Gambling.com Group Ltd (NASDAQ: GAMB) Q2 2025 Earnings Call | 08/15/2025

Gambling.com Group Limited reported record Q2 2025 results, with significant revenue and adjusted EBITDA growth, driven by diversification across marketing, sports data services, and an upcoming ticketing platform acquisition. The company continues to expand its traffic sources and revenue models, leveraging an omnichannel approach and strategic acquisitions to capture a larger addressable market.

Financial Highlights (presented by CFO Elias)

• Q2 2025 Results:

  • Revenue: $39.6 million, up 30% year-over-year, a Q2 record.

  • Marketing Business: Grew 3%, delivering over 108,000 new depositing customers (NDCs), flat year-over-year, with North America facing tough comparables due to the prior year’s North Carolina sports betting launch.

  • Sports Data Services: Revenue quadrupled to $10 million, led by OpticOdds (120% year-over-year growth).

  • Subscription Revenue: Accounted for 25% of total revenue, with recurring revenue (including revenue share) at 51%.

  • Gross Profit: $36.9 million, up 27%, with a 93.2% gross margin (down from 95.3% due to higher cost of sales from diversified traffic sources and acquisitions).

  • Operating Expenses: $61.3 million, including $23.8 million in acquisition-related charges (primarily from OddsJam and OpticOdds outperformance).

  • Adjusted EBITDA: $13.7 million, up 22%, with a 35% margin (down from 37%).

  • Adjusted Net Income: $13.4 million, up 37%, boosted by euro strengthening vs. USD.

  • Adjusted Diluted EPS: $0.37, up 42%.

  • Free Cash Flow: $8.2 million, up 36%, despite $5.5 million in tax payments (including $3.3 million acquisition-related).

• Balance Sheet:

  • Cash: $18.7 million as of June 30, 2025.

  • Debt: Drew $94.5 million on a $165 million credit facility, with $70.5 million undrawn.

  • Swap Agreement: Converted 75% of USD borrowings to euros, reducing cost of capital by ~200 basis points.

  • Share Repurchase Program: Board approved a $10 million expansion, totaling $20 million (none utilized yet).

• Full-Year 2025 Guidance:

  • Revenue: $171–175 million (midpoint $173 million, 36% year-over-year growth), reflecting Spotlight.Vegas contribution, Missouri sports betting launch, and weaker search rankings from Google’s algorithm update.

  • Adjusted EBITDA: $62–64 million (midpoint 29% year-over-year growth), impacted by higher non-SEO cost of sales and no EBITDA contribution from Spotlight.Vegas in 2025.

Strategic Highlights (presented by CEO Charles Gillespie)

• Diversification Strategy:

  • Expanded traffic sources (apps, email, social media, YouTube, communities, paid media) and revenue models (subscriptions, revenue share) to reduce reliance on traditional search.

  • Non-search channels are growing rapidly, with shorter investment cycles and attractive ROI.

  • Search remains a key driver but is expected to decline in relative importance, with AI tools enhancing its role by linking to authoritative sites like Gambling.com’s brands (Gambling.com, Bookies.com, Casinos.com).

• Sports Data Services:

  • Accelerated growth, particularly OpticOdds (120% year-over-year), with a larger-than-expected total addressable market due to diverse client interest (operators, startups, arbitrageurs, media companies).

  • RotoWire refresh and OddsJam integration are driving double-digit growth, with full impact expected post-NFL season.

• Acquisitions:

  • Spotlight.Vegas (closing September 1, 2025): A capital-efficient acquisition ($8 million upfront, up to $22 million earn-out over 2026–2027 at 6x operating profit). The platform serves Las Vegas with ticketing for shows, attractions, and hotels, generating over $30 million in 2024 turnover. Expected 2026 contribution: $8 million net revenue, $1.4 million adjusted EBITDA.

  • Expands client base to land-based operators and enhances monetization of Gambling.com’s audience.

  • Prior acquisitions (RotoWire, OddsJam, OpticOdds, FreeBets.com) demonstrate successful integration and reduced purchase multiples through execution.

• AI and Search:

  • AI-driven search changes have a smaller impact on online gambling compared to other industries, as users seek entertainment and retain decision-making agency.

  • Gambling.com’s authoritative brands position it to capture high-intent traffic from AI tools, with early indications showing strong share of voice.

• Market Outlook:

  • Las Vegas hotel occupancy is currently low, but historical resilience suggests a rebound, making Spotlight.Vegas a timely investment.

  • Prediction markets are a potential growth driver, pending legal clarity, with a consumer-friendly model that could reshape the industry.

Q&A Highlights

• Spotlight.Vegas Acquisition (Elias, Charles):

  • Earn-out structure: $8 million upfront, up to $22 million over 2026–2027 based on EBITDA thresholds.

  • Synergies with Gambling.com’s digital marketing expertise will enhance conversion rates and marketing efficiency, leveraging an existing platform and a strong local team.

• AI Impact (Charles):

  • AI search reduces click-through rates but relies on authoritative sources like Gambling.com’s brands, ensuring strong positioning (top 1–2 results).

  • Non-search channels are scaling rapidly to offset search declines.

• Google Algorithm Update (Charles):

  • Recent update (within Q3) impacted search rankings, with recovery expected in 1–3 months.

  • Revenue guidance reflects higher sports data services and non-SEO revenue, offset by lower search revenue and no Spotlight.Vegas EBITDA in 2025.

• Sports Data Services (Charles):

  • OpticOdds growth driven by new clients and higher average revenue per client, serving diverse industries (operators, startups, media).

  • OddsJam sees flat client numbers but increased revenue per user through upselling.

  • RotoWire refresh shows double-digit growth, with full impact post-NFL season.

• Margin Profile (Charles):

  • Long-term adjusted EBITDA margin target remains 35–40%, with 2025 at 36% due to higher non-SEO cost of sales.

  • Shift to non-SEO channels and sports data services drives revenue growth but with slightly lower margins than SEO.

• Prediction Markets (Charles):

  • Emerging category with potential for significant growth if legal barriers are resolved, offering a consumer-friendly model with sophisticated technology.