Q4 2023 Gambling.com Group Limited Earnings Call
Operator: Greetings. Welcome to Gambling.com Group's fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode.
Greetings and welcome to gambling Dotcom group's fourth quarter 2023 earnings conference call. At this time, all participants I don't know listen only mode.
Operator: 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, senior vice president of investor relations. Thank you. You may begin.
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 <unk> Senior Vice President of Investor Relations. Thank you you may begin.
Peter McGough: Good morning and hello everyone, and welcome to Gambling.com Group's fourth quarter and full year 2023 results call. I am Peter McGough, Senior VP of Investor Relations. I am joined by Charles Gillespie, Gambling.com Group's Co-Founder and Chief Executive Officer, and Elias Mark, Chief Financial Officer. This call is being webcast live through the investor relations section of our website at www.gambling.com forward slash corporate forward slash investors, and a 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.
Peter: Good morning, and Hello, everyone and welcome to gambling Dotcoms group.
Peter: Dot com group's fourth quarter and full year 2023 results call I mean, Peter Mclaughlin senior VP of Investor Relations I'm joined by Charles Gillespie gambling Dotcom group's co founder and Chief Executive Officer, and Elliot Snark, Chief Financial Officer.
Peter: This call is being webcast live through the Investor Relations section of our website at gambling dotcom forward slash corporate forward slash investors and a downloadable version of the presentation is available there as well.
Peter: Cast replay will be available on our website. After the conclusion of this call. You may also contact the Investor relations support by Emailing investors at GTC groups Dot Com I would like to remind you that the information contained in this conference call, including any any financial and related guidance to be provided.
Peter McGough: You may also contact investor relations support by emailing investors@gdcgroup.com. I would like to remind you that the information contained in this conference call, including any financial and related guidance to be provided, constitutes forward-looking statements as defined by securities law. 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.
Peter: Some forward looking statements as defined by Securities laws.
Peter: 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 material materially from those expressed in or implied by these statements.
Peter: Important factors that could cause such differences are discussed in the risk factors section of gambling Dot com group's filings with the Securities and Exchange Commission.
Peter McGough: Forward-looking statements speak only as to 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. During the call, there will also be a discussion of non-IFRS financial... The description of these non-IFRS financial measures is included in the press release issued earlier this morning, and reconciliations of these non-IFRS financial measures to the most directly comparable IFRS measures are included in the appendix to the presentation and press release, both of which are available on the Investors tab of our website. I'll now turn the call over to Charles. Thank you, Pete.
Peter: Forward looking statements speak only as to 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.
During the call. There will also be a discussion of non <unk> financial measures and a description of these non <unk> financial measures is included in the press release issued earlier this morning, and reconciliations of these non <unk> financial measures to their most directly comparable <unk> measures are included in the <unk>.
Peter: She was the presentation and press release.
Peter: Some of which are available in the investors tab of our website.
Peter: I'll now turn the call over to Charles.
Charles Gillespie: Thanks Pete.
Charles Gillespie: This time a year ago, I said that we had started 2023 with great momentum and that I was confident we would be able to continue on our gross trajectory. As you can see from the results we reported this morning, our momentum from early 2023 continued at full speed into the end of the year. We reported record fourth-quarter and record full-year 2023 results. While full-year revenue rose 42% year-on-year, revenue in Q4 grew 52% year-on-year. We increased full-year adjusted EBITDA by 53%, and we generated 71% more free cash flow than in 2022, all while continuing to invest in the business to drive growth in 2024 and beyond. Gambling.com Group is a founder-led business with a high-performance culture that operates according to clearly defined values. While our financial performance has been impressive and industry-leading for years, it is our culture of execution that should excite our investors most. When we put our collective shoulder into something, we win.
Charles Gillespie: This time, a year ago, I said that we had started 20 twenty-three with great momentum and that I was confident we would be able to continue on our growth trajectory.
As you can see from the results. We reported this morning, our momentum from early 2023 continued at full speed into the end of the year.
We reported record fourth quarter and record full year 2023 results.
Charles Gillespie: While full year revenue rose, 42% year on year revenue in Q4 grew 52% year on year.
We increased full year adjusted EBITDA by 53% and we generated 71% more free cash flow than in 2022, all while continuing to invest in the business to drive growth in 'twenty 'twenty four and beyond.
Charles Gillespie: Gambling Dot Com group is a founder led business with a high performance culture that operates according to clearly defined values.
Charles Gillespie: While our financial performance has been impressive and industry leading for years. It is our culture of execution, which should excite our investors most.
Charles Gillespie: When we put our collective shoulder into something we win and there are a vast number of opportunities in our industry.
Charles Gillespie: And there are a vast number of opportunities in our industry. We have built one of the largest performance marketing businesses in North America over the past four years, having taken revenue from $7 million in 2021 to over $60 million in 2023. While our two acquisitions in early 2022 helped grow our presence in North America, the vast majority of our revenue in the region is produced by assets we have developed ourselves. Fundamentally, we built it in a capital efficient way instead of buying our way into the market.
Charles Gillespie: We have built one of the largest performance marketing businesses in North America over the past four years, having having taken revenue from $7 million in 2021 to over $60 million in 2023.
Charles Gillespie: While our two acquisitions in early 2022 helps grow our presence in North America.
Charles Gillespie: The vast majority of our revenue in the region is produced by assets. We have developed ourselves fundamentally we built it in a capital efficient way instead of buying our way into the market.
Charles Gillespie: In North America, revenue topped $20 million for the first time in Q4. Ohio, Massachusetts, and Kentucky launched in 2023, and we have previously discussed at length how these new state launches drive revenue growth. Excluding these three launches, our North American business grew more than 30% in 2023. I'm going to say that again to make sure nobody missed it.
Charles Gillespie: In North America revenue topped 20 million for the first time in Q4.
Charles Gillespie: Ohio, Massachusetts in Kentucky launched in 2023, and we have previously discussed at length. How these new state launches drive revenue growth.
Charles Gillespie: Excluding these three launches our north American business grew more than 30% in 2023.
Charles Gillespie: I'm going to say that again to make sure nobody missed at our North American growth in 2020 three was over 30% even when you exclude the contribution from all of the years New state launches.
Charles Gillespie: Our North American growth in 2023 was over 30 percent, even when you exclude the contribution from all of the year's new state launches. This growth is consistent with our previous comments about how online gamblers become more sophisticated as markets bed in after regulation is introduced, and is also consistent with our experience in all of the markets where we have a longer operating history. Total revenue growth in North America in 2023 was driven by three things: the three new state launches, consumers opening more accounts per individual, and our accelerating media partnership initiatives, which ramped faster than initially expected, demonstrating the efficacy of our performance marketing platform to drive new revenue for the owners of leading legacy media brands. We expect continued growth from the North American region in 2024 driven by increases in market share and the addition of online sports betting in our home state of North Carolina, where we are off to a strong start following the market's launch on March 11.
Charles Gillespie: This growth is consistent with our previous comments about how online gamblers become more sophisticated as markets bed in after regulation is introduced and is also consistent with our experience in all of the markets, where we have a longer operating history.
Charles Gillespie: Total revenue growth in North America in 2023 was driven by three things the three new state launches by consumers opening more accounts per individual and our accelerating media partnership initiatives, which ramped faster than initially expected demonstrating the efficacy of our performance marketing platform.
Charles Gillespie: To drive new revenue for the owners of leading legacy media brands.
Charles Gillespie: We expect continued growth from North American region in 'twenty 'twenty, four driven by increases in market share and the addition of online sports betting and our home state of North Carolina, where we are off to a strong start following the market's launch on March 11th.
Charles Gillespie: We expect NC to be one of the strongest sports betting markets in North America. Our co-founder and COO, Kevin McChrystal, and I started the business while at university in Chappalist. For us, the North Carolina launch is just the latest highlight of a journey around the world that started in North Carolina and has now brought us all the way back home.
Charles Gillespie: We expect N C will be one of the strongest sports betting markets in North America.
Charles Gillespie: Our co founder and COO, Kevin Mcchrystal and I started the business while at University in Chapel Hill.
For us the North Carolina launch is just the latest highlight of a journey around the world that started in North Carolina and has now brought us all the way back home.
Charles Gillespie: We are very well positioned with our portfolio of assets, especially betcarolina.com, to lead in driving new customers to online sportsbook operators across the state. Our new state launch playbook is well honed at this stage, and while North Carolina holds a special place in our hearts, it is very much business as usual. Our growth in North America will be complemented by continued growth in our international market. While revenues from the UK and Ireland were down modestly in Q4 compared to the year-ago period, for the full year, these revenues rose 11%, which outpaced the overall market growth.
Charles Gillespie: We are very well positioned with our portfolio of assets, especially with bet Carolina Dot com to lead in driving new customers to online sports book operators across the state.
Charles Gillespie: Our new state launch playbook as well honed at this stage and while N. C holds a special place in our Hearts. It is very much business as usual.
Charles Gillespie: Our growth in North America will be complemented by continued growth in our international markets well.
Charles Gillespie: While revenues from the U K and Ireland were down modestly in Q4 compared to the year ago period for the full year. These revenues rose, 11%, which outpaced the overall market growth.
Charles Gillespie: Even considering the challenging comps we have for the first half of this year, we expect to achieve double-digit revenue growth in the UK and Ireland this year, once again outpacing the expected overall market growth. We also expect to achieve strong growth elsewhere in Europe and international markets, where we have tactically invested in localized products for our leading brands for years. We have been building great consumer-facing products for over a decade, but behind all of the pretty websites is a purpose-built platform where our team translates their culture of execution into real world processes, which gives us a superior Capacity to Deliver with Enhanced Efficiency, Speed, and Quality.
Charles Gillespie: Even considering the challenging comps we have for the first half of this year, we expect to achieve double digit revenue growth in the U K and Ireland. This year once again outpacing the expected overall market growth.
Charles Gillespie: We also expect to achieve strong growth elsewhere in Europe, and international markets, where we have tactically invested in localized products for our leading brands for years.
Charles Gillespie: We had been building great consumer facing products for over a decade, but behind all of the pretty websites is a purpose built platform, where our team translates their culture of execution into real world processes.
Charles Gillespie: Could you give us give us a superior capacity to deliver with enhanced efficiency speed and quality.
Charles Gillespie: I am delighted to announce the addition of some new assets to our portfolio today. We have signed a definitive agreement to acquire complementary assets in a highly accretive transaction which gives us additional scale. With the addition of FreeBets.com and its related European casino assets, we expect to be able to drive additional growth in the UK and Ireland and substantial growth in the rest of Europe. We look forward to welcoming our new team members, who will join us in early April when the transaction closes. We expect the acquisition to be highly accretive to our adjusted EBITDA and free cash flow immediately upon closing.
Speaker Change: I am delighted to announce the addition of some new assets into our portfolio today.
Speaker Change: We have signed a definitive agreement to acquire complementary assets in a highly accretive transaction, which gives us additional scale with the addition of free bets dot com and its related European casino assets, we expect to be able to drive additional growth in the U K and Ireland and substantial growth in the rest of Europe.
Speaker Change: We look forward to welcome our new team members, who will join US in early April when the transaction closes.
Speaker Change: We expect the acquisition to be highly accretive to our adjusted EBITDA and free cash flow immediately upon closing we are confident that over time, we will scale the revenue and cash flow generating capabilities of the acquired assets as we put our operating excellence and technology platform to work just as we have done with their earlier.
Charles Gillespie: We are confident that over time we will scale the revenue and cash flow generating capabilities of the acquired assets as we put our operating excellence and technology platform to work, just as we did with our earlier acquisitions of Bonus Finder and Rotowire. We are excited to hit the ground running on day one following the close at the beginning of April, and we are very confident that this investment will deliver a strong return on investment and create substantial shareholder value. This latest transaction is a perfect example of how we can use acquisitions to further leverage our performance marketing platform. We also continue to evaluate other potential acquisitions for complementary return-focused opportunities that would allow us to bring additional value to both our B2B and B2C customers as well as to our shareholders. On the B2B side, this includes businesses that create marketing and advertising value for our online gambling operator clients, in addition to performance marketing.
Speaker Change: <unk> of bonus finder, and roto wire.
Speaker Change: We are excited to hit the ground running on day one following the close at the beginning of April and we are very confident that this investment will deliver a strong return on investment and create substantial shareholder value.
Speaker Change: This latest transaction is a perfect example of how we can use acquisitions to further leverage our performance marketing platform.
Speaker Change: We also continue to evaluate other potential acquisitions for complementary return focused opportunities that would allow us to bring additional value to both our b to b and b to C customers as well as to our shareholders.
Speaker Change: On the beta beside this includes businesses that create marketing and advertising value for our online gambling operator clients. In addition to performance marketing.
Speaker Change: And we see strong opportunities in B to C. As consumers are more willing than ever to pay for premium content as evidenced by the accelerating growth of our roto wire b to C subscription products as a result of recent product launches.
Charles Gillespie: And we see strong opportunities in B2C as consumers are more willing than ever to pay for premium content, as evidenced by the accelerating growth of our RotoWire B2C subscription products as a result of recent product launches. Our expertise and excellence in performance marketing is the engine that has propelled us past $100 million in revenue, and we remain laser-focused on continuing to fuel that growth engine while simultaneously evaluating opportunities to layer on new channels of accretive growth. We will continue to prudently and efficiently allocate capital to new growth opportunities in newly regulated markets, like Latin America, and to existing regulated markets where there is a clear case for attractive returns on invested capital. Our portfolio of big B2C gambling brands stands alone at the top of the industry, and we will continue to invest in all of them, gambling.com, casinos.com, bookies.com, rotowire.com, bonusfinder.com, and now freebets.com, to take full advantage of all of the opportunities available to them in this high-growth global industry. Our 2023 results speak for themselves, and I want to thank our entire team for another year of superb execution. The competitive spirit and grit of our team is really unique in our field.
Speaker Change: Our expertise and excellence and performance marketing is the engine that has propelled us past the $100 million in revenue.
Speaker Change: And we remain laser focused on continuing to fuel that growth engine, while simultaneously evaluating opportunities to layer on new channels of accretive growth.
Speaker Change: We will continue to prudently and efficiently allocate capital to new growth opportunities and newly regulated markets like in Latin America and to existing regulated markets, where there is a clear case for attractive returns on invested capital our portfolio, a big B to C gambling brands.
Speaker Change: Stand alone at the top of the industry and we will continue to invest in all of them gambling dotcom casinos dotcom bookies dotcom roto wired dot com bonus finer dot com and now free bets dot com to take full advantage of all of the opportunities available to them in the high.
Speaker Change: Gross global industry.
Speaker Change: 2023 results speak for themselves and I want to thank our entire team for another year of superb execution, the competitive spirit and grit of our team is really unique in our field. Despite our increasing size I remain confident in our ability to continue to deliver the high performance growth. We are known for I will now turn it over to <unk>.
Speaker Change: Elliott to discuss the financial figures and deaths.
Elliott: Thank you Charles as discussed we saw a very strong finish to the year with all time quarterly record revenue a record Q4 adjusted EBITDA.
Elias Mark: Despite our increasing size, I remain confident in our ability to continue to deliver the high-performance growth we are known for. I will now turn it over to Elias to discuss the financial figures in depth. Thank you, Charles.
Elliott: Full year 2020 results were ahead of street consensus for both revenue and adjusted EBITDA and significantly ahead of our initial guidance of 95 million and 54 million respectively at the midpoint.
Elliott: Q4 revenue of $32 5 million increased 52% compared to prior year or 45% in constant currency.
Elias Mark: As discussed, we saw a very strong finish to the year with all-time quarterly record revenue and record adjusted Q4 adjusted EBITDA. Full year 2023 results were ahead of street consensus with both revenue and adjusted EBITDA and significantly ahead of our initial guidance of $95 million and $34 million, respectively, at the midpoint. Q4 revenue of $32.5 million increased 52% compared to the prior year or 45% in constant current. North America led the way with revenue growth of 103% to $20.3 million, driven largely by continued strong growth from our media partnership initiative. Revenue also benefited from the launch of sports betting in Kentucky in late September and the entry of ESPN bet into the market in November. New depositing customers in the quarter grew 95% compared to the prior year to more than 159,000.
Elliott: North America led the way with revenue growth of 103% to $20 3 million driven largely by continued strong growth from our media partnership initiatives.
Elliott: Revenue benefited from the launch of sports betting in Kentucky in late September and an entry of ESPN back into the market in November.
Elliott: New defaults 10 customers in the quarter grew 95% compatriot prior year to more than 159000.
Elliott: N D C growth was faster than revenue growth a sports betting made up the highest percentage of our cookie N D CS yet.
Elliott: Yeah.
Elliott: Q4 cost of sales were $5 1 million, which as we have previously discussed reflect the significant ramp in our media partnership revenue.
Elliott: Total operating expenses were $19 3 million down $1 8 million from the year ago period.
Elliott: Fourth quarter 2022 operating expense included $4 3 million of fair value movements on contingent consideration.
But it's fair value movement operating expenses grew 16% year over year or 10% in constant currency, even as revenue rose 52%.
Elias Mark: NDC growth was faster than revenue growth as sports betting made up the highest percentage of our quarterly NDCs yet. Q4 cost of sales was 5.1 million, which, as we have previously discussed, reflects the significant ramp-up in our media partnership revenue. Total operating expenses were $19.3 million, down $1.8 million from the year-ago period. Fourth quarter 2022 operating expenses included 4.3 million of fair value movements on contingent consideration. Adjusted for this fair value movement, operating expenses grew 15% year-over-year, or 10% in constant currency, even as revenue rose 52%, reflecting the operating leverage from our platform of technologies and brands. Net income in the quarter adjusted for the unwinding of the third consideration was $6.8 million, or $0.18 per diluted share, compared to adjusted net income of $600,000 or $0.02 per diluted share in the prior year. Adjusted EBITDA rose 54% to $10.6 million compared to $6.9 million in the prior year. The adjusted EBITDA margin in the quarter was $32,000.
Elliott: Flexing the operating leverage from our platform all technologies and brands.
Elliott: Net income in the quarter adjusted for winding up the third consideration was $6 8 million or 18 cents per diluted share compared to adjusted net income of six.
Elliott: 601000, or two cents per diluted share in the prior year.
Elliott: Adjusted EBITDA rose, 54% to $10 6 million compared to $6 9 million in the prior year.
Elliott: Adjusted EBITDA margin in the quarter was 32%.
Elliott: We continue to invest in our portfolio in the fourth quarter would it touches all some casino domains and websites for $6 4 million, which will enable us to accelerate growth for casino start to call him you know auto Europe segment.
Elliott: We also have to keep deployed cash to repurchase shares.
Elliott: We are confident represent excellent value to our shareholders during the fourth quarter, we repurchased approximately 206000 ordinary shares at an average price of 970 for total consideration of approximately $2 million.
Elliott: Cash at December 31st totaled $25 4 million at 1.5 million quarter on quarter decrease.
Elliott: Operating cash flow was $6 9 million was offset by the capital expenditures and share buybacks in the fourth quarter.
Elliott: Turning to the financial results for the full year revenue.
Elliott: Revenue grew 42% or 38% in constant currency to 108.7 million.
Elliott: Adjusted net income was $26 3 million and adjusted earnings per diluted share was <unk> 68 cents compared to 77 cents in 2020 two.
Elias Mark: We continue to invest in our portfolio in the fourth quarter with a purchase of some casino domains and websites for 6.4 million, which will enable us to accelerate growth for casinos.com in our other European segments. We also tactically deployed cash to repurchase shares that we are confident represent excellent value to our shareholders. During the fourth quarter, we repurchased approximately 206,000 ordinary shares at an average price of $970,000 for a total purchase of approximately $2 million.
Elliott: Adjusted EBITDA increased by 53% to $36 7 million, reflecting an adjusted EBITDA margin of 34%.
Elliott: Free cash flow grew 71% to $16 2 million.
Elliott: 2023 free cash flow includes $9 2 million in Capex.
Elliott: <unk> to $9 3 million in 2022.
Elliott: We keep prudently investing in our products and technologies with a firm focus on return on investments, although we have significantly east the pace of our hiring.
Elliott: We remain able to entirely fund our organic growth initiatives solely from operating cash flow, while also continuing to generate significant positive free cash flow.
Elias Mark: Cash at December 31st totaled $25.4 million, a $1.5 million quarter-on-quarter decrease as strong operating cash flow of $6.9 million was offset by capital expenditures and share buybacks in the fourth quarter. Turning to the financial results for the full year, Revenue grew 42% or 38% in constant currency to $108.7 million. Adjusted net income was $26.3 million, and adjusted earnings per diluted share was 68 cents compared to 37 cents in 2022. Adjusted EBITDA increased by 53% to $36.7 million, reflecting an adjusted EBITDA margin of 34%. Pre-cash flow grew 71% to $16.2 million.
Elliott: This flexibility enables us to be opportunistic and pursue acquisitions and share buybacks to enhance shareholder value.
Elliott: Our recently announced 50 million credit facility with Wells Fargo gives us additional liquidity and financial flexibility.
Elliott: We continue to see strong consumer demand to sign up for new player accounts and operate the demand for performance marketing services.
Elliott: We expect to drive organic growth across all our geographical segments in 2024, including in North America, Despite starting with a higher base of revenue than ever and.
Elliott: And with only one new steak lunch versus three in 'twenty two 'twenty three.
Elliott: This will be complemented by incremental contribution from the acquisition of free bet Dot com and related assets announced today and expect it to close in the beginning of April.
Elliott: This morning, we introduced our 'twenty 'twenty four guidance for revenue in the range of 102009 to 133 million with the main points representing growth of 21% over 2023.
Elias Mark: 2020 free cash flow includes $9.2 million in CapEx compared to $9.3 million in 2020. We keep prudently investing in our products and technologies with a firm focus on return on investments, although we have significantly eased the pace of our hiring. We remain able to entirely fund our organic growth initiatives solely from operating cash flow while also continuing to generate significant positive free cash flow.
Elliott: And adjusted EBITDA of between 44, and 48 million with a mean to point representing growth of 25% over 2023.
Elliott: The guidance assumes an average euro to USD exchange rate of one point of nine throughout 2024.
Elliott: It also assumes no additional U S state launches beyond the recent launch in North Carolina.
Elliott: We expect cost of sales related to our media partnerships to be approximately 10 million went to distribution falling primarily in the first third and fourth quarter in alignment with sports seasonality.
Elias Mark: This flexibility enables us to be opportunistic and pursue acquisitions and share buybacks to enhance shareholder value. Our recently announced $50 million credit facility with Wells Fargo gives us additional liquidity and financial flexibility. We continue to see strong consumer demand to sign up for new player accounts and operator demand for performance marketing services. We expect to drive organic growth across all our geographical segments in 2024, including in North America, despite starting with a higher base of revenue than ever and with only one new state launch versus three in 2023. This will be complemented by incremental contribution from the acquisition of Freebets.com and related assets announced today and expected to close in the beginning of April. This morning, we introduced our 2024 guidance for revenue in the range of 129 to 133 million with a minimum point representing growth of 21% over 2023 and adjusted EBITDA of between $44 and $48 million with a midpoint representing growth of 25% over 2020. The guidance assumes an average Euro to USD exchange rate of 1.09 throughout 2020.
The guidance includes expected revenue from the acquisition of free bets column and related assets of approximately $10 million.
Elliott: Incremental adjusted EBITDA of approximately 5 million for that nine month period from April to December.
Elliott: Our guidance does not include contributions from panning out or acquisitions.
Elliott: With that I will turn it back to Charles.
Charles Gillespie: Thank you al is a weird delighted to announce all the positive news today, including a record fourth quarter and full year results are highly accretive acquisition and guidance for the full year, which will.
Which continues our high growth trajectory, we are tracking toward a strong Q1 that will show year on year growth and set us up to deliver on our full year guidance, all while taking incremental market share from our peers and operator. Please open up the line for questions.
Speaker Change: Thank you if he 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 he would like train move your question from the queue and for participating.
Speaker Change: It's been choosing speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Our first question is from Jeff <unk> with Stifel. Please proceed.
Jeff: Hey, good morning, Charles Thanks for taking our questions maybe starting off here on the free bets.
Jeff: And it seems like a logical fit your your historical strategy here with with M&A, but Charles.
Elias Mark: It also assumes no additional U.S. state launches beyond the recent launch in North Carolina. We expect cost of sales related to our media partnership to be approximately $10 million, with distribution falling primarily in the first, third, and fourth quarters in alignment with sports seasonality. The guidance includes expected revenue from the acquisition of FreeBets.com and related assets of approximately $10 million and incremental adjusted EBITDA of approximately $5 million for the nine-month period from April to December. Our guidance does not include contributions from any other acquisitions. With that, I will turn back to Charles.
Jeff: Expand a bit more on kind of where do you see the asset as being perhaps under monetize previously or in other words, where there's the most opportunity.
Jeff: To plug it into your systems and then yielded up.
Jeff: Just a follow up to the extent you can give us a sense for where do you think that that 5 million of incremental nine month adjusted EBITDA could ultimately go longer term that that would help as well. Thanks.
Speaker Change: Sure Hey, Jeff the there's a lot of potential you know it's it's it's all the things right. So it's slightly better deals it's better conversion rates its more traffic it's.
Speaker Change: Higher quality traffic.
Speaker Change: It's faster websites. It's it's you know incremental improvements across every single point in the conversion funnel and that's what we are great at so.
Charles Gillespie: Thank you, Elias. We are delighted to announce all the positive news today, including our record fourth quarter and full year results, a highly accretive acquisition, and guidance for the full year, which continues our high growth trajectory. We are tracking toward a strong Q1 that will show year-on-year growth and set us up to deliver on our full year guidance, all while taking incremental market share from our peers. Operator, please open up the line for questions. Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
Speaker Change: I'm very confident that we can we can narrow the.
Speaker Change: The focus on those assets and and and drive growth and as you have correctly surmised. We do expect 2025 contribution from these assets to be quite substantially better than what we have indicated for the first nine months of the acquisition.
Speaker Change: Okay, Great. That's really helpful. Thank you Charles and then turning to the full.
Speaker Change: Finally for guidance.
It looks like the midpoint implies about 35%.
Speaker Change: Adjusted EBITDA margins, Alex I think last quarter, if I recall, you talk to us a structural 35% to 40% margin profile for the business fluctuating by quarter or is the decision to guide to the low end of this range, mostly just conservatism or are you seeing more mix shift to media partnerships and then perhaps you previously.
Operator: You may press star 2 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 star key. Our first question is from Jeff Stantial with Stifel. Please proceed. Hey, good morning, Charles, and Elias.
Speaker Change: <unk> just how should we think about some of the puts and takes here for for that margin guidance relative to the to the prior 35% to 40% long term rich. Thanks.
Jeff Stantial: Thanks for taking our questions. Maybe starting off here on the FreeBets acquisition seems like, you know, logical and fits your historical strategy here with M&A. But Charles, could you just expand a bit more on kind of where you see the asset as being perhaps under-monetized previously, or in other words, where there's the most opportunity to plug it into your systems and yield it up? And as a follow-up, to the extent you could give us a sense for where you think that $5 million of Incrobital-9 month-adjusted EBITDA could ultimately go longer term, that would Thanks. Sure. Hey Jeff, there's a lot of potential. It's all the things, right?
Alex: Yeah, the 35% to 40% you can think of that as more of a long term goal you know the.
Alex: 'twenty 'twenty four is very near term in.
In the guidance as you well know assumes no further M&A no additional U S. State launches are you know we could easily be in a situation before the end of the year, where we see one or more of those opportunities come into focus and then naturally we would probably see that ticking up.
Speaker Change: Perfect very helpful. Thanks, Charles I'll pass it on.
Speaker Change: Our next question is from Ryan Seagull with Craig Hallum Capital Group. Please proceed.
Ryan Seagull: Hey, good morning, guys I want to start in North America, or the U S. A.
Charles Gillespie: So, it's slightly better deals. It's better conversion rates. It's more traffic. It's... higher quality traffic. It's faster websites.
Ryan Seagull: Some of your competitors have noted lower C. P. A rates more competition to that tune, we've seen kind of losing traffic losing authority for those same domains. So I guess the exact opposite seems to be happening for gambling dot com. So I guess, how important what do you think about CPA negotiations with your customers and sports books in an opera.
Charles Gillespie: It's, you know, incremental improvements across every single point in the conversion funnel. And that's what we are great at. So, very confident that we can narrow the focus on those assets and tribe growth. And as you have correctly surmised, we do expect 2025 contribution from these assets to be quite substantially better than what we have indicated for the first nine months of the acquisition. Great. That's, that's really helpful.
Ryan Seagull: Readers is authority in traffic and a kind of a share gains you guys are seeing.
Speaker Change: Yeah, Hey, Ryan like I think it is important to.
Speaker Change: Compare like for like here you know there is you know we sell a lot of different types of traffic.
Speaker Change: And you know different markets different co.
Jeff Stantial: Thank you, Charles. And then turning to full year 24 guidance, it looks like the midpoint implies about 35% Justin, even on margins, Elias. I think last quarter, if I recall, you talked to us about a structural 35 to 40% margin profile for the business fluctuating by quarter. Is the decision to guide to the low end of this range mostly just conservatism?
Speaker Change: Cohorts.
Speaker Change: Some of it.
Speaker Change: It goes into kind of a special situations bucket.
Speaker Change: You know so if you look at kind of the launch of E. S. P N that right like.
Speaker Change: Enormous consumer demand for that.
Speaker Change: And in quite different to what we have seen with new state launches you know what I need to stay launch you've got a bunch of different operators all launching in the same state at the same time, you see and that was like the opposite it was one operator launching in multiple states.
Speaker Change: At the same time, so from our perspective, and there's you know it's it's not as it's not quite as competitive of a situation as a new state launch.
Elias Mark: Are you seeing more mix shift to media partnerships than perhaps you previously anticipated? Just how should we think about some of the puts and takes here for that margin guidance relative to the prior 35 to 40% long-term range? Thanks. Yeah, the 35 to 40% you can think of that as more of a long-term goal, you know, 2024 is very near term, and the guidance, as you well know, assumes no further M&A, and no additional U.S. state launches. You know, we could easily be in a situation before the end of the year where we see one or more of those opportunities come into focus, and then naturally, we would probably see that ticking up. Perfect. Very helpful. Thank you, Charles. I'll pass it on.
Speaker Change: And there's huge amount of consumer demands. So we you know we were able to drive.
Speaker Change: Fairly spectacular numbers of N D C's with E. S. P N bet in Q4.
Speaker Change: And naturally it's it's only fair and reasonable that they would not pay the same kind of a full market rate. If you will for a for a competitive situation with lots of operators contesting the same players you know a lot of those players where were looking for ESPN, but specifically.
Speaker Change: You can also.
Speaker Change: Talking about the Super Bowl here you know the superbowl is similar to what we see in the U K with the Grand National Horse race. Some of these a lot of these people that sign up for sports books around the Super Bowl.
Speaker Change: Or around the Grand National a horse race, they they bet they sign up and they bet once a year you know some of it.
Speaker Change: Not the most valuable cohorts.
Operator: Our next question is from Ryan Sigdahl with Cricallum Capital Group. Please proceed. Hey, good morning, guys. I want to start in North America or the U.S.
Speaker Change: And and you know, we effectively operate with a dynamic pricing model right. So we're not going to we're not going to just.
Speaker Change: Just try to sell traffic to our clients. It's a for a price. That's you know just.
Ryan Sigdahl: Some of your competitors, I guess, have noted lower CPA rates, and more competition. To that tune, we've seen a kind of losing traffic, and losing authority for those same domains. So I guess the exact opposite seems to be happening for Gambling.com. So I guess how important is authority and traffic and the kind of those share gains you guys are talking about? That's what you guys are seeing. Yeah, hey, Ryan.
Speaker Change: Yeah dislocated against the value and.
Speaker Change: And we are constantly having these discussions with them and and when you have these sorts of special situations. Yeah. You know the the CPR rates can be different but I wouldn't confuse that with any sort of change in overall pricing power across the whole market you know across our.
Speaker Change: You know situations, where it's more competitive and in the and the player value is known to be high you know and in that kind of bread and butter.
Speaker Change: Situation for us that the CPA rates haven't haven't meaningfully changed.
Charles Gillespie: Look, I think it's important to compare like for like here, you know, there's, We sell a lot of different types of traffic and and, you know, different markets, different cohorts, some of it goes into kind of a special situations bucket, you know. So if you look at the kind of launch of the SPN bet, right, the enormous consumer demand for that, and quite different to what we have seen with new state launches. You know, in a new state launch, you get a bunch of different operators all launching in the same state at the same time. The SPN bet was like the opposite.
Speaker Change: Very helpful. For my follow up you mentioned, you expect double digit revenue growth in the U K and Ireland. This year is that organic or is that inclusive of the free boats acquisition.
Speaker Change: That would include a small contribution from the recent acquisition.
Speaker Change: Got you thanks, guys. Good luck.
Speaker Change: Our next question is from Barry Jonas with truly Securities. Please proceed.
Barry Jonas: Hey, guys.
Barry Jonas: Wanted to start with a revenue share you know in the past I think you maybe alluded to maybe.
Barry Jonas: The percentage in the U S, possibly increasing over time, any new thoughts there or any new discussions with operators in north.
Charles Gillespie: It was one operator launching in multiple states at the same time. So from our perspective and theirs, you know, it's not quite as competitive of a situation as a new state launch, and there's a huge amount of consumer demand. So we were able to drive fairly spectacular numbers of NDCs with ESPN bet in Q4, and naturally, it's only fair and reasonable that they would not pay the same kind of full market rate, if you will, you know, for a competitive situation with lots of operators contesting the same players. You know, a lot of those players were looking for an ESPN bet specifically. You know, you can also talk about the Super Bowl here. The Super Bowl is similar to what we see in the UK with the Grand National Horse Race. A lot of these people that sign up for sports books are around the Super Bowl or around the Grand National Horse Race. They sign up, and they bet once a year, so it's just not the most valuable cohort.
Barry Jonas: In North America. Thank you.
Speaker Change: Hey, Barry.
Speaker Change: Yeah.
Speaker Change: So when we spoke about this previously we merely wanted to indicate the direction of travel not that there was a significant shift afoot.
Speaker Change: I think.
Speaker Change: You know some of those comments might've been over over interpreted.
Speaker Change: If you look at our portion of Rev share in North America. It's it's.
Speaker Change: Virtually unchanged I mean, the changes is very.
Speaker Change: Small when you look quarter to quarter last year and when you look in Q4, specifically, we had such a special situation with ESPN doesn't really driving growth on a CPA basis that the portion of revenue share actually fell substantially.
But that's not a.
Speaker Change: Indicative of the future run rate that was specific to Q4. So it's it's.
Speaker Change: It's just not.
Speaker Change: A meaningful change.
Speaker Change: Perfect. That's helpful. Thanks for that and then just as a follow up are you know I think fantasy as a part of the business that's talked about loud, but curious if you could talk about how meaningful. It is for you guys and are there risks with increasing scrutiny in some states towards our towards fantasy. Thanks.
Charles Gillespie: And, you know, we effectively operate with a dynamic pricing model, right? So we're not going to try to sell traffic to our clients for a price that's, you know, dislocated against the value, you know, and we are constantly having these discussions with them. And when you have these sorts of special situations, yeah, you know, the CPA rates can be different, but I wouldn't confuse that with any sort of change in overall pricing power across the whole market, you know, across situations where it's more competitive and the player value is known to be high, you know, and that kind of bread and butter situation for us, the CPA rates haven't meaningfully changed.
Speaker Change: Yeah, there's lots of different types of fantasy roto wire as you know.
Speaker Change: As a season long fantasy products I imagine you're talking about these these player prop type fantasy sites.
Speaker Change: It's extremely small portion of our business, it's not a meaningful driver of revenue. It is an interesting area and some of the recent product launches on.
Speaker Change: Roto wire has have been designed to cater to that audience and those products as we mentioned on the call are are growing.
Speaker Change: Very healthily, so it's an area of opportunity for us where we could do more in the future, but it's not a it's not a meaningful driver of revenue today.
Ryan Sigdahl: Very helpful. For my follow-up, you mentioned you expect double-digit revenue growth in the UK and Ireland this year. Is that organic, or is that inclusive of the free bets acquisition?
Speaker Change: Great. Thanks, so much.
Speaker Change: Yeah.
Speaker Change: Our next question is from Chad Beynon with Macquarie. Please proceed.
Speaker Change: Hi, This is Sam on for Chad. Thank you for taking our questions. Just wanted to ask about Brazil. What are your plans for that market is that a market you want to lean into pretty heavy.
Charles Gillespie: That would include a small contribution from the recent acquisition. Gotcha. Thanks, guys. Good luck.
Sam: Once it's regulated any color on strategy and expectations would be great.
Operator: Our next question is from Barry Jonas with Truist Securities. Please proceed. Hey guys, I wanted to start with revenue share.
Sam: Yes.
Sam: It's a very exciting market. We're delighted that the regulation is now a more or less finalized and that they did online casino in addition to sports betting.
Barry Jonas: You know, in the past, I think you've maybe alluded to maybe, you know, the percentage in the US possibly increasing over time. Any new thoughts there? Any new discussions with operators in North America? Thank you. Hey, Barry. So when we spoke about this previously, we merely wanted to indicate the direction of travel, not that there was a... Significant shift in foot.
Sam: We have a Brazilian version of gambling Dot Com, we will no doubt do something with casinos dotcom as well in time.
Sam: We are not going all in on the first round like some of our peers are we consider Brazil very similar to a vote.
Sam: To the to the kind of average non U S market. If you will where the first mover advantage is not.
Charles Gillespie: I think some of those comments might have been overly interpreted. If you look at our portion of RevShare in North America, it's virtually unchanged. I mean, the change is very small when you look quarter to quarter last year.
Sam: Particularly significant.
So we'd like to see a few things kind of settle in in terms of how the market develops before we push it harder.
Sam: But it it certainly has the potential to be a another growth driver for the business on an M&A front, we would consider opportunities in Brazil, but but again, we have a a organic strategy for Brazil with their existing branded assets. So there's there's no.
Charles Gillespie: And when you look in Q4 specifically, we had such a special situation with ESPN that really drove growth on a CPA basis that the portion of revenue share actually fell substantially. But that's not indicative of the future run rate that was specific to Q4. So it's, It's just not.
Sam: Pressure for us to do a deal in Brazil, it's but where we're here to be opportunistic if the right thing Pops up.
Speaker Change: Awesome, Thanks, and then as a follow up maybe.
Barry Jonas: A meaningful change. Perfect. That's helpful. Thanks for that. And then, just as a follow-up, you know, I think fantasy is a part of the business that's talked about less, but curious if you could talk about how meaningful it is for you guys. And are there risks with increasing scrutiny in some states towards fantasy?
Speaker Change: Maybe back in the U S.
Speaker Change: What are you guys hearing in terms of I gaming legislation you know, there's lots of talk around Maryland, and New York or Alberta, just any any color on the impact to your business are you know in the coming years.
Speaker Change: Yeah, I mean, any the addition of any I gaming state will be.
Speaker Change: Massive for US you know if you look at the the handful of I gaming States, which are alive now they produce.
Speaker Change: Speaking about the same amount of revenues all the sports betting states.
Charles Gillespie: Thanks. Yeah, there's lots of different types of fantasy, you know. Rotowire is, you know, has season-long fantasy products. You know, I imagine you're talking about these player prop-type fantasy sites. It's an extremely small portion of our business. It's not a meaningful driver of revenue. It is an interesting area, and some of the recent product launches on Rotowire have been designed to cater to that audience, and those products, as we mentioned on the call, are growing very helpfully. So it's an area of opportunity for us where we could do more in the future, but it's not a meaningful driver of revenue today. Great, thanks so much.
Speaker Change:
Speaker Change: I think the presidential election. This year is a little bit of a headwind for I.
Speaker Change: Gaming.
I gaming, obviously is a more challenging political.
Sale than sports betting so I think a lot of these I gaming initiatives will.
Speaker Change: It starts to fly in 2020 five.
Speaker Change: And on the sports betting side this year, Georgia, and Missouri are the two that we have our eye on are they.
Speaker Change: Things could come together and it is possible that you have a an additional state launched this year although.
Speaker Change: We're certainly not planning on that at this stage.
Speaker Change: Great. Thanks for the color.
Operator: Our next question is from Chad Baynon with Macquarie. Please proceed. Hi, this is Sam on behalf of Chad. Thank you for taking our questions. I just wanted to ask about Brazil.
Clarke Lamp: Our next question is from Clarke lamp in with D. P. I G. Please proceed.
Clarke Lamp: Thanks, very much I wanted to Charles I guess, maybe backtrack to your sort of comment in the prepared remarks around 30% growth in North America could you give us a sense I guess, if it's possible maybe.
Sam: What are your plans for that market? Is that a market you want to lean into pretty heavily? Once it's regulated, any color on strategy and expectations would be great.
Clarke Lamp: You know inclusive in North Carolina inclusive of ongoing increases in penetration, where do you think that rate lands in 2024.
Charles Gillespie: Yeah. It's a very exciting market. You know, we're delighted that the regulation is now more or less finalized and that they have an online casino in addition to sports betting. We have a Brazilian version of Gambling.com. We will no doubt do something with Casinos.com as well in time. We are not going all in on the first round like some of our peers are. We, you know, consider Brazil very similar to the kind of average non-US market, if you will, where the first mover advantage is not particularly significant.
Charles Gillespie: Well that 30% figure.
Charles Gillespie: Yeah that that was it's a it's a it's a it was calculated in a very simple way, where we just excluded all the new state revenue from.
Charles Gillespie: Our 2023 in the calculation.
Charles Gillespie: You can do a more intricate analysis of the same state sales and more.
Charles Gillespie: Like for like analysis, and the figure is substantially higher than 30%.
Sam: So we'd like to see a few things kind of settle in, in terms of how the market develops before we push it harder, pressure for us to do a deal in Brazil. It's, but we're here to be opportunistic if the right thing pops up. Awesome, thanks. And then as a follow-up... Maybe back in the U.S., what are you guys hearing in terms of iGaming legislation? You know, there's lots of talk about Maryland, New York, or Alberta.
Charles Gillespie: If you look at it.
Charles Gillespie: North America.
Charles Gillespie: As a whole this year.
Charles Gillespie: With only one new state launch compares with three new state launches last year growth will obviously moderate for the entire sector.
Charles Gillespie:
Charles Gillespie: But we still expect to see growth in North America, and you know if you were to take out.
The effect of North Carolina.
Charles Gillespie:
Charles Gillespie: We we.
Charles Gillespie: Just any color on the impact on your business, you know, in the coming years. Yeah, I mean, any addition of any iGaming state will be, massive for us. If you look at the handful of iGaming states which are live now, they produce, Broadly speaking, about the same amount of revenue as all the sports betting states. I think the presidential election this year is a little bit of a headwind for iGaming. Uh, iGaming obviously is a more challenging political sale than sports betting.
It is just one state so it's not going to make a massive difference overall in the AR and the full year North American results.
Charles Gillespie: Yes.
Charles Gillespie: Okay. That's helpful and maybe I guess, just kind of a derivative question as we think about I guess.
Charles Gillespie: The mix of revenue for 2024 in total should be think about a.
More of the business sort of continuing to be you know this media partnerships business that you guys have been building has been growing I think very nicely. As you guys noted in the release is that expected to continue or did we see sort of an inflection point, maybe in <unk> and that sort of rate of revenue I guess, if you guys would be willing to quantify it would be helpful.
Charles Gillespie: So I think a lot of these iGaming initiatives will start to fly in 2025. And on the sports betting side this year, Georgia and Missouri are the two that we have our eye on. You know, things could come together, and it is possible that you have an additional state launch this year, although we're certainly not planning on that at this stage. Great. Thanks for the call.
Charles Gillespie: I guess in absence of the filing does that sort of you know persist throughout 'twenty four thank you guys.
Charles Gillespie: Yeah.
Speaker Change: Due to the.
Operator: Our next question is from Clark Lampin with BTIG. Please proceed. Thanks very much. I wanted to, Charles, I guess maybe backtrack to your sort of comment during the prepared marks around 30% growth in North America. Could you give us a sense, I guess, if it's possible, you know, inclusive of North Carolina, inclusive of ongoing increases in penetration, where do you think that rate lands in 2024? Well, that 30% figure was calculated in a very simple way, where we just excluded all the new state revenue from 2023 in the calculation. You can do a more intricate analysis of the same state sales, a more, like-for-like analysis, and the figure is substantially higher than 30%.
Speaker Change: Quite quick launch of ESPN bets.
Speaker Change: A lot of that value was captured.
Speaker Change: Our media partners. So the media partnership proportion in Q4.
Speaker Change: Would be meaningfully meaningfully higher than where we would expect to see it on a kind of a normal run rate basis. So that's I wouldn't I wouldn't look to Q4 to inform you for full year 2024 it'll be.
Speaker Change:
A good bit less.
Speaker Change: But I think we're we're estimating about 15% of.
Speaker Change: Revenue in 'twenty 'twenty four to come from media partnerships.
Thank you again.
Speaker Change: We have reached the end of our question and answer session I would like to turn the conference back over to management for closing remarks.
Clark Lampin: If you look at North America as a whole this year, with only one new state launch compared to three new state launches last year, growth will obviously moderate for, you know, the entire sector. But we still expect to see growth in North America. And, you know, if you were to take out The Effect of North Carolina. You know, we It's just one state, so it's not going to make a massive difference overall in the full-year North American results.
Speaker Change: Thanks, everybody for joining us today, it's been a pleasure to share all this positive news with you and we look forward to catching up in May when we will share our Q1 results.
Speaker Change: Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.
Speaker Change: [music].
Charles Gillespie: Okay, that's helpful. And maybe, I guess, just kind of a derivative question, as we think about, I guess, the mix of revenue for 2024 in total, should we think about more of the business sort of continuing to be, you know, this media partnership system that you guys have been building has been growing, I think, very nicely, as you guys noted in the release. Is that expected to continue, or did we see sort of an inflection point maybe in 4Q and that sort of rate of revenues? I guess if you guys would be willing to quantify it, it would be helpful, I guess, in the absence of the filing.
Speaker Change: Yeah.
Speaker Change: Okay.
[music].
Speaker Change: Yeah.
Speaker Change: [music].
Clark Lampin: Does that sort of, you know, persist throughout 24? Thank you, guys. Yeah, due to the Q&A Q&A Q&A Q&A Q&A Q&A Q&A Q&A by our media partners. So the media partnership proportion in Q4 would be meaningfully higher than where we would expect to see it on a normal run rate basis.
Charles Gillespie: I wouldn't, I wouldn't look to Q4 to inform you for the full year 2024. It'll be a good bit less. I think we're estimating about 15% of revenue in 2024 to come from media partnerships. Thank you again. We have reached the end of our question and answer session. I would like to turn the conference back over to management for closing remarks. Thanks, everybody, for joining us today. It's been a pleasure to share all this positive news with you, and we look forward to catching up in May when we will share our Q1 results.
Speaker Change: Okay.
Speaker Change:
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: [music].
Charles Gillespie: Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.
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