements.

Important factors that could cause such difference are discussed in the risk factors section of the annual report filed on Form 10-K on March 31.2021.

Forward looking statements speak only as of the data statements are made the company assumes no obligation to update forward looking statements to reflect actual results changes in assumptions or changes in other factors affecting forward looking statements, except as required by securities laws.

During the course of the discussion of some non-GAAP financial measures and a description of these non-GAAP financial measures is included in our press release issued this afternoon and reconciliation of these non-GAAP financial measures. The most directly comparable U S GAAP measures, including the appendix of the Investor presentation and Russell.

Definitely as well both of which are available on the investor catheter website with that I'd like to turn the call over to dermis opening remarks. Please go ahead.

Thank you Bobby and good afternoon, everyone.

Please join me on the fourth slide presentation released earlier today to discuss second quarter performance for our consolidated operating segment results.

Our <unk> enterprise software segment, and the international <unk> Sports betting segment.

I'm very pleased with the momentum we gained in the second quarter delivering continued strong top line growth, which was supported by strong recurring revenue isn't a BBB segment and expansion of our adjusted EBITDA margin together with strong execution of new client wins and launches all reinforced by a standout performance from our <unk> segment leveraging the <unk>.

International Sports calendar, Ken Amanda the seasonal slowdown in U S sports.

This momentum in both of our segments have continued into the later summer months with continued strength in our BDC segment now well into the third quarter and positive recent BTB developments, including the anticipated expansion in Arizona and Merrill Lynch with an existing client a new simulated gaining clients and treasure island on the Las Vegas strip and a multiyear sea.

Related gaming contract extension in Oklahoma with the regional market leaders, particularly for the nation and their flagship casino property Winstar World Casino.

Our U S sales team has an ongoing active discussions with a wide range of new BTB clients for a long standing core platform offering.

Our only channel <unk> sports solution and of course, our new Super Rgs, a quick with exclusive high value content for which we anticipate point announcements will follow shortly.

Before getting into the details of the second quarter I want to congratulate our entire team for winning three U S. <unk> industry Awards for <unk> E Gaming review, including the best full service technology platform in North America.

Best North American White label platform provider.

We have the best most holistic <unk> solution in the market today I'm very proud of our whole team and very excited at the recognition neighbor and from my industry peers with these awards.

Turning now to the second quarter, our top line increased 24% sequentially. As a reminder, the first quarter included $3 million of patent license fee revenue.

While our <unk> segment revenue grew 68% compared to the first quarter and our <unk> segment grew quarter on quarter, excluding the first quarter license fee due to strength in U S. I gave me bucking the well established seasonal downturn as major first quarter U S sports events keen to an expected and.

Our revenue guidance was increased in early July up to a midpoint of $130 million on a range of $125 million to $135 million.

I'm sort of puts and put this in some perspective.

Last year, our full year revenue was just $35 million almost exactly what we delivered in this second quarter alone.

Our balance sheet remains but it's debt free and robust and we will hear more details on our financial performance shortly from our CFO Karen Florida.

At the highest level of our shared opportunity we remain in the early innings of the rollout of the U S market with a total addressable market widely believed to exceed $30 billion between online sports and gaming expected within just a few short years.

This was also a newly complemented by the incremental Canadian town of up to $5 billion annually and an equally rapid timeframe.

So North America is where we are and where we will remain focused as a market leading <unk> vendor for many years to come with <unk> market leadership reinforced by the momentum in our <unk> segment, which continued to deliver growth quarter on quarter, particularly from Michigan, where we dominate the b to b platform landscape as well as from our fourth most recently again stay to launch being west for.

Yes.

In conjunction with the President of our <unk> segment, Mr. Don Ryan I'd like to congratulate his team for delivering new clients and expanded relationships with existing clients together with the opening of our newest be offices in Miami, Florida, where we are continuing to invest and use software engineering capability to best serve our 'twenty two U S casino operator.

Lyons, who together own and operate in excess of 100 retail casino properties coast to coast here in America.

Next in combination with our <unk> segment President Mr. Anders Karlsen I'd like to take this opportunity to congratulate the entire <unk> team for executing ahead of expectations and their operation of cool that dot com, our overseas online sports betting business, which accelerated throughout the quarter as major international sports events took place.

Higher than expected sports book margins experienced in the second quarter serve as a testament to the capability of the sports trading and risk management teams, who have continued that impressive operation sports trading performance well into this third quarter.

As many listening note our longstanding BTB activities are not perfectly complimented by our fast growing DTC segment.

Together these businesses and collaborated exceptionally well to rapidly localized and deployed our U S b to be online and retail sports sports betting offering, which we are looking forward to demonstrating in a couple of months time at G. III.

Let's move together onto the next slide slide five.

Yeah.

The Super Rgs is a key strategic initiative of ours that will enable continued strong growth in USB to be gaming revenue.

The Super Rgs will firstly, bringing a wide spectrum of BDC operators that are not currently on our platform, thereby creating an entirely new revenue stream and.

Secondly, this will increase our take rate online gaming revenues derived from our existing client operations.

All Super Rgs integrations going forwards will be direct to platform integrations with any and all aggregated integrations scheduled for sunset within 12 months.

I'll turn it back now to the exclusive Ainsworth and incredible technologies I gaming U S contact deal secured recently.

Technical execution is progressing well and we look forward to bringing our impressive combined gaming content portfolio to the market at scale.

Meanwhile, we will benefit from their existing I gaming content licensing revenue is derived from BDC operators not already clients again.

The Super Rgs aggregation platform offers PTC operators, a wide library of nearly 1200 U S certified and compliant game titles, including exclusive gaming content all through one seamless technical integration.

It also positions Gan in the market as an independent one stop shop distributor of large high gaming content providers seeking wide and rapid U S distribution of their online games in a way that doesn't benefit any slot machine manufacturers with whom they compete in their traditional retail channel.

Looking forwards Gans must hop portfolio of recognized U S gaming content will be complemented by additional content portfolios and we will remain active in reviewing relevant opportunities commensurate to our balance sheet strength, which remains unburdened by debt.

Moving onto the next slide slide six.

Again sports proposition is getting ready for kickoff similar to our Super Rgs Gan sports Firstly opens up a new client base and secondly allows for a bigger piece of the value chain, which thirdly translates into revenue growth profitability and value for our shareholders.

And so it was the NFL season cranks up our industry will convene in person at <unk> for against first enterprise solution for both online and retail sports will be presented.

Crafted by U S veterans of retail sports betting working hand in hand, with the UI UX technical innovators in Estonia, Gan will be taking the wraps off a U S ready sports betting kiosk and over the counter or OTC solution, which redefines the retail consumer proposition just as the Gan sports mobile experience has been redefining the international consumer.

Experienced since 2016.

With an attractive full light touch screen and ergonomic design, the Gan sports retail kiosk golfers rupee and veteran retail sports gamblers alike, New features and design optimizations to revitalize and reinvigorate existing retail sports books in America.

Multi gained parlays offering our clients the highest sports margin opportunities are now presented more attractively than ever with an innovative single window design, both increasing the uptake and complexity of user defined parlays.

Our retail kiosks in OTC capability will allow us to participate in standalone retail only opportunities in states, where online sports regulation has yet to accompany retail sports.

Despite retail sports representing roughly 10% of the overall U S sports opportunity. These retail deployments are high margin opportunities for revenue shares tend towards 50.50 of revenue versus 10% in the online channel.

Corporate acquisitions have shaken loose menu replacement opportunities. We're currently pursuing with some gusto.

We cannot wait to show you the offering of <unk> and introduced the future of the U S sports betting experience seamlessly delivered by Gan across retail and online channels.

Let's move together onto the next slide please slide seven.

We've delivered a lot this year already and we have a substantial number of remaining deliverables committed through the balance of this year.

We have the largest native American casino in Michigan to bring online that's soaring Eagle with Churchill Downs of six states to bring online the New Jersey.

We are super Rgs integrations to complete we have new stimulated gaming clients like treasure island to launch and perhaps the most significant of all the Wynn Resorts award winning retail rewards program to reveal within their win bet online product live in Michigan, which relies on our patented hybrid framework just in time for the new NFL season.

We expect to be active participants in early suppliers in the Ontario market, which is similar in populations of Pennsylvania, The fifth largest U S. State, we expect to announce our clients in the coming weeks as deals are formally signed.

I do want to briefly mentioned our decision not to form a capital intensive consortium and the state of New York, where we spent a lot of time evaluating numerous bid opportunities in the end, we didn't see a path to a positive ROI for us to invest our balance sheet resources that so we made the prudent and disciplined decision to remain true to our <unk> business model.

And walk away from the publicized New York consortium in the interim but remain cautiously optimistic the continuing opportunities to deploy as a platform for commercial operator participants or New York tribal operators remain open to us in the near term together with longer term like gaming opportunities now widely expected to emerge consequent to recent political regime changes.

Yeah.

There is simply so much to do for our <unk> clients that this segment will remain at the center of our investment cycle as we continue to invest in the necessary talent and technology needed to capture the maximum share of the North American online gambling opportunity and maximize our shareholders' value.

I recently returned from a rather humid Florida, where we just opened our Gan Miami Tech hub. Our first new engineers are already on boarded and what we expect to be a vibrant technology recruitment environment benefiting from a populist shift towards sunbelt lower tax states.

Equipped with the shareholder approved employee share purchase plan, we're highly confident that <unk> can compete admirably with even the largest U S technology employers to attract the most qualified candidates to join us in the earliest innings of a pure play and online sports betting and gaming here in America.

With engineering talent remaining at the center of our need for optimal execution of maximum market share capture we're proud to be investors in U S software engineering to best complement our already sizeable <unk> engineering bandwidth centered in Europe.

We've onto the next slide slide eight please.

And so during the second quarter, our international DTC operations with our center of gravity in Latin America served as a perfect complement to our U S <unk> business.

Just as the U S sports betting calendar slowed after the NFL on March madness in the first quarter. The international sports calendar took over the successive Copa and Euro soccer tournament striving cool bed dotcom to new heights of customer acquisition activity and revenues with more than 100000 unique customers gambling online during just these two events alone.

Sure.

And that results were largely favorable to the sports book, resulting in higher than expected sports trading North sports hold which combined with a strong performance from cross sell into the online casino.

Latin America is widely accepted as one of the few international regions offering BDC operators access to a secular unprofitable growth cycle for the next decade or more.

With an estimated time of $3.1 billion by 2026 up from just $1.2 billion last year the growth profile for $650 million Latin American residents speaks to the opportunity already being captured by cool that dot com and its unique mobile sports betting experience.

Increased access to the mobile Internet increased credit card penetration rates and a favorable regulatory environment bodes well for cool that which has already taken market leadership and more than one Latin American country.

Brazil remains an extraordinary incremental opportunity in mobile sports betting and cool bed is preparing for market entry and a logical structured manner in the near future, where similar viral marketing dynamics experienced elsewhere in Latin American markets remain a reasonable expectation for future performance.

Okay.

On the next slide slide nine.

So before moving on to the financial review I'll set out again, the key pillars of our position.

Number one.

We have now armed ourselves with proven land based gaming content that we're rolling out to new <unk> clients, we don't already have as well as clients of our core platform, which will yield a continued expansion of our <unk> gaming take rate.

Number two we are focused on our exciting beta launch of Gan sports in the coming months I remain highly confident this product will change American consumers expectations of any online or retail sports betting experience.

Number three cool bed dot com outside the U S remains a highly successful and valuable indeed coveted asset to leverage in terms of cash flow contribution trading and risk management capability and of course industry, leading sports betting technology.

And number four we are scaling right now to meet the demand from existing and new clients. We can see emerging from an extremely active sales pipeline comprising new U S market entrants from overseas.

Domestic retail casinos here in the U S looking to move online consequent to regulation.

An existing U S b to C online operators.

With their own in house Tech looking to lean on our battle tested platform in selected states as they themselves run short of engineering bandwidth.

Okay, let me repeat that.

Existing BDC U S online operators with enhanced tech looking to lean on our battle tested platform.

On that last point, given the recent wave of M&A in the space, our technology is becoming demonstrably scarcer and ultimately more valuable.

Some of the bigger operators are looking to bring that tech platforms in house, given the cost technical complexity and regulatory expertise required we don't see this as a realistic option for most casinos and foresee the some who tried will ultimately fail as they have again and again throughout Europe, 25 year industrial history, which must serve as a cautionary tale for all who underestimate the challenge.

Here in the U S interest rate gambling markets, which remain the high watermark of online regulatory technical complexity anywhere in the world.

To wrap up we have the right team the right technology and the right strategy to continue to grow revenues domestically in North America, and abroad, and Europe and Latin America.

I'll turn it over to my fellow Executive Director and Chief Financial Officer, Mrs. Karen Flores count up to you.

Thanks, Jeremy and good afternoon, our strong revenue performance in the second quarter reflects the continued broad based strength in online gaming and excellent ongoing execution by our team, which resulted in accelerated growth for PVC segment and continued elevated activity for our <unk> segment, which this quarter.

Delivering almost 90% of its revenue from recurring SaaS revenue.

My comments today will be on quarter over quarter comparison for the second quarter given the effect of the Covid acquisition on January 1st of this year.

For reference we have provided both sequential and comparative tables in our earnings release and 10-Q filed today.

Starting with our consolidated financial results on slide 11.

We again had impressive performance with a 24% increase in our second quarter revenue to $34.6 million in line with our preliminary results announced in early July.

<unk> already noted we are excited to state that the revenue this quarter was almost equal to our consolidated revenue and all of 2020.

At $35.2 million before giving effect to the acquisition.

<unk> segment revenue outperformed our expectations, increasing 58% to $24 million in the second quarter derived from the contribution of claw back online international sports betting and casino gaming operations.

The results were primarily driven by stronger than expected performance in Latin America, and northern Europe as the quarter benefited from strong performance from two major international soccer event.

Importantly, we view the strength in Quebec as sustainable.

In perspective, the Copa and Euro Cup accounted for less than 15% of turnover in the quarter. So while a clear positive contributor to the growth there is broader underlying strength in the business.

<unk> segment revenue of $10.6 million was down $3 million sequentially are roughly flat, excluding $3 million of patent licensing revenue recognized in the first quarter. We are pleased that the elevated levels of online activity that we observed in the first quarter were sustained in the seasonally low second quarter, including for stimuli.

<unk> gaming and Italy, which were both relatively unchanged from the prior quarter.

Operating expenses increased 15% to $36.4 million the largest drivers of which were increased personnel expenses related to investments in talent technology and corporate infrastructure to meet the strong demand environment as well as increased marketing spend in support of a pullback user acquisition and retention.

Head count increased 15% during the second quarter to 591 worldwide.

With revenue growth and margin expansion outpacing the growth in our cost structure, our operating margin improved to negative 5% versus negative 14% in the first quarter and our net loss was reduced by 39% to $2.7 million.

Adjusted EBITDA increased 173% to profit of $4.6 million.

The balance sheet remains strong with a cash balance of $52 million at quarter end and we continue to remain debt free granting us a clear path to focus on high growth initiatives, securing additional market share and delivering the best platform technology to the market.

Moving on to our key performance indicators on slide 12.

<unk> gross operator revenue from our clients increased 3% to $221 million.

Hello, USA gaming gross operating revenue increased 5% for which scans relative market share 21% trends in gaming have remained strong even as casinos have reopened across the U S and games position as the number one supplier to this market remains equally strong with 59% supplier market share in the <unk>.

Second quarter versus the next closest competitor is supplier market share is approximately 10%.

And we look forward to the launch of a Super Rgs again for it.

See a meaningful opportunity to greatly expand our access to the larger addressable market displace existing providers.

Our wallet share of the value chain and deliver an unmatched product to our clients.

Turning to beat at the key performance indicators remain at exceptional levels across the board with active customers that nearly 70% to 187000.

Congrats to the growth in active customers, we view marketing spend as a percentage of total revenue and cost per acquisition as critical measures of performance and profitability.

Our <unk> segment scaled customer acquisition throughout the second quarter, while seeing significant improvements in these metrics.

The total marketing spend ratio declined to just 12% of revenue and cost per acquisition, so 60% to an astounding $30 per new deposit and customer.

He has enviable kpis speak to the social engagement features.

Giving viral and low cost customer acquisition as well as the geographic makeup of our customer base. There is a tremendous growth opportunity and pull that ahead of us as we focus on large and growing markets with industry tailwind and a best in Class Award winning mobile sports offering.

We continue to execute against our long term strategy, it's been just over a year and a half since I joined the <unk> team and in that time, we've accomplished an amazing amount financially and strategically.

And now even more optimistic about the growth path ahead for the company with our upcoming Super Rgs against sports VW product launches and the secular PTC growth trends internationally.

We continue to be the number one enterprise platform in the U S based on market share and one of the fastest growing DTC I gaming companies in the world.

<unk> team continues to rise to the challenge of competing and competing well.

Dynamic market environment.

We are reiterating guidance that we provided the market early July with our preliminary results, we expect revenue of $125 million to $135 million.

In the second half of the year will be more weighted on the fourth quarter, given new <unk> customers coming online and seasonality in both b to B and D C.

While we arent, providing adjusted EBITDA guidance, we are continuing to ramp our talent and technology in the near term, but the operating margin is expected to progressively improve on an annualized basis.

As a reminder, we hope to see many of you at our Investor event on October for it during the first day of the global Gaming Expo in Las Vegas also known as <unk>.

We look forward to providing a deeper dive into call that unique capabilities and the long term scalability of our <unk> business as well as introduce other senior leaders here again more information on that will be forthcoming I'll now turn it back over to <unk> to conclude our remarks Dermot.

Thank you Karen wrapping up we delivered sequential growth in B to B U S. Gross operating revenue we've demonstrated the excellence of our BDC International operations and are investing to accommodate growth and demand for our <unk> technology and services right here in the U S.

These strong results should continue as we move through the balance of the year as we ramp through the key NFL sports bidding season launch into Canada and stand up additional clients such as Super both in New Jersey, and Colorado and so we're in Eagle in Michigan, we anticipated expansions into Connecticut, I gaming and mobile sports betting in Arizona.

Continuing to execute on our stated strategy is book and on a path to deliver a highly scalable and recurring business model, which will maximize value for all of our stakeholders.

That concludes our remarks, we'll now open the line for questions.

Yes.

Thank you at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

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Our first question comes from Chad Beynon with.

With Macquarie Macquarie You May proceed with your question.

Hi, good afternoon, Thanks for taking my question.

Nice results gentlemen, it with respect to your your implied guidance. Karen you noted that youre, assuming more revenues in the fourth quarter, but I think you guys. Also noted that July has started off pretty strong could you just kind of help us think about what's going into your assumptions for I gaming.

There's some debate out there in terms of if it will hold or if some of the stimulus checks were off and the fact that people are getting back out of their homes, just trying to get a better sense of how that went into your thinking and then also can you help us think about the normal cool, but seasonality. Thank you.

Yeah. Thank you Chad.

So relative to the last comment I think the information for both New Jersey, and Michigan was just released into the market and for the month of July we're seeing very positive results in terms of again the continued elevated levels of online activity. So we were very happy to see that in due course.

Understanding.

Within the B to B business, the way that I would characterize it is that you know we feel like we've hit our stride for the rest of the year I think extremely.

Extremely positive that the revenue results for the second quarter are primarily that recurring SaaS revenue.

The revenue for the remainder of the year is highly predictable low risk at most of the major launches that we had on the b to b side of the business.

<unk> in the first half of the year with Michigan and with all of the multi state launches associated with Churchill. So even though we have over $10 million of revenue coming in this year and just from a.

All of the nuances combined in terms of the contribution in the second half of the year. It really is low single digit millions in itself from a <unk> perspective are really sort of in that stride for the remainder of the year all things held equal relative to the market, but again I think we're seeing a lot of that favorable activity continue with the July result.

It's on the BDC side of the business I would say the same thing obviously.

Tremendous tremendous success.

With the soccer tournament that started in the month of June and Theres always an inherited swing factor there in the sports business, specifically around the fold and said there could be some volatility there we've taken that into consideration in the guidance and it's again just the sheer execution ability of that team is what is giving us.

Confidence and I would say theres, a little more volatility of course just by nature.

On the BDC side of the business, but we are we've taken that into consideration and feel very comfortable with the revenue range right now.

And as well the Anders Karlsson told me not that long ago don't forget to tell everybody that there are more international sporting events, taking place in this calendar year than in any other year in living memory, so seasonality what seasonality you're bouncing from one major sporting event to the next to the next.

That's great thanks and related to that I know.

For U S sports betting a lot of the companies just focused solely here.

I've talked about are really high customer acquisition period in the fourth quarter and theyre going to be spending a lot in marketing given that cool beds reaches a little bit different than some of the U S names here.

On slide 12, when you talked about marketing spend around 12% I think last year was 14% should we assume that at any period. It gets back into these heavy customer acquisition period quarters like we're seeing from some of the others or do you think the Gulf for that business is to keep that marketing spend.

As long as possible at least in the near term and I won't go through any major quarters, where it's just all about acquiring customers at whatever cost. Thank you.

Well, you've already hit the nail on the head, though Chad the Cooper team are outperforming industry metrics that are the international industry, certainly pays a lot of attention to there.

They were doing things differently with a vastly superior product, which results in people our customers recommending the product to others. We think that's going to continue for.

For the foreseeable future and accordingly, our existing cost of acquisition and percentage of revenues and marketing will be well within the range. It's already been established there may will be an exception next year as Brazil begins to look like launching that there may well be some investment in a quarter related to our preparation to launch.

In Brazil, which is such a huge opportunity that we take it extremely seriously and the team is progressing extremely well and in terms of preparations for that.

So that's very much at the.

Earlier summer fall of next year.

Great. Thank you very much guys last quarter.

Thank you.

Our next question comes from David Katz with Jefferies. You May proceed with your question.

Hi, This is Cassandra Lee on behalf of David Thank you for taking my questions.

I just want to ask.

Ask about the strategy in Canada, how old you are.

Consider that a b to C opportunity versus fee to be opportunity there.

Yep.

The <unk> business, we have in Canada is relatively de Minimis, it's a pretty small percentage of overall revenues low single digits across the enterprise. So it will transit into the regulated market environment, but it's not a marketplace that we will be investing in proactively.

It's really about keeping what we have as opposed to aggressively investing in that market are equally we have a.

Highly exciting to me to be opportunity in Canada for Battle tested U S platform and a lot of these things that have been developed specifically for the U S from a regulatory technical framework standpoint, and compliant standpoint are immediately relevant and immediately deployable in Canada, which makes us very attractive.

And all of the system to choose if your lineup the provincial Canadian opportunity starting with <unk> on the first of December.

Yeah.

Got it thank you and can you provide a bit more.

Colors on the outlook around NFL seasons.

Many states are looking to go live around that time.

And there have been some glitches or blackout.

During the Super Bowl weekend this year due to start with volumes, though.

Do you anticipate any challenges in the upcoming months to handle the elevated volume.

I think I think we're the only guys who didn't have any problems in the last three super bowls that took place here in America in the regulated market environment. So I'll put the usual industrial health warnings, but I would say our CIO and the entire technology team is extremely confident that we will not do.

Are you experiencing any material technical issues.

Our U S platform delivered to our clients.

That's a brief statement to make wheel noted a tsunami of demand thats coming down and people opening accounts to pose the nameplate in the online casino all while things ramp up to that will important Super Bowl pickles, but we went through this year's Super Bowl flawlessly very very happy with a massive step up in activity.

The platform a year on year and we're looking forward to delivering the same flawless performance in Super Bowl early next year for all of our <unk> platform clients. So no concerns at this point, we've learnt a huge amount over the last super bowls, and I really think that that points towards the scarcity value of Dan's technology platform M D.

Sure confidence of clients can have in choosing gang answered powerful because we have driven through successful Super bowls again flawlessly. So.

Great question, hopefully a reasonable answer.

Got it thank you very much.

Our next question comes from David Bain with B Riley you May proceed with your question.

Great. Thank you and nice performance in <unk> and Dermot very interesting M&A comments in your remarks would concur with those by the way.

And so far with the existing customers and prospective.

Prospective customers have the exclusive content that the offerings that you've now talked Dan or are going to talk to them have they shown to be clinically beneficial to the larger business, even anecdotally or does it need to life first before we when you see something like that and then just any kind of update on launch timing for <unk>.

Haynesworth, an incredible that'd be great.

Yeah, No problem I'll take the second last if you don't mind, so ainsworth deep clinical integration is now done.

We're talking about launching.

Ainsworth.

In either the very end of this quarter early next quarter in the additional states. So ainsworth continents, only live in New Jersey today, and all of the existing integrations Ainsworth has done for Rgs will sunset within the next 12 months. So we will if you like take over the range of the existing single market presence in operationally presence in.

So we will expand into Michigan and west.

West, Virginia, and Connecticut reasonably quickly.

As the next few months relapse.

Similar story for incredible technologies may be at a two to three months incremental to Ainsworth.

And then when you asked about has it improved our market position as a platform I would say anecdotally yes.

However, it's really the the response that we've received to the Super Rgs proposition enhanced with Ainsworth anecdotal technologies has been overwhelmingly positive. So hence our statements in the prepared remarks that we believe the vast majority of possibly with one or two exceptions for the vast majority of the BDC operators today and then the fee.

<unk> here in the U S will be taking the Super Rgs as a service in order to get access to what I broadly describe as must have I gaming content for America and that's a statement that's been validated by many of our existing clients over platform.

Okay, great perfect.

My second question on the kiosks.

Essentially the operator are there cross over opportunities with the online class.

For them.

It's still a strategic opportunity there or are these just stan.

Sure.

Relative to <unk> digital's the other.

Is there like I think you spoke to expanded wagering option.

If you could give us an idea of what makes.

You're offering different couple.

A couple of the others that'd be fantastic.

Yes, Great question, David So historically up until this point the retail sports opportunity in retail only states, where they've only passed legislation to enable retail sports betting to take place inside casinos, that's been a bit of a standalone part of the industry and that it's being served by really one or two major providers of stand alone sports betting.

Broadly describe Ebola is plugging in a microwave.

So we're actually bringing a very different and superior technology system, where people can do retail sports betting and mobile on premise really when we deploy the kiosks. What we're actually deploying is the ability for people to attend to casino place a bet on the kiosk if they wish and equally a mobile phone in place I've seen that via the mobile phones.

It is a very much leveraging our online capability to infiltrate a very lucrative corner of the industry.

Okay. That's awesome. Thank you very much.

Our next question comes from Greg give us with Northland Securities. You May proceed with your question.

Hey, Germany, Karen Thanks for taking the questions and congrats on the Q2 results.

To clarify the how much of a sports betting margin benefit you got in the quarter, and maybe where youre forecasting is that margin going forward.

Yes, we did have a higher than normal margin on sports for the quarter. It was close.

Close to 10%.

We typically would expect and the way that we forecasted for the for the balance of the year is closer to 8% one of the things that pulled that does very well of course is compete on price.

And so it was a little bit of a higher benefit we did mention in our prepared remarks that you know.

The total amount of revenue from the quarter relative to the tournament was 15%.

Until that revenue that you can kind of do the math from there in terms of the incremental benefit.

But just overall, if it's a combined effect effect essentially.

Not only the soccer tournament, but just the Latin America growth story that we're seeing which is going to be sustained.

With all that.

Moving forward.

Okay great.

And.

I guess I apologize if you already mentioned this but.

Do you kind of expect that EDC strength on the <unk>.

International side too.

Carryover into Q3, I mean, maybe with some international events like the Olympics.

Or was it primarily a function of those two large events that you mentioned.

You too.

Yeah, I think I touched on in an answer to an earlier question, Greg, but yes. It is.

For the international sports calendar being absolutely jam packed with events. This year in part because of delays from Covid impacted last year and pushing the events into this year.

You can't really.

Move without coming across the international sports events, you've got the Olympics, you've got the soccer seasons in Europe already recommenced. It. So it's a very exciting time to be in this particular market with this particular team and product offering.

Okay.

Great. Thanks for clarifying appreciate it.

As a reminder, if you would like to ask a question. Please press star one on your telephone keypad.

Our next question comes from Ryan Cig Dahl with Craig Hallum Capital You May proceed with your question.

Good afternoon, Jeremy Alright, congrats on the strong <unk> results this quarter.

So curious curious you announced on cool, but you announced the customer an unnamed customer back in January for lunch in Virginia curious if you can give them an update on who that customer is and then any progress there with that customer and then any other cross sell.

Yes, the curse of <unk> remains in place, we can not to disclose the identity of our B to B current until they are comfortable doing so and the license has been in place. They were not successful in getting the first wave of Virginia licenses that would be pushed out to the second wave.

As far as I understand it will be a launch at some point in the first half of next year, but of course, we look forward to updating everybody hopefully by Investor day in the fourth of October will be in a position to be a little bit more transparent, but again such is the nature of the b to b vendor side of the industry. So please accept my apologies on behalf of the entire industry.

Yeah.

And then curious you announced a lot of nice wins in the quarter I didn't see win in there I know they've launched a couple of new states in the quarter any update with our progress with win outside of Michigan.

We are in continuing conversations with all of our clients almost simultaneously. So we're very excited to talk about Arizona, and Maryland, and Canada in Connecticut of which three of those four are launching decided as of the yearend.

But beyond that I really got to redefine Europe question over to the Wynn resorts management team as of when you can.

Great that's it for us thanks.

At this time, we have reached the end of the question and answer session and I will now turn the call over to Dominic for closing remarks.

Thank you for joining today for our second quarter earnings. We now have the complete product offering required to further deepen our stable of long term b to b clients to include the vast majority of the BDC operators active here in the U S.

We will also deploy rapidly for platform clients into additional states Anthony regulate I believe we are well positioned to increase our take rate on gross operating revenues by leveraging our super Rgs, an exclusive gaming content.

We have firm visibility over our domestic and international growth and solid control over our business going forwards, which is now equipped with both a strong balance sheet and the Bristol bandwidth and engineering resources required to continue delivering for all of our clients all the time.

Accordingly, we look forward to continuing with the strong execution of the current third quarter as we progress into the seasonally strongest period in Americas growing online gambling industry.

We look forward to hopefully seeing many of you in person on October the fourth during our Investor day in Las Vegas, and look forward to exciting developments in interim stay safe wherever you are.

This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.

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