Q2 2023 Gambling.com Group Ltd Earnings Call
I think if you're going to try to draw some lines between us and the operators, it'd be far easier to do it on the revenue side, of course.
There's a lot of things that affect each individual operator's profitability, which have nothing to do with us.
But probably speaking, if the operators are doing well and growing, I think you should expect the affiliates from a, you know, at least a revenue perspective to be doing well and growing as well.
But generally speaking, long term, we expect that, kind of outpace the operators. We expect the affiliate proportion.
of the overall.
sales and marketing expense from the operators to increase over time. And therefore, you know, if the overall online gambling market in North America is growing at X, we'd expect, you know, our essentially North American Tam to be growing at something faster than X. Right, X plus. Got it. X plus. And my other question is when we look at the population of players, and again, you know, I'm a bit more US focused. And we think about the mix of operators out there. You know, conventional wisdom for any business would suggest that.
Operator 2: Greetings. Welcome to Gambling.com Group's Q2 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Peter McGough, Vice President of Investor Relations. Thank you. You may begin.
Speaker 1: Greetings. Welcome to Gambling.com Group's second quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode.
Speaker 1: A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Peter Mickels, Vice President of Investor Relations. Thank you. You may begin.
you know, the smaller players are smaller scale and you get to charge them more, whereas the bigger players, you know, tend to bring scale and, you know, get more of an efficiency discount. Is that the case, you know, with you? And is that something we should be thinking about given the sort of ins and outs?
Peter McGough: Hello, everyone, and welcome to Gambling.com Group's Q2 2023 earnings results call. I'm Peter McGough, Vice President of Investor Relations. I'm joined by Charles Gillespie, Chief Executive Officer and Co-founder, and Elias Mark, Chief Financial Officer. The call is being webcast live through the investor relations section of our website at gambling.com/corporate/investor, the downloadable version of the presentation is available there as well. A webcast replay will be available on the website after the conclusion of this call. You may also contact investor relations support by emailing investors@gdcgroup.com. I would like to remind you that information contained in this conference call, including any financial and related guidance to be provided, consists of forward-looking statements as defined by securities laws.
Speaker 2: Hello everyone and welcome to Gambling.com Group's second quarter 2023 earnings results call. I am Peter McGough, Vice President of Investor Relations. I am joined by Charles Gillespie, Chief Executive Officer and Co-Founder and Elias Mark, Chief Financial Officer. The call is being webcast live through the Investor Relations section of our website.
that we've discussed today, you know, over the recent past. It is, and that's fair. You know, it is our experience that, you know, if you bucket the operators off into kind of tier one, tier two, tier three, based on market share.
It's the Tier 2 and Tier 3 operators, which are most keen to work with us.
They're the ones that are willing to invest, not only the money but the time to put campaigns together that perform, that have high conversion rates. You know, they've got more incentive to make the affiliate channel work.
Speaker 2: A webcast replay will be available on the website after the conclusion of this call.
Speaker 2: You may also contact Investor Relations support by emailing investors at GDCgroup.com.
Speaker 2: I would like to remind you that information contained in this conference call, including any financial and related guidance to be provided, consists of forward-looking statements as defined by securities laws. These statements are based on information currently available to us and involve risks and uncertainties that could cause actual future results, performance, and business prospects and opportunities to differ materially from those expressed in.
Peter McGough: These statements are based on information currently available to us and involve risks and uncertainties that could cause actual future results, performance, and business prospects and opportunities to differ materially from those expressed in or implied by these statements. Some important factors that could cause such differences are discussed in the Risk Factors section of Gambling.com Group's filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date the statements are made, and the company assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws. Please also see our references to forward-looking statements in a related presentation and press release. During the call, there will also be a discussion in non-IFRS financial measures.
than the big guys who are already market leaders.
So the best outcome is a mix of operators and a distribution.
Definitely, and we haven't, we're not really seeing this at the moment in North America, but you've had a couple of new operators enter the fray. So you've got Fanatics coming, you've got ESPN back coming. It is our view that there will be many, many more operators that enter the fray in the process, especially as more states regulate casino.
Speaker 2: or implied by these statements. Some important factors that could cause such differences are discussed in the risk factors section of Gambling.com Group's filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date the statements are made, and the committee assumes no obligation to update forward-looking statements.
you know, on the casino side, it's not so difficult to set up an online casino. You know, you need a brand, a bit of software, customer service, you know, but it doesn't have to be this enormously.
Speaker 2: to reflect actual results. Changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws.
Speaker 2: Please also see our references to forward-looking statements in a related presentation and press release.
We've seen for years, operators in Europe stand up online, casino brands with...
Peter McGough: A description of these non-IFRS financial measures is included in the press release issued earlier this morning. Reconciliations of these non-IFRS financial measures to their most directly comparable IFRS measures are included in the appendix to the presentation and press release, both of which are available in the Investors tab of our website. I'll now turn the call over to Charles.
Speaker 2: During the call, there will also be a discussion in non-IFRS financial measures. The description of these non-IFRS financial measures has included in the press release issued earlier this morning. And recommendations of these non-IFRS financial measures to their most directly comparable IFRS measures
without crazy amounts of investment, and very sharp precision digital marketing, and therefore succeed, and have nicely profitable businesses. So there will be a point in time in the US market where we finally see this kind of next wave of operators entering ó
Speaker 2: are included in the appendix to the presentation and press release, both of which are available in the Investors tab of our website. I'll now turn the call over to Charles. Thanks, Peter, and welcome everyone. Today we reported phenomenal second quarter results, including strong year-over-year revenue adjusted, even though...
Charles Gillespie: Thanks, Peter. Welcome, everyone. Today, we reported phenomenal Q2 results, including strong year-over-year revenue, adjusted EBITDA, and free cash flow growth. These results demonstrate our ability to win with our business model in regulated markets around the world at all stages of their development. The record results are just an early example of Gambling.com Group's bright near and longer-term future as we further leverage our excellence in SEO and our proprietary data science systems to deliver consistent growth, healthy margins, and great returns for our shareholders. I'll provide a bit more color on our growth opportunities in a moment, but at the outset, I want to highlight that these opportunities reach beyond just new states coming online in North America.
which have, which are bringing more kind of experience on the digital marketing side versus unlimited amounts of capital and they will have...
reasonable market share and profitable businesses in our opinion and again that's really an online casino kind of
Speaker 3: and free cash for low growth. These results demonstrate our ability to win with our business model in regulated markets around the world at all stages of their development.
Opportunity more sudden sports betting, sports betting, of course lower margin and kind of more expensive to run properly but
Speaker 3: The record results are just an early example of Gamma.com groups bright, near, and longer term future. As we further leverage our excellence in SEO and our proprietary data science systems to deliver consistent growth, healthy margins, and great returns for our shareholders. See them find ways to help them in your recovery plans.
We are, of course, still of the opinion that we will get many more online casinos based in the US.
still of the opinion that we will get many more online casino states in the US. Perfect, thank you very much.
Our final question is from Chad Baynon with Macquarie. Please proceed.
Speaker 3: I'll provide a bit more color on our growth opportunities in a moment, but at the outset, I want to highlight that these opportunities reach beyond just new states coming online in North America. I'll provide a bit more color on our growth opportunities in a moment, but at the outset, I want to highlight that these opportunities reach beyond just new states coming online in North America.
Hi good morning. Nice quarter thanks for taking my question Charles, Elias and Pete. Wanted to ask first just on the 18 million dollar pound termination fee that you talked about and I believe also you might have the final payment for for Rotowire. So as we think about you know some of these these cash outflows.
Charles Gillespie: While North America is already our largest revenue contributor, and we are still in the very early stages of realizing our scale and potential in the market, our near and long-term growth profile is not solely dependent on when new states will come online. New state launches will surely be additive to our business, but we also expect to continue to gain market share in existing states, benefit from the development of our new media partnerships, and realize the near and longer-term benefits from the launch of our new premier brand, Casinos.com. I would like to also highlight that as online gambling markets mature, the importance of performance marketing solutions increases for two reasons. First, consumers become more selective and need more help. Secondly, operators begin to exhaust the capacity of their lowest cost acquisition channels.
Speaker 3: North America is already our largest revenue contributor, and we are still in the very early stages of realizing our scale and potential in the market.
How does this kind of shape how you guys are thinking about share repurchases, leverage, anything else on the capital allocation? Thanks.
Speaker 3: New State launches will surely be added to our business, but we also expect to continue to gain market share in existing states benefit from the development of our new media partnerships and realize the near and longer term benefits from the launch of our new premier brand, Casinos.com.
So with the early termination of the bonus finder announced, that uncertainty of future cash outflow from investing activities has been replaced with a certainty. What will be paid is...
Speaker 3: I would like to also highlight that an online gambling market to mature the importance of performance marketing solutions increases for two reasons. First, consumers become more selective and need more help. Secondly, operators begin to exhaust the capacity of their lowest...
$18 million of final consideration of which $5 million was paid in July . So there is a further $13 million that will be payable at the end of April next year and we are able to settle up to 50% of that in ordinary shares.
Charles Gillespie: Broadly speaking, we expect to have more inventory to sell to operators and for the operators to need our channel more than ever as markets mature. You can see that dynamic in the strong growth we continue to generate in the UK and Ireland, markets that have been regulated for nearly 20 years. Turning now to some of the highlights for the Q2 results. Revenue rose 63% to EUR 26 million, reflecting a 115% increase in North American revenue and continued strength in the UK and Ireland, where revenue rose 25% year over year. We generated adjusted EBITDA of EUR 9.4 million, we converted a remarkable 91% of our adjusted EBITDA to free cash flow, which totaled EUR 8.5 million in the quarter.
So that kind of gives you certainty on the cash flow side. We continue to generate very strong free cash flow and...
Speaker 3: cost acquisition channels. Broadly speaking, we expect to have more inventory to sell to operators and for the operators to need our channel more than ever as markets mature.
we have over 30 million in the bank. So there is excess capitalization that can be used for either M&A or travel purchases. And we remain opportunistic and pragmatic about both and we'll carefully consider capitalization.
Speaker 3: You can see that dynamic in the strong growth. We continue to generate in the UK and Ireland markets where we have been regulated, markets that have been regulated for nearly 20 years.
Speaker 3: Turning now to some of the highlights for the second quarter results, revenue rose 63% to 26 million, reflecting a 115% increase in North American revenue and continued strength in the UK and Ireland or revenue rose 25% year-over-year. We generated adjusted evita of 9.4 million and we converted a remarkable 90%
depending on the M&A pipeline and other things. Okay, thank you. And then just as we are now in kind of the post-white paper world in the UK, you continued to show very strong growth. I think most of your partners over there had already adjusted their websites and kind of all the affordability checks ahead of this. So it doesn't seem like there was a major change. And you obviously talked about gaining market share as a goal as the market growth has slowed. But can you talk about anything else that you are seeing kind of near term in the market post-white paper, maybe with some of these tier 2, tier 3 operators, at what point will the UK Ireland growth?
Charles Gillespie: Our ability to consistently generate mid-30s% adjusted EBITDA margins and convert a high level of adjusted EBITDA to free cash flow reinforces our belief that we have the most attractive business model in our industry. At the core of our success is our technology-focused approach, which continues to differentiate Gambling.com Group from our publicly traded peers with best-in-class organic growth. We expect to continue to drive strong organic growth for the balance of 2023, resulting in another year of record financial performance, including improved year-over-year profitability and continued robust free cash flow generation. Since our last call, we now know that Kentucky will launch sports betting on 28 September. Therefore, we are now including Kentucky in our guidance. We expect that the next state to launch after Kentucky will be North Carolina.
Speaker 3: to consistently generate mid-30s adjusted EBITDA margins and convert a high level of adjusted EBITDA to free cash flow reinforces our belief that we have the most attractive business model in our industry.
Speaker 3: At the core of our success, is our technology focus approach, which continues to differentiate Ganyway.com group from our publicly traded peers with best in-class, organic growth.
you know, start to look more, I don't know, more normal and so it's kind of hyper growth that you're publishing. Thank you. I can take that one. I think you're right in the operators in the UK have adjusted their pros and pros and procedures. They say it's very much business as usual and any negative impact had been priced in pre-issue and so the white paper. You're right that we've been driving out size.
Speaker 3: We expect to continue to drive strong organic growth for the balance of 2023, resulting in another year of record financial performance, including improved year over year profitability, and continued robust free cash flow generation. Since our last call, we now know that Kentucky will launch sports betting on September 28th.
Charles Gillespie: While we suspect this will be during Q1 of 2024, we do not yet have any certainty about the launch specifics and therefore North Carolina will remain outside of our guidance until we do have such specifics. Elias will give a full update on our raised guidance later in the call, I am delighted to say that we now expect to deliver at least EUR 100 million in revenue in 2023. Looking at the Q2 results in more detail, we benefited from unseasonably strong growth in US sports betting NDCs. Excluding this atypical outperformance, our results would have still exceeded consensus estimates. Beyond the strength in US sports, we also profited from continued strength in iCasino revenues in the US and in other markets. We delivered over 91,000 new depositing customers for our online gambling operator clients, an increase of 60% over Q2 2022.
Speaker 3: While we suspect this will be during Q1 of 2024, we do not yet have any certainty about the launch specifics, and therefore North Carolina will remain outside of our guidance until we do have such specifics.
growth in the UK and Ireland in the past six quarters now. That pace can't continue forever as we're entering into harder comps in the third and particularly the fourth quarter. So we do expect
Speaker 3: L.A.S. will give a full update on our raised guidance later in the call, but I am delighted to say that we now expect to deliver at least 100 million in revenue in 2023. Looking at the second quarter results in more detail, we benefited from unseasonably strong growth in U.S.
in the media partnership with the independent.
a big part of how we continue to drive roads in the UK.
Thanks guys, appreciate it.
We have reached the end of our question and answer session. I would like to turn the conference back over to management for closing comments.
Speaker 3: deal exceeded consensus customas.
Speaker 3: Beyond the strength in U.S. sports, we also profited from continued strength in IKACINA revenues in the U.S. and in other markets.
Thank you again to everybody for joining us today. We appreciate your support and interest in Gamma.com Group. We've had a strong start to the year and expect more of the same solid performance for 2023. We look forward to updating everyone again when we report our Q3 results in November and hopefully we can see many of you at G2E in early October .
Speaker 3: We delivered over 91,000 new depositing customers for our online gambling operator clients in increase of 60% over a Q2 2022. Our growth in NDC is driven by our continuously improving ability to capture high intent traffic.
Charles Gillespie: Our growth in NDCs is driven by our continuously improving ability to capture high intent traffic and leverage our proprietary technology and data science systems to monetize this traffic through our expanding portfolio of websites. We are very pleased to have officially launched Casinos.com on 17 July. As a new powerhouse brand, our long-term vision for Casinos.com is for it to be the category-defining destination for the regulated global casino market. We expect to accomplish in years with Casinos.com what we accomplished in a decade with Gambling.com. I'll have a bit more to say on Casinos.com at the end of the call. On an operational level, we remain focused on optimizing the positioning of our websites and leveraging our BI capabilities to widen the execution gap that we have created versus our peers.
Speaker 3: and leverage our proprietary technology and data science systems to monetize this traffic through our expanding portfolio of websites.
Speaker 3: We're very pleased to officially launch Casinos.com on July 17th.
Speaker 3: As a new powerhouse, brands, our long-term vision for Casinos.com is for it to be the category defining destination for the regulated global casino market. We expect to accomplish in years with Casinos.com what we accomplished in a decade with gambling.com.
Speaker 3: And I'll have a bit more to say on casinos.com at the end of the call. On an operational level, we remain focused on optimizing the positioning of our websites and leveraging our BI capabilities to widen the execution gap that we have created versus our peers. We will continue to prudently invest
Charles Gillespie: We will continue to prudently invest to improve the performance of our websites and our media partnerships to maintain industry-leading organic growth rates. Finally, the BonusFinder acquisition has consistently outperformed our expectations since we acquired the business in early 2022. In order to accelerate the realization of all potential synergies from this successful acquisition, we negotiated and agreed to a final deferred compensation arrangement in a fixed amount of EUR 18 million in exchange for the early termination of the earn-out period. With that, I will hand the call over to our CFO, Elias Mark, for a more detailed review of Q2 results and our increased guidance.
Speaker 3: to improve the performance of our websites and our media partnerships to maintain industry-leading, organic growth rates. Finally, the bonus finder acquisition has consistently outperformed our expectations since we acquired the business in early 2022.
Speaker 3: in order to accelerate the realization of all potential synergies from this successful acquisition.
Speaker 3: We negotiated and agreed to a final deferred compensation arrangement in a fixed amount of 18 million euros in exchange for the early termination of the earnout period.
Speaker 3: With that, I will hand the call over to our CFO , Alias Mark, for a more detailed review of second quarter results and our increased guidance.
Elias Mark: Thank you, Charles. Welcome everyone. As Charles mentioned, we generated another quarter of record financial results. Revenue increased 63% to EUR 26 million compared to the prior year, or 60% in constant currency. The increase in revenue was driven by strong growth in NDCs in North America, the UK and Ireland, and the rest of the world. New depositing customers in the quarter grew 60% to more than 91,000. As Charles stated, Q2 results would have exceeded consensus expectations, even without the tailwinds from unseasonably strong NDC generation in US sports. We expect to deliver a strong Q3 in line with market expectations, despite not modeling the benefit of the seasonally aided typical outperformance from the Q2 to carry over into the Q3.
Speaker 4: Thank you, Charles, and welcome everyone.
Speaker 4: As Charles mentioned, we generated another quarter of record financial results.
Speaker 4: Revenue increased 63% to 26 million compared to a prior year or 60% in constant currency. The increase in revenue was driven by strong growth in NDC in North America, the UK and Ireland, and the rest of the world. New deposit and customers in quarter grew 60% to more than 91,000. As Charles Bated, second quarter results would have exceeded consensus expectations even without the tailwinds from the seasonally strong NDC generation in US sports. We expect to deliver a strong third quarter in line with market expectations, despite not modeling the benefit of the seasonally-aided typical power performance from the second quarter to carry over into the third quarter. The increase was primarily driven by additional headcounts across our market. The market theme product sales, technology and finance functions.
Elias Mark: Cost of sales during Q2 from our media partnerships and the subscription business of RotoWire.com amounted to EUR 0.9 million, versus EUR 0.5 million in Q2 of 2022. Total operating expenses were EUR 24.3 million, an increase of EUR 6.7 million. Total operating expenses included EUR 6.1 million of fair value movements in contingent consideration related to the BonusFinder acquisition. Adjusted for fair value movements, adjusted operating expenses were EUR 18.3 million, an increase of 23%. The increase was primarily driven by additional headcount across our marketing, product, sales, technology, and finance functions. Amortization expense decreased to EUR 0.4 million as short-lived assets from the RotoWire and BonusFinder acquisitions are now fully amortized. For the full year 2023, we expect to incur amortization of approximately EUR 1.9 million.
Speaker 4: A motivation expands decreased to 0.4 million at short-lived assets from the road to wire and bonus finder acquisitions are now fully amorticized. For the full year 2023, we expect to incur a motivation of approximately 1.9 million. We continue to hire selectively to drive continued organic growth. At the same time, we expect operating leverage from revenue growth for the full year to outpace growth in operating expenses. And we expect to continue generating substantial free cash flow as our business model enables.
Elias Mark: We continue to hire selectively to drive continued organic growth. At the same time, we expect operating leverage from revenue growth for the full year to outpace growth in operating expenses. We expect to continue generating substantial free cash flow as our business model enables strong free cash flow conversion, which was approximately 90% of adjusted EBITDA in Q2. Net income totaled EUR 0.3 million or EUR 0.01 per diluted share. Adjusted for fair value movements in contingents and deferred consideration, adjusted net income in the quarter was EUR 6.5 million, and adjusted earnings per share was EUR 0.17 per diluted share. As a result of the early termination of the BonusFinder earn-out, there will be no related fair value movements in future periods. We generated Q2 adjusted EBITDA of EUR 9.4 million, compared to EUR 3.6 million in Q2 of last year.
Speaker 4: strong free cash flow conversion, which was approximately 90% of adjusted EBITDA in the second quarter. Net income total of 0.3 million or 1 cent per diluted share.
Adjusted for far-value movements in contingents and the third consideration. Adjust the net income in quarter, what 6.5 million. And adjusted earnings per share, what 17 cents per limited share.
As a result of the early termination of the bonus fund or ARDA, there will be no related per-value movement in future periods.
We generated second quarter adjust the divita of 9.4 million compared to 3.6 million in Q2 of last year.
Elias Mark: This 161% growth represents the leverage we gain as our top-line growth outpaces spending growth. adjusted EBITDA margin was 36% compared to 23% in Q2 2022. Total cash generated from operations of EUR 4.6 million increased from EUR 3.4 million in Q2 2022, driven by the strong year-over-year revenue growth, partly offset by the earn-out payment for the BonusFinder acquisition. We generated Q2 free cash flow of EUR 8.5 million, we continue to be positioned to entirely fund our organic growth initiatives from operating cash flow while continuing to generate positive free cash flow. Cash as of 30 June 2023 was EUR 31.3 million, a EUR 2.3 million quarterly sequential decline, primarily reflecting the earn-out payment for BonusFinder's 2022 performance. Turning to outlook.
This 161% growth represents the leverage we gain as our top-line growth outpaces sending growth.
Just to leave it a margin was 36% compared to 23% in the second quarter of 2022.
Total cash generated from operations of 4.6 million increased from 3.4 million in Q2 2022 driven by the strong year over year revenue growth partly offset by the on-out payment for the bonus binder acquisition.
We generate the second quarter free cash bill or 8.5 million. And we continue to be positioned to entirely fund our organic growth initiatives from operating cash flow while continuing to generate positive free cash flow.
Cash of June 30th, 2023 was 31.3 million.
2.3 million quarterly sequential decline, primarily reflecting the on-unpayment for bonus funders 2022 performance.
Elias Mark: We expect to see typical seasonality in Q3, reflecting the lighter sports calendar in July and August, followed by the launch of the autumn sports season in September on both sides of the Atlantic. This includes the start of NFL and college football, as well as the commencement of European football leagues. Our strong Q2 results underscores the fact that demand for performance marketing services in the online gambling industry remains strong, and our unique offerings are even more valuable to operators as they progress towards delivering profitability. As of now, we have not seen any signs of pullback from consumers. Given these factors and our strong Q2 performance, we're increasing our 2023 full-year revenue and adjusted EBITDA guidance.
turning to Outlet.
We expect the typical seasonality in the third quarter reflecting the lighter sports calendar in July and August .
followed by the launch of the autumn sports season in September on both sides of the Atlantic.
It includes the start of NFL and college football, as well as the commencement of European football leagues.
Our strong second quarter results underscores the fact that the month of performance marketing services in the Alhmanganning industry remains strong and are unique offering even more valuable to operators as they progress towards delivering profitability.
We continue to monitor consumer behavior closely. And Apple now, we have not seen any time of full-back phone consumers.
Given these factors and our strong Q2 performance, we're increasing our 2023 full year revenues and adjusted with that item.
Elias Mark: The new ranges are for revenue expected in the range of EUR 100 to 104 million, compared to the prior range of EUR 95 to 99 million. The new range represents year-over-year revenue growth of 31% to 36%. We now expect adjusted EBITDA to be between EUR 36 and 40 million, compared to our earlier expectation of EUR 33 to 37 million, with the new range representing year-over-year growth of 49% to 66%. Assuming the midpoints of our revenue and adjusted EBITDA ranges implies a full-year adjusted EBITDA margin of 37%. Our updated 2023 guidance assumes that Kentucky will launch on 28 September 2023. Beyond Kentucky, our guidance assumes no benefit from additional market launches or acquisitions over the balance of 2023. Our guidance for 2023 now assumes a EUR to USD exchange rate of 1.095. We repurchased 77,683 shares at an average price of $9.83 in Q2.
and new ranges are for.
Revenue expected in the range of 100 to 104 million compared to the prior range of 95 to 99 million.
The new range.
Rep. 0 year revenue goes up 31 to 36%.
We now expect adjusted EBITDA to be between 36 and 40 million compared to our earlier expectation of 33 to 37 million, with a new range representing year-over-year growth of 49 to 66%.
Assuming the midpoints of our revenue and adjusted EBITDA ranges.
implies a full year adjusted dividend margin of 37%.
Our updated 2023 guidance assumes that Temprati will launch on September 28.
Beyond Syntarchy, our guidance assumes no benefit from additional market launches or acquisitions over the balance of 2023.
All guidance for 2023 now assumes the EUR to USD exchange rate of 1.095.
We repartured $77,683 at an average price of $9.83 in the second quarter.
Elias Mark: We continue to have $8.9 million remaining on our $10 million authorization, and we'll continue to opportunistically repurchase shares when we believe it represents the best use of capital, is in shareholders' best interest, and we are able to be in the market. Finally, following the successful follow-on offering of $4.9 million secondary shares by certain pre-IPO shareholders, which of course, did not increase the shares outstanding, but did increase the free float. We are pleased to have an expanded shareholder base and improved daily trading liquidity. With that, I will turn the call back to Charles.
We continue to have 8.9 million remaining on our 10 million authorizations and will continue to opportunistically repurchase shares when we believe the represents the best use of capital is in general the best interest and we are able to be in the market.
And finally, following the successful follow-on offering of 4.9 million secondary shares by certain pre-IPO shareholders, which of course did not increase the share of standing but did increase the free close. We are pleased to have an extended shareholder base.
and improved daily trading liquidity. With that, I will turn the call back to Josh.
Charles Gillespie: Thank you, Elias. Before opening up the call for your questions, I'd like to review in a bit more detail several of our current growth drivers. Our operating model is expected to continue to drive strong performance with attractive adjusted EBITDA margins and strong free cash flow as we execute on our many growth opportunities. These include continued organic market share growth in North America and the benefit from new states that will come online, such as Kentucky in September, and our home state of North Carolina, where online sports betting was recently approved. We expect NC to go live in 2024, but do not have any specifics at this time. While North America already represents our largest reporting market, 43 states have yet to regulate iCasino, and 21 states have yet to regulate online sports betting.
Thank you, Elias. Before opening up the call for your questions, I'd like to review in a bit more detail several of our current growth drivers.
Our operating model is expected to continue to drive strong performance with attractive adjusted even though margins and strong free cash flow as we execute on our many growth opportunities. These include continued organic market share growth in North America and the benefit from new state that will come online such as Kentucky in September .
at our home state of North Carolina, where online sports betting was recently approved.
We expect NC to go live in 2024, but do not have any specifics at this time. While North America already represents our largest reporting market, 40-30 states have yet to regulate Icasino and 21 states have yet to regulate online sports betting.
Charles Gillespie: While expansion of regulated online gambling in the US still grabs the most headlines and the majority of investors' attention, the opportunity for sizable new regulated markets outside of North America and Europe is compelling and remains underappreciated. For example, Brazil has issued a provisional measure to regulate sports betting and is nearly at the finish line for complete regulation. We expect Brazil to be a major global sports betting market if the regulations are finalized 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 there break through. We also have a significant longer-term opportunity from last month's launch of Casinos.com.
While expansion of regulated online gambling in the US still grabs the most headlines and the majority of investors' attention, the opportunity for sizable new regulated markets outside of North America and Europe is compelling and remains underappreciated. For example, Brazil has issued a provisional measure to regulate...
market if the regulations are finalized 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 there break through.
We also have a significant longer term opportunity from last month's launch of Casinos.com. With more experience buying and selling these superstar gambling domain names than anyone in the world, I consider Casinos.com to be the single most desirable domain name in the industry for a performance marketing company such as ours.
Charles Gillespie: With more experience buying and selling these superstar gambling domain names than anyone in the world, I consider Casinos.com to be the single most desirable domain name in the industry for a performance marketing company such as ours. We will continue to develop Casinos.com with our well-honed playbook of best-in-class content and precision digital marketing. We remain highly confident that Casinos.com can be established alongside Gambling.com as another powerhouse international flagship brand. Today, Casinos.com is designed for high-intent iCasino players. In time, we expect to develop the brand into a best-in-class recommendation engine for everything casino related. I remain very excited about the significant potential of our relatively new media partnership initiatives.
We will continue to develop Casinos.com with our well-honed playbook of best-in-class content and precision digital marketing. We remain highly confident that Casinos.com can be established alongside gambling.com as another powerhouse international flagship brand. Today, Casinos.com is designed for high intent eye casino players.
Charles Gillespie: As previously discussed, we have partnered with two of the largest newspaper organizations in North America, recently announced our first international partnership with The Independent, one of the UK's largest digital media publishers, with a reach of nearly 21 million unique monthly users. Our UK websites have been delivering NDCs at record levels, we see this new partnership with The Independent as a great way to further that performance in what remains the world's largest single regulated online gambling market. At present, we are very focused on being ready for the launch of the fall sports season in the US, I am most excited about ramping up our flagship media partner asset, the USA Today website. Our continued strong growth in the UK and Ireland is an often-overlooked dynamic of our business.
excited about the significant potential of our relatively new media partnership initiatives. As previously discussed, we have partnered with two of the largest newspaper organizations in North America and recently announced our first international partnership with the Independent, one of the UK's largest digital media publishers.
with a reach of nearly 21 million unique monthly users. Our UK websites have been delivering NDCs at record levels, and we can see this new partnership with the independent and the great way to further that performance in what remains the world's largest single regulated online gambling market.
At present, we are very focused on being ready for the launch of the fall sports season in the US. And I am most excited about ramping up our flagship media partner asset, the USA Today website.
Our continued strong growth in the UK and Ireland is an often overlooked dynamic of our business.
Charles Gillespie: An important part of our growth in established markets is due to the simple fact that as these markets mature, end users of online gambling services become more sophisticated, picky, and promiscuous, resulting in increasing amounts of demand for new online gambling accounts. In parallel, performance marketing partners become increasingly critical to operators and their ability to attract new players. For example, while we estimate that 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%. We are confident that over time, the North American market will mirror the same dynamics that exist in the more mature European markets.
An important part of our growth in established markets is due to the simple fact that these markets, that as these markets mature end users of online gambling services become more sophisticated, picky, and promiscuous, resulting in increasing amounts of new demand for new online gambling accounts. In parallel,
performance marketing partners become increasingly critical to operators and their ability to attract new players. For example, while we estimate that NBC's referred through performance marketing channels account for less than 10% of US operators is customer databases in the UK that percentage is 20 to 40%
We are confident that over time North American market will mirror the same dynamics that exists in the more mature European markets.
Charles Gillespie: Hopefully, this review of our many growth drivers provides you with more perspective on why I started the call today, noting that our phenomenal Q2 results are just the start of what we expect Gambling.com Group can ultimately achieve. We have never been more excited for our near and long-term prospects, and look forward to continuing to review our successes with you. I will end by once again thanking the brilliant team at Gambling.com Group for their exemplary efforts in delivering yet another record quarter. Before we open up the call for questions, please note that management will be presenting at the following conferences in New York in September. The Citi Global Technology Conference on 6 and 7 September, the BTIG GameDay Conference on 13 September, and the B. Riley Consumer Conference on 14 September. With that, we'd be happy to open up the line for questions.
Hopefully this review of our many drivers provides you with more perspective on why I started the call today noting that our phenomenal second quarter results are just the start of what we expect, Family.com Group can ultimately achieve. We have never been more excited for our near and long-term prospects.
and look forward to continuing to review our successes with you. I will end by once again thinking the brilliant team at gamely.com group for their exemplary efforts and delivering yet another record quarter.
Before we open up the call for questions, please note that management will be presenting at the following conferences in New York in September . The City Bank Global Technology Conference on September 6th and 7th, the VTIG game day conference on September 13th, and the B. Riley Consumer Conference on September .
Charles Gillespie: Over to Sherry, the operator.
14. With that, we'd be happy to open up the line for questions.
With that, we'd be happy to open up the line for questions over to Sherry the operator. Please vote for Curtis or
Operator 2: Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For a participant using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit to one question and one follow-up question. One moment while we poll for questions. Our first question is from David Bain with B. Riley Securities. Please proceed.
Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue, and for a participant choosing speaker equipment, it may be necessary to pick up your handset before pressing the start.
David Bain: Awesome. Thank you, and congratulations on the Q2 results. First, I guess, Elias, you touched on seasonality a little bit, but can you remind us in a typical year, extracting state expansions or big website launch or whatever, on a per quarter basis, how do you seasonally weight, or what do you see typically?
The first question is from David Bain with Be Ryleigh Securities. Please proceed.
Awesome, thank you and congratulations on the two key results. First I guess, Ellie, you touched on seasonality a little bit, but can you remind us in a typical year extracting state expansions or big website launch or whatever? On a per quarter basis, how do you...
Elias Mark: Yeah. If Q1 and Q4 are always the seasonally strongest. In a normal year, Q2 and Q3 should be of roughly similar size. This quarter, as we touched upon, we saw outperformance in US sports, which is seasonally untypical. If you look towards Q3, we believe that Street consensus expectations are reasonable, and the balance within our full-year guidance would fall into Q4.
seasonally weight or what do you see typically? Yeah, so if the first quarter and the fourth quarter are always the seasonally strongest, in a normal year, the second quarter and the third quarter should be of roughly similar.
It's not only uncivil. So if you look towards the third quarter, we believe that three consensus expectations are reasonable and the balance.
David Bain: Okay. Have the amounts paid for either online sports or iCasino at NDC been changing at all? Have the preferences by books for either CPA or hybrid or recur, has that moved at all? Can you mostly, at your scale, create that mix on your own?
within our full year guidance, what we're holding to keep for. Okay, and then have the amounts paid for either online sports or I can see you know, at NDC's been changing at all and have the preferences by books for.
either CPA or hybrid or recur. Has that moved at all, or can you mostly, you know, your scale kind of create that mix on your own?
Charles Gillespie: Hey, David. Very broadly speaking, I'd say rates are roughly stable. There's been no meaningful increase or decrease. We've been at scale in most of our main markets for some time now. There's increasingly the capability from US operators to do more than pure CPA deals. That gives us simply more options than we had in the past. I think we'll gravitate somewhat in that direction. We have very strong views on those three models, and that is that any one of them can be the best. It all depends on the details. Which operator, which market, which product? Are they good at retaining the customers? What's the confidence in the counterparty that they're going to remain in business, et cetera? There's a lot of things that go into these, especially the estimates of player lifetime value over time.
Hey David.
Very broadly speaking, I'd say rates are roughly stable. There's been no meaningful increase or decrease. We've been kind of at scale and most of our main markets for some time now. There's increasing the capability from US operators to do more than pure CTA deals.
So that gives us simply more options than we had in the past. So I think we'll gravitate somewhat in that direction. But, you know, we have very strong views on those three models. And that is that any one of them can be the best. It all depends on the details, which operator, which product.
Are they good at retaining the customers? What's the competence and the counterparty that they're going to remain in business, etc.? There's a lot of things that go into these, especially the estimates of player lifetime value over time. So, you can arrive at...
Charles Gillespie: You can arrive at a conclusion which says that that's a great idea or a conclusion which says you should take the CPA. We do the math, and we pick the one which is, in our view, going to put the most money in the company's pocket.
at a conclusion which says that that's a great idea or a conclusion which says you should take the CPA. And you know we do the math and we pick the one which is in our view going to put the most money in the company's pocket.
Operator 2: Our next question is from Jeff Stantial with Stifel. Please proceed.
Our next question is from Jeff Stantel with Steve Folle, please proceed.
Jeff Stantial: Great. Thanks. Good morning, guys. Nice quarter. Starting off here on the North America market, there's been a good deal of news flow these last couple of months, the most recent one being the partnership announced between PENN and ESPN. Just curious how you see the level of competition between the various operators trending as we head into NFL season and into 2024, and sort of what are the immediate P&L implications for the affiliate model?
Great, thanks. Good morning guys, next quarter.
Starting off here on the North America market, there's been a good deal of news flow. These last couple months, the most recent one being the partnership announced between Pan and ESPN. Just curious how you see the level of competition between the various operators trending as we kind of head into NFL season into 2024 and sort of what are the immediate P&L implications for the affiliate model.
On the North America market, there's been a good deal of news flow these last couple months, the most recent one being the partnership announced between Pan and ESPN. Just curious how you see the level of competition between the various operators trending, as we kind of had in TANFL season into 2024 and sort of what are the immediate P&L implications for the affiliate model? Yeah.
Charles Gillespie: Yeah. I think, look, it's a huge deal, right. Everybody's been waiting on ESPN to do something since 2018, finally they have. I think in general, it's really positive because it's the worldwide leader. It's the biggest name in sports in the United States. Now that they've done something, it kind of further destigmatizes the industry. The stigma had already more or less totally washed off, this is another very meaningful step in the right direction for the industry going fully mainstream. ESPN with PENN, they're going to have to spend a lot of money acquiring customers, as any new operator would, especially an operator that's set such high expectations for themselves. Clearly this means more demand for affiliate services. The implications with Barstool are also pretty fascinating. They have essentially come off of the map.
I think, look, I mean, it's a huge deal, right? Everybody's been waiting on ESPN to do something since 2018, and finally they have. I think in general it's really positive because it's the worldwide leader, it's the biggest name in sports in the United States. So now that they've done something, it kind of further destigmatizes the industry. The stigma had already more or less totally washed off, but this is another.
very meaningful step in the right direction for the industry kind of going fully mainstream.
ESPN with Penn, you know, they're gonna have to spend a lot of money acquiring customers at any new operator would, especially an operator that's set such high expectations for themselves. So clearly this means more demand for affiliate services. The implications of the bar stool are also...
Charles Gillespie: They're not supposed to take any revenue in from gambling companies, so they're not going to be competition. We see it as pretty universally positive and exciting.
pretty fascinating, but they have essentially kind of come off of the map. You know, they're not supposed to take any revenue in from...
So they're not really, they're not going to be competition.
So we see it as pretty universally positive and exciting.
Jeff Stantial: Great. That's really helpful. Thanks, Charles. Moving to the guidance, looks like the midpoint of full-year EBITDA guidance assumes a slight step-down H2, H1. Just to be clear, is that mostly reflecting some of the state launches in Q1, Ohio and Massachusetts specifically? Is this more seasonality driven? A bit of both? Elias, can you just help us understand how much Kentucky is contributing to the revenue and the EBITDA guidance raise that you announced? Thanks.
Great, that's really helpful. Thanks Charles. And then moving to the guidance, looks like the midpoint of full year EBITDA guidance assumes a slight step down second half, first half. Just to be clear, is that mostly reflecting some of the state launches in Q1, Ohio and Massachusetts specifically? Is this more seasonality driven?
Elias Mark: It's a combination of two things. As you mentioned, in Q1, we had two major launches. The second component is the unseasonably atypical outperformance that we saw in US sports in Q2. The raising of our guidance is partly on the back of that outperformance that we saw in Q2, and partly on the back of the Kentucky launch. If we are to quantify the outperformance that we saw, that was outside of our normal expectations, that's roughly EUR 2.5 million in Q2.
Thanks. Yes, it's a combination of two things. As you mentioned, in Q1 we had two major launches. And the second component is the unseasonably untypical outperformance that we saw in US sports in the second quarter.
The raising of our guidance is partly on the back of that performance that we saw in Q2 and partly on the back of the Kentucky launch. And if we are to quantify the outperformance that we saw, that was
How outside of our normal expectations that's roughly 2.5 million in the second quarter. And Kentucky's gonna launch, you know, at the very end of September . So virtually all the benefits from Kentucky will fall into queue four. Our next question is from Barry Jonas with Truese Securities. Please proceed.
Charles Gillespie: Kentucky's going to launch at the very end of September, so virtually all the benefit from Kentucky will fall into Q4.
Operator 2: Our next question is from Barry Jonas with Truist Securities. Please proceed.
Barry Jonas: Hey, guys. Ohio just raised its gaming tax. Curious if that has had any indirect effect on you guys so far, or if you would expect anything there? Thanks.
Hey guys, Ohio just raised its gaming tax. Curses that have had any indirect effect on you guys so far or if you would expect anything there. Thanks. It's definitely not helpful, obviously, what?
Charles Gillespie: It's definitely not helpful. Obviously, when the states raise the tax rates, it directly impacts the operators and essentially how much a player is worth to them. It doesn't get directly passed on to us, but it's not a helpful dynamic either. At the same time, our rates and relationships and everything else in Ohio remain extremely healthy. It's not having any sort of material impact.
when the states raise the tax rates it directly impacts the operators and essentially how much a player is worth to them. That doesn't get directly passed on to us but it's not a helpful dynamic either.
At the same time, our rates and relationships and everything else in Ohio remain extremely healthy.
It's not having any sort of material impact.
Barry Jonas: Great. That's helpful. I guess just a high-level question on the M&A environment. Just curious how you'd characterize the pipeline here and your appetite at the moment.
Great, that's helpful. And then I guess just sort of a high level question on the M&A environment. Just curious how you characterize the pipeline here and your appetite at the moment.
Charles Gillespie: Pipeline is very good. We've got lots of conversations happening at the moment. There's been a few new things which have entered the scope of what we are considering. As ever, really busy, spending a lot of time on it, doing a lot of work. I'd be hopeful that we'll be able to announce something, not imminently, but assuming these conversations go well over the next six, nine months. We obviously have the balance sheet to do something, and that's the purpose of our cash, is to enable us to take on the right M&A opportunity when the stars line up. As ever, we are super picky. We're not going to do a deal just to do a deal. We'll walk away from a great deal for a number of reasons. We can grow this business without M&A, as we are demonstrating every single quarter.
Pipeline is very good.
We got
Lots of conversations happening at the moment.
There's been a few new things, which have entered the scope of what we are considering. So as ever, really busy, spending a lot of time on it, doing a lot of work. And.
I'd be hopeful that it will be able to announce something.
you know, not imminently, but assuming these conversations go well over the next...
You know.
69 months. We obviously have the balance sheet to do something and that's...
That's the purpose of our cash is to enable us to take on the right M&A opportunity when
when the stars line up. But, you know, I'd never, we are super picky. We're not gonna do a deal just to do a deal. We'll walk away from any, you know, a great deal for a number of reasons. You know, we can grow this business without MNA as we are demonstrating every single quarter. So, for us to pull the trigger, it's gotta really pass all the tests.
Charles Gillespie: For us to pull the trigger, it's got to really pass all the tests.
Barry Jonas: Great. Thanks for that, and nice quarter.
Operator 2: Our next question is from Ryan Sigdahl with Craig-Hallum Capital Group. Please proceed.
Great, thanks for that, a nice quarter.
Great, thanks for that, nice quarter. Our next question.
Ryan Sigdahl: Hey, Charles, Elias, Pete. Nice job, guys. Curious how the media pipeline looks like internationally. You have The Independent, but as you look at whether it's the top 10 or whatever the right number is, but what type of opportunities are there?
is from Ryan Seidl with Craig Hallam Capital Group. Please proceed. Hey Charles, Elias, Pete. Nice job guys. I'm curious how the media pipeline looks like internationally. You have the independent, but as you look at whether it's the top 10 or whatever the right number is, but what type of opportunity is there there?
Charles Gillespie: I think there's a lot of opportunities there. Obviously, there's a lot of markets around the world that have regulated online gambling. If you think about the US, we're in a good place, right? We've done two of the biggest media partnerships that have ever been done in the US, so we're not really looking for a third. In the UK, we're now in a very good place. To the extent we did anything else, it would probably be in a third market. At the same time, having announced so many important media partnerships, we are now very focused on simply delivering for our partners. There's really no rush to do another one, and the internal teams are very focused on simply executing on the partnerships we've got.
I think there's a lot of opportunities there. I mean, obviously there's a lot of markets around the world that have regulated all that gambling. If you think about the US, we're in a good place, right? We've done two of the biggest movie partnerships that have ever been done in the US. So we're not really looking for a third.
In the UK, we're now in a very good place. So to the extent we did anything else, it would probably be in a third market. But at the same time, having announced so many important media partnerships, we are now very, very focused on simply delivering for our partners. So there's really
no rush to do another one and Internal teams are very focused on simply executing on the partnerships we've got.
Ryan Sigdahl: You mentioned Kentucky, North Carolina, but Vermont, Maine also coming here. You have the BetState domains in both of those states. Curious, are those included in guidance, and how you think about those, albeit relatively smaller market opportunities?
And then you mentioned Kentucky, North Carolina, but Vermont, Maine also coming here you have the best state domains in both of those states. Curious are those included in guidance and how you think about those albeit you know relatively smaller market opportunities? So our view is that we
Charles Gillespie: Our view is that we talk about and we enter these states where we think there'll be a viable market where there's multiple operators, reasonable taxes, et cetera. At this point, we don't think those states will have any meaningful impact on our North American business. If that changes in the future, we'll talk about it some more.
You know we talked about and we we we enter these states where we think there will be a viable market You know where there's multiple operators reasonable taxes, etc At this point we don't think those states will have any meaningful impact on our North American business
Ryan Sigdahl: Great. Thanks, guys. Good luck.
And if that changes in the future, we'll talk about it some more. Great. Thanks, guys. Good luck.
Operator 2: Our next question is from Clark Lampen with BTIG. Please proceed.
Our next question is from Clark Lampant with BTIJ, please proceed. Thanks, Morning. I wanted to start with the North American eye gaming commentary that was in the presentation deck. It sounds like performance has been improving and you guys are capturing some share. Could you share a little bit more around what sort of driving that strength and how you're thinking about momentum?
Clark Lampen: Thanks. Morning. I wanted to start with the North American iGaming commentary that was in the presentation deck. It sounds like performance has been improving and you guys are capturing some share. Could you share a little bit more around what's sort of driving that strength and how you're thinking about momentum for that business in the back half of the year?
Charles Gillespie: Sure. Yeah, in our heart of hearts, we're casino people. We like to pursue the online casino performance marketing business before the sports betting performance marketing business. Of course, in the US, you've had many more states regulate sports betting than casino. Somewhat kind of ironically for us, when we broke through in the US, we broke through with sports betting. We created a very nice sports betting business for ourselves before casino really gained momentum. Finally, this year, both in Q1 and Q2, we've kind of broken through on the casino side. That's really New Jersey, Pennsylvania, and Michigan. What's changed is we've simply been able to capture this high-intent traffic better than we did in prior quarters. That means better search rankings, better conversion rates, better engagement, more inventory, if you will, to sell to the operators.
Clark Lampen: I guess as we think about sort of the drivers of improved guidance over the balance of the year, Charles, in your prepared remarks, you sort of talked about share and media partnerships as important sort of contributors alongside new launches. Can you help us think about maybe what's sort of embedded or contemplated for the back half from a directional standpoint, maybe as it pertains to share and operator spend? Is it expected to be stable, increasing? Any color there you could provide would be useful.
Charles Gillespie: I think it's fair to say that the overall proportion of revenue that is coming from media partnerships, we would expect to increase H2. We're at this kind of funny point in the year now where you're pretty close to football season, football season hasn't started. You've done all this work to prepare for football season, you think it's going to work. You don't have any concerns about anything, it's not done until it's done. We kind of joke that this is the point of maximum uncertainty as you've done all this work, that's really true of media partnerships. We've done a lot of work with USA Today and the rest of the Gannett properties and, of course, our valued partners at McClatchy. We think we're in a really great position for the start of NFL.
Charles Gillespie: We'll only rest once we've seen the numbers come through.
Clark Lampen: Thank you.
Operator 2: Our next question is from David Katz with Jefferies. Please proceed.
David Katz: Hi. Morning, everyone. Congrats on the quarter. What I'm wondering about is, as we look at the US and the growth in sports betting here, what have we learned so far about how that correlates with your specific growth in the US, right? Is there a calculus that we can understand a little bit better and track as we see that grow and how that ties into you?
Charles Gillespie: I think if you're going to try to draw some lines between us and the operators, it'd be far easier to do it on the revenue side, of course. There's a lot of things that affect each individual operator's profitability, which have nothing to do with us. Broadly speaking, if the operators are doing well and growing, I think you should expect the affiliates from at least a revenue perspective, to be doing well and growing as well. Generally speaking, long term, we expect to kind of outpace the operators. We expect the affiliate proportion of the overall sales and marketing expense from the operators to increase over time. Therefore, if the overall online gambling market in North America is growing at X, we'd expect our essentially North American TAM to be growing at something faster than X.
David Katz: Right. X plus. Got it.
Charles Gillespie: X plus.
David Katz: My other question is when we look at the population of players, and again, I'm a bit more US-focused, and we think about the mix of operators out there, conventional wisdom for any business would suggest that the smaller players are smaller scale, and you get to charge them more, whereas the bigger players tend to bring scale and get more of an efficiency discount. Is that the case with you, and is that something we should be thinking about given the sort of ins and outs that we've discussed today over the recent past?
Charles Gillespie: It is, and that's fair. It is our experience that if you bucket the operators off into kind of tier 1, tier 2, and tier 3 based on market share, it's the tier 2 and tier 3 operators which are most keen to work with us. They're the ones that are willing to invest not only the money, but the time to put campaigns together that perform, that have high conversion rates. They've got more incentive to make the affiliate channel work than the big guys who are already market leaders.
David Katz: Got it. The best outcome is a mix of operators and a distribution.
Charles Gillespie: Definitely. We're not really seeing this at the moment in North America, but you've had a couple of new operators enter the fray. You've got Fanatics coming, you got ESPN Bet coming. It is our view that there will be many more operators that enter the fray in the US, especially as more states regulate casino. On the casino side, it's not so difficult to set up an online casino. You need a brand, a bit of software, and customer service. It doesn't have to be this enormously expensive capital expenditure exercise. We've seen for years operators in Europe stand up online casino brands without crazy amounts of investment, and very sharp precision digital marketing, and therefore succeed and have nicely profitable businesses.
Charles Gillespie: There will be a point in time in the US market where we finally see this kind of next wave of operators entering, which are bringing more experience on the digital marketing side versus unlimited amounts of capital. They will have reasonable market share and profitable businesses, in our opinion. Again, that's really an online casino kind of opportunity more so than sports betting. Sports betting, of course, lower margin and kind of more expensive to run properly. We are, of course, still of the opinion that we will get many more online casino space in the US.
David Katz: Perfect. Thank you very much.
Operator 2: Our final question is from Chad Beynon with Macquarie. Please proceed.
Chad Beynon: Hi. Good morning. Nice quarter. Thanks for taking my question, Charles, Elias, and Pete. Wanted to ask first just on the GBP 18 million termination fee that you talked about, and I believe also you might have the final payment for RotoWire. As we think about some of these cash outflows, how does this kind of shape how you guys are thinking about share repurchases, leverage, anything else on the capital allocation? Thanks.
Elias Mark: With the early termination of the BonusFinder owner, that uncertainty of future cash outflow from investing activities has been replaced with a certainty. What will be paid is EUR 18 million of final consideration, of which EUR 5 million was paid in July. There is a further EUR 13 million that will be payable at the end of April next year, and we are able to settle up to 50% of that in ordinary shares. That kind of gives you certainty on the cash outflow side. We continue to generate very strong free cash flow. We have over EUR 30 million in the bank. There is excess capitalization that can be used for either M&A or share repurchases. We remain opportunistic and pragmatic about both, and we'll carefully consider capital allocation depending on the M&A pipeline and other things.
Chad Beynon: Okay. Thank you. Just as we're now in kind of the post-white paper world in the UK, you continued to show very strong growth. I think most of your partners over there had already adjusted their websites and kind of all the affordability checks ahead of this, so it doesn't seem like there was a major change. You obviously talked about gaining market share as a goal, as the market growth has slowed. Can you talk about anything else that you're seeing kind of near term in the market post-white paper, maybe with some of these tier 2, tier 3 operators? At what point will the UK, Ireland growth start to look more, I don't know, more normal instead of kind of hypergrowth that you're publishing? Thank you.
Elias Mark: I can take that one. I think you're right in that the operators in the UK have adjusted their processes and procedures. It's very much business as usual, and any negative impact had been priced in pre-issuance of the white paper. You're right that we've been driving outsized growth in the UK and Ireland in the past six quarters now. That pace can't continue forever as we're entering into harder comps in Q3 and particularly Q4. We do expect that growth rate to slow down, but we expect the strength and the momentum in the UK and Ireland business to continue.
Charles Gillespie: The media partnership with The Independent will be a big part of how we continue to drive growth in the UK.
Chad Beynon: Thanks, guys. Appreciate it.
Operator 2: We have reached the end of our question and answer session. I would like to turn the conference back over to management for closing comments.
Charles Gillespie: Thank you again to everybody for joining us today. We appreciate your support and interest in Gambling.com Group. We've had a strong start to the year and expect more of the same solid performance for 2023. We look forward to updating everyone again when we report our Q3 results in November, and hopefully, we can see many of you at G2E in early October. Goodbye.
Operator 2: Thank you. This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.
