GAN Q1 2025 Earnings: Strong B2C Momentum Amid Strategic SEGA SAMMY Merger Push

GAN Limited (NASDAQ: GAN) has unveiled its first quarter 2025 financial performance, marking a pivotal moment as the company accelerates toward its planned merger with SEGA SAMMY. While headline revenue figures show modest headwinds, the underlying business dynamics tell a more nuanced story of geographic diversification and operational refinement.

B2C Segment Leads Recovery Charge Across Key Markets

The standout performer in Q1 2025 was undoubtedly the B2C division, which generated $24.3 million in revenue—a remarkable 33% year-over-year surge compared to $18.3 million in the same quarter last year. This growth wasn’t evenly distributed; rather, it was concentrated in two regions that represent GAN’s strongest market positions: Europe and Latin America.

Europe emerged as a powerhouse, contributing $15.5 million to total Q1 revenue, up from $11.6 million in Q1 2024. The Latin American market demonstrated similarly robust expansion, delivering $8.4 million versus $6.9 million year-over-year. These gains underscore GAN’s ability to capture market share in regulated online sports betting jurisdictions where brand recognition and technological reliability command premium positioning.

The B2C active customer base expanded to 235,000 users (measured in thousands), climbing from 222,000 a year prior. More impressively, the B2C sports margin—a key profitability indicator—improved to 8.6% in Q1 2025 from 5.7% in the prior year period, suggesting enhanced pricing discipline and better risk management in sportsbook operations.

B2B Headwinds: The Multistate Contract Expiration Impact

Conversely, the B2B segment faced significant headwinds during the quarter. Revenue contracted sharply to $5.1 million from $12.3 million, primarily driven by the expiration of a multistate B2B commercial contract. This single event cascaded through the financial statements, with B2B gross operator revenue tumbling to $144.6 million from $632.0 million in Q1 2024.

The B2B take rate, however, showed marginal improvement, rising to 3.5% from 2.0%, indicating that while transaction volumes contracted, the company’s ability to extract value per transaction improved modestly. B2B segment contribution (a measure excluding depreciation and amortization) declined to $2.9 million from $10.3 million, with contribution margins compressing to 56.9% from 83.1%.

Consolidated Revenue and Profitability: The Bigger Picture

On a consolidated basis, GAN reported total revenue of $29.4 million for Q1 2025, representing a 4% decrease from $30.7 million in Q1 2024. This aggregate decline masks the divergent trajectories of the two business units—the B2C surge was insufficient to offset the B2B contraction.

The net loss widened to $6.8 million in Q1 2025 versus $4.2 million in Q1 2024. However, this deterioration was partially attributable to accounting adjustments and higher interest expenses rather than operational decay. Adjusted EBITDA, which strips out non-cash items and one-time costs, stood at negative $1.5 million, compared to negative $0.6 million a year prior.

Cost Structure Optimization Yields Mixed Results

Management prioritized operational efficiency during the quarter, reducing total operating expenses to $23.7 million from $24.6 million. This cost reduction stemmed from lower compensation costs and headcount optimization realized through ongoing restructuring initiatives. Sales and marketing expenses declined to $5.9 million from $6.0 million, while product and technology costs fell to $7.9 million from $9.6 million.

Despite these improvements, the company’s gross profit margin under the total segment contribution lens compressed to 63.5% from 69.6% due to B2B revenue collapse disproportionately impacting overall profitability. The B2C segment contribution margin remained resilient, improving to 64.9% from 60.4%, reinforcing the segment’s operational leverage.

Balance Sheet Strength and Liquidity Position

GAN maintained a solid cash position of $39.9 million as of March 31, 2025, up marginally from $38.7 million at year-end 2024. The improvement reflected favorable working capital dynamics, providing the company with adequate liquidity to navigate regulatory requirements and support business operations through the merger completion window.

Geographic Revenue Distribution: Europe’s Outsized Contribution

Breaking down revenue by geography reveals GAN’s international pivot. European markets accounted for $15.5 million (52.7% of total revenue), while Latin America contributed $8.4 million (28.6%). United States revenue declined to $4.7 million from $9.1 million, reflecting the B2B contract expiration. The “Rest of the World” category generated $0.8 million, down from $3.1 million.

This geographic concentration underscores GAN’s strategic bet on offshore-regulated markets where competitive dynamics and margin profiles differ substantially from the U.S. land-based casino-centric B2B model.

SEGA SAMMY Merger: Regulatory Pathway Nearing Completion

The proposed merger with SEGA SAMMY continues to advance through regulatory checkpoints. GAN shareholders approved the transaction at a special general meeting, the Committee on Foreign Investment in the U.S. (CFIUS) granted clearance, and several gaming regulatory agencies—including the Nevada Gaming Commission—issued approvals. Management anticipates the merger closing in Q2 2025, subject to remaining regulatory requirements and customary closing conditions.

The elimination of a standalone earnings call reflects the company’s focus on merger execution rather than quarterly investor relations cadence. This move, while reducing near-term market visibility, signals management confidence in the transaction timeline.

Market Context: Sports Betting Tailwinds and Consolidation Trends

The improved B2C sports margin (8.6% in Q1 2025 versus 5.7% in Q1 2024) reflects both operational excellence and favorable market conditions. Online sports betting continues to expand in regulated European and Latin American jurisdictions, where GAN has established competitive footholds. The B2C marketing spend ratio improved to 18% from 23%, demonstrating more efficient customer acquisition relative to revenue generation.

Forward-Looking Implications

While Q1 2025 presents a mixed picture—B2C momentum offset by B2B contraction—the underlying trends suggest GAN is successfully repositioning itself as an international B2C operator with B2B technology capabilities, rather than a pure B2B service provider. The SEGA SAMMY merger represents an inflection point for this transformation, potentially unlocking new distribution channels and capital to fund expansion in high-growth betting markets.

The company’s ability to sustain B2C customer growth and margin expansion while absorbing B2B revenue headwinds will determine whether the current earnings trajectory represents a temporary adjustment or a more durable shift in the business model’s risk-return profile.