Gambling.com sees revenue up 37% in Q3 and best month ever in Sept.; explores M&A

Digital marketing services group Gambling.com has announced its financial results for the third quarter of 2021. For the period ended September 30, the company reported year-over-year revenue growth of 37% to $10.1 million, and diluted earnings per share of $0.13.

Furthermore, the group also posted a net income of $4.7 million, compared to $2.3 million in the same period for the prior year. Adjusted EBITDA, on the other hand, decreased 14% to $3.5 million, compared to $4.0 million in 2020. Free cash flow also decreased 81% to $0.8 million, versus $3.9 million last year.

"Our third-quarter results came in a bit above our expectations,” said Elias Mark, Chief Financial Officer. “After slow summer trading, our financial performance accelerated in September to close out the quarter with the best month in the company's history.”

The CFO also described the company’s Adjusted EBITDA margin of 34% as “healthy”, despite a seasonally slow quarter and investments in scaling the organization for organic growth initiatives and operating as a public company. The company had already given guidance that near-term margins could deviate from the average 40% target as it pursues its M&A strategy.

For the full year, Gambling.com reiterated its expectation to achieve both above 40% year-on-year organic revenue growth, and approximately 40% Adjusted EBITDA margin. “We remain in a very strong financial position after the IPO last quarter, which offers us significant optionality going forward to execute our growth plan and each of our capital allocation priorities," added Mark.

September, the new all-time high revenue month for the business, followed the quiet summer months of July and August. “With the launch of Arizona and the kickoff of the NFL season, we saw a significant uplift in U.S. revenue in September and our US performance exceeded our internal expectations,” said Charles Gillespie, CEO and co-founder of Gambling.com Group.

The company is now entering the typically strong fourth quarter “with good momentum,” while remaining “highly focused” on prudently growing through both sustained organic growth and future acquisitions which the business continues “to actively pursue.”

In a call with investors, Gillespie said the IPO on the Nasdaq market in July was “the highlight of the third quarter,” a move he described as “successful.” Moreover, the CEO also highlighted steps taken to solidify the business presence in the US These include the launch of BetArizona.com in time for the NFL season and MarylandBets.com. 

Moreover, the company also launched two new websites for the Netherlands market to establish there early. The company’s main markets today are, according to Gillespie, the UK, Ireland, the US, and Canada.

During and after the quarter, the company continued to add additional domains to its portfolio to prepare for the launch of online gambling in additional US states. The CEO also said that now that New York regulators have approved nine sportsbooks to launch in time for the Super Bowl 56, the company is “well-positioned” to service the market with “multiple media assets.”

Regarding Florida, which went live on November 2 with a single operator, Gambling.com expects to generate affiliate revenue “in the future.” Meanwhile, in the Netherlands, as many of the most important international online gambling operators have yet to receive their licenses, the company expects to see a positive financial impact “in 2022” as the market gains momentum.

The German market, which saw its interstate treaty going live at the beginning of Q3, has been described as still “viable” for operations. However, the group warns it has seen revenue volatility and lower NDC values as a result of legal uncertainty and regulatory restriction.

In terms of its M&A strategy, Gillespie said Gambling.com is well-positioned to make “attractive approaches” to mid-sized targets. This would drive inorganic growth by integrating their complete businesses and teams into the group.

“We evaluate a broad range of targets on an ongoing basis and seek to execute an average of one to two deals a year and an approximate range of 20 to 50 million each,” the CEO explained to investors. Since the IPO, the business has been “very busy” evaluating and advancing discussions on multiple opportunities.