Gan Plc
This week on the Intelligent Investing Podcast, I sat down with Jeremy Raper. One of companies we discussed Gan Plc.
Summary
Gan is a small cap and listed on the AIM junior exchange, so caveat emptor. The company is a provider of B2B software for internet gambling providers. Historically, all revenues came from Europe but the new major client now is FanDuel sports betting in the US and so they are plugged in to the structural multi-year growth runway in US legalized sports betting.
Revenues
The company gets royalty fees based on users and engagement thus as ARPDAU grows, margins should scale, like a SaaS business. Revenues are expected to double this year and there’s no reason why the company won't keep growing aggressively as sports betting growth continues.
Valuation
Today, Mr. Market offers Gan for <4x FY20E revs and EBITDA positive (maybe <15x EV/EBITDA) for a business growing triple digits. This is obviously highly unusual. The reason the business is cheap is because its not on a major exchange. However, this will change from next year with their NASDAQ listing.
Management
Dermot Smurfit's family owns ~30% of the company and is highly aligned. Not too long ago he explored putting the company up for sale but scrapped the plans. Clearly he thinks he can get more keeping it public and listing it on NASDAQ.
Conclusion
This is an atypical opportunity and highly interesting given the valuation/setup. You can listen to the full Intelligent Investing Podcast episode, here.