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Shares in Gambling.com Group have skyrocketed almost 16% as CEO Charles Gillespie unveiled a compelling growth opportunity alongside impressive Q2 results.

Topline numbers

In Q2 2023, Gambling.com Group generated record-breaking revenue of $26m, indicating a substantial 63% increase compared to the same period in 2022.

The company’s adjusted EBITDA also experienced an impressive surge of 161%, reaching a new Q2 peak at $9.4m, which corresponds to a margin of 36%.

Meanwhile, during H1 2023, the affiliate business recorded revenue of $52.7m, a significant 48% rise compared to the first half of 2022.

Adjusted EBITDA also demonstrated strong growth, increasing by 87% to reach $20.1m over the first six months of 2023.

News nugget

During the company’s earnings call, Gambling.com CEO and co-founder Charles Gillespie offered thorough insights into the company’s trajectory and the broader industry outlook.

He asserted that the Q2 results merely mark the initial phase of what Gambling.com Group is poised to accomplish in the long run.

Gillespie said that while the US represents the group’s largest reporting market, 43 states have yet to regulate iCasino and 21 states have yet to regulate online sports betting.

However, he also added that while expansion of regulated online gambling in the US still grabs the most headlines and the majority of investors’ attention, “the opportunity for sizeable new regulated markets outside of North America and Europe is compelling and remains under-appreciated.”

“We expect Brazil to be a major global sports betting market if the regulations are finalised and enacted.

“We are also excited about the potential for Japan to become one of the largest regulated online gambling markets in the world should regulatory efforts break through,” Gillespie added.

Mature market growth

Moreover, Gillespie said that the group’s growth in the UK and Ireland (25% year-on-year) is an often overlooked area.

He pointed out that in more mature markets, players become more discerning, selective and varied in their choices.

“In parallel, performance marketing partners become increasingly critical to operators and their ability to attract new players.

“For example, while we estimate that new depositing customers (NDCs) referred through performance marketing channels account for less than 10% of US operators’ customer databases, in the UK that percentage is 20% to 40%.”

Gillespie said that over time, the North American market will come to mirror the same dynamics that exist in more mature European markets.

He also noted that it’s frequently tier 2 and tier 3 operators who display the greatest enthusiasm to collaborate with affiliate firms.

“They’ve got more incentive to make the affiliate channel work than the big guys who are already market leaders,” he added.

The US iGaming opportunity

Gillespie also shared some thoughts on the competitive landscape in the US.

Earlier this month, Penn Entertainment parted ways with Barstool Sports and sealed a substantial $2bn agreement with ESPN to forge ESPN Bet.

He highlighted that ESPN’s entry further “destigmatises the industry” due to the broadcaster’s importance in US sports.

“It is another very meaningful step in the right direction for the industry going fully mainstream,” Gillespie said.

He also believes that more operators will enter the US market.  

Gillespie said this opportunity is more aligned with online casinos rather than sports betting, as sports betting involves lower margins and tends to be more expensive to run effectively.

“It’s not so difficult to set up an online casino. You need a brand, a bit of software, customer service. It doesn’t have to be this enormously expensive capital expenditure exercise.

“We’ve seen for years operators in Europe set up online casino brands without crazy amounts of investment, but with very sharp precision digital marketing and succeed.”

Turning to Gambling.com Group’s plans, Gillespie emphasised the firm’s overarching goal for Casinos.com to become the definitive destination for the globally regulated casino market.

In our heart of hearts, we’re casino people,” he said.

However, since most US states first regulated sports betting, “we created a very nice sports betting business for ourselves before casino really gained momentum.”

Finally this year, Gillespie said, the company has broken through on the casino side, however, the company did not provide detailed figures.

Best quote

“There will be a point in time in the US market where we finally see the next wave of operators entering, which is about bringing more experience to the digital marketing side rather than relying solely on unlimited capital. These operators will have a reasonable market share and, in our opinion, profitable businesses.”
Gambling.com Group CEO Charles Gillespie

Best Question

Barry Jonas from Truist Securities asked Gillespie about the group’s M&A pipeline and appetite at the moment.

CEO Gillespie replied: “We’ve got lots of conversations happening at the moment. There have been a few new things that have entered the scope of what we are considering.”

He added that assuming these conversations go well, he is hopeful he’d be able to announce a deal over the next six to nine months.

“We obviously have the balance sheet to do something,” he said.

However, he added: “We can grow this business without M&A, as we are demonstrating every single quarter. So, for us to pull the trigger, it’s got to really pass all the tests,” he added.

Current trading and outlook

Gambling.com raised its full-year revenue guidance to a range of $100 to $104m, while adjusted EBITDA is expected to hover between $36m and $40m.

The company has incorporated Kentucky’s sports betting launch on 28 September into its plans, and it foresees North Carolina following suit, possibly in the first quarter of 2024.

However, due to uncertainties surrounding details, North Carolina remains outside of Gambling.com’s guidance.

Investor enthusiasm was palpable, resulting in a remarkable 15.6% surge in Gambling.com’s stock.

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