Q4 2024 Gambling.com Group Ltd Earnings Call
Tom Hiddleston. Tom.
Speaker Change: Greetings. Welcome to Gambling.com, Group 4th quarter, 2024 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,
Speaker Change: Please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to introduce Peter McGough, Peter Vase President of the Invest Relations and Capital Markets. Thank you. You may begin.
Speaker Change: Thank you. Hello, everyone, and welcome to Gambling.com's fourth quarter 2024 results call. I'm Peter McGough, senior VP of Investor Relations and Capital Markets, and I'm joined by Charles Gillespie, Gambling.com's groups, co-founder and chief executive officer and Elias Mark, chief financial officer.
Speaker Change: The call is being broadcast live through the Investor Relations section of our website at gambling.com forward slash corporate, forward slash investors and the downloadable version of the presentation is available there as well.
Speaker Change: I would like to remind you that the 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.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: During the call, there will also be a discussion of non-IFRS financial measures.
Speaker Change: The description of these non-IFRS financial measures is included in the press release issued earlier this morning.
Speaker Change: and reconciliations of these non-IFRS financial measures to their most directly comparable IFRS measures are included in the appendix.
Charles Gillespie: 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.
Good morning and thank you for joining us today.
Charles Gillespie: Gambling.com group had a tremendous fourth quarter with revenue of $35.3 million, adjusted EBITDA of $14.7 million, and free cash flow of $13.2 million, finishing 2024 in style with record quarterly and full year financial performance.
Charles Gillespie: Full year 2024 revenue and adjusted EBITDA rose 17% and 33% respectively, driven by global iGaming growth and the highly accretive acquisition of FreeBets.com.
Charles Gillespie: This outperformance reflects our relentless focus on execution and our diversified market exposure with a prioritization of iGaming revenue.
Charles Gillespie: As strong as our execution was last year, we expect to accelerate our growth in 2025.
Charles Gillespie: with our biggest and most talented team ever, a greater ability to drive high intent traffic to our online gambling operator clients.
Charles Gillespie: Higher Global Penetration and an expanded product portfolio that now includes all data solutions for consumers and our operator clients
Charles Gillespie: We are positioned for full-year revenue growth of 35% and adjusted EBITDA growth of 40%, as indicated by the midpoints of our initial guidance for the year.
Charles Gillespie: As we hit our targets for the year, our performance will demonstrate that we continue to close in on our goal of generating $100 million in annual adjusted EBITDA.
Charles Gillespie: a goal I introduced in May last year when we only had $37 million in adjusted EBITDA during the preceding 12 months.
Charles Gillespie: As we work toward our goal of $100 million in adjusted EBITDA, the midpoint of this year's guidance of $68 million implies that we will be more than halfway there already in 2025.
Charles Gillespie: Our most exciting growth driver for this year will come from our expanded product offering following the January acquisition of OzJam and OpticOz.
Charles Gillespie: This acquisition expanded our footprint in the online gambling ecosystem, providing another strong growth catalyst, while increasing the overall proportion of our consumer and enterprise recurring subscription revenue.
Charles Gillespie: Like FreeVest.com, this acquisition demonstrates once again that we can put forth a clear framework and vision for M&A and then precisely deliver within those parameters.
Charles Gillespie: These acquisitions have created immediate value for our shareholders while strategically positioning us for the long term.
Charles Gillespie: Over the first nearly 80 days of owning our new odds businesses, we've been very pleased with the integration and are very excited by the expertise and capabilities of our 40 new colleagues.
Charles Gillespie: And we are excited about the growth trajectory of the business's current products and services and the long-term future prospects of new businesses we can launch with this one-of-a-kind and highly valuable platform.
Charles Gillespie: On the consumer product side, Ogden's current subscriber base is highly profitable and we are confident we can grow this base while maintaining margins.
Charles Gillespie: We are also very optimistic about the opportunity to leverage our 500-plus operator relationships to grow OpticOdd's nascent enterprise subscription revenue.
Charles Gillespie: While Odds Jam is the larger business today and continues to grow, we believe the growth opportunity for OpticOdds is substantially larger still.
Charles Gillespie: Opticods is starting from a smaller base and has a very attractive business profile which involves long-term high-value contracts as a result of playing a key role in solving a critical risk management problem for operators globally.
Charles Gillespie: Together with Roto-Wire's subscription business, we are pacing for recurring subscription revenue to account for more than 20% of total group revenue this year.
Charles Gillespie: While the whole GAM team is very excited about our shiny new toys with Odds Jam and Optic Odds
Charles Gillespie: It should not overshadow the continued strength of our core affiliate business, which just had its best quarter in our 19-year history.
Charles Gillespie: iGaming revenue grew in 2024 across all of our operating regions and will continue to do so this year, driven by continued strong organic growth as well as a full year benefit from our acquisition of FreeBets.com
Charles Gillespie: That tactical acquisition further strengthened our UK and Ireland market performance while also providing a strong tailwind for our activities across other European markets.
Charles Gillespie: And in North America, we continue to grow our market share and benefit from improving iGaming pricing trends.
Charles Gillespie: Throughout 2025, we are confident in our ability to monetize the full benefits of our showcase brands, such as Gambling.com and the growing performance of Casinos.com, along with the optimization we've achieved now for FreeBets.com.
Charles Gillespie: will continue to further differentiate us from our competitors and drive record iGaming performance this year.
Charles Gillespie: Longer term, we expect additional states to approve iGaming as they seek to address budget issues and give players what they want.
Charles Gillespie: Another growth driver this year will be organic growth from sports vetting.
Charles Gillespie: Last year had challenging sports betting comparables due to the lower state launch activity in the U.S. and the blowout performance of ESPN bet in Q4 23.
Charles Gillespie: We expect a return to growth in our North American sports business this year, and that's before the anticipated launch of sports betting in Missouri toward the end of this year, and which, per our policy, will not be included in our guidance until the launch date is confirmed.
Charles Gillespie: Following our record 2024 performance with these gross drivers and our team's ability to consistently execute
Charles Gillespie: Our confidence in our near and long-term outlook has never been higher. And that starts with this year as we are on track to generate another year of record revenue, just as EBITDA, and free cash flow on our path to $100 million in annual adjusted EBITDA.
Charles Gillespie: Now, let me turn the call over to Elias for a review of the fourth quarter and full year financial highlights and details on our 2025 outlook.
Thank you, Gilles.
Elias Mark: Record Q4 revenues of $35.3 million was ahead of expectations and we delivered over 145,000 NDCs to our customers.
Elias Mark: This 9% year-over-year revenue increase was driven by growth in casino revenue across all regions, which more than offset the decline in North American sports revenue.
Elias Mark: Revenue in the UK and Ireland, outer Europe and the rest of the world continue to see very strong growth driven by our core brands and our acquisition in April of freebest.com and related assets.
Elias Mark: Gross profit increased 21% year-over-year to $33.1 million. Cost of sales was $2.2 million, down 57% year-over-year as a result of the lower media partnership revenue.
Elias Mark: Gross margin increased from 84% in the 10th last year's fourth quarter to 94% in Q4 2024.
Elias Mark: Total operating expenses increased 21% to $23.3 million, reflecting increased headcounts and increased amortization expenses related to the FreeBus.com acquisition.
Elias Mark: Operating expenses are slightly above our expectations in the fourth quarter due to higher bonus accruals linked to outperformance.
Elias Mark: Adjusted EBITDA increased 39% year-over-year to another all-time record of 14.7 million compared to 10.6 million a year ago.
Elias Mark: For the quarter adjusted EBITDA margin was 42%, up from 32% in the year-ago period.
Elias Mark: Adjusted net income for the fourth quarter of 2024 rose 41% to $12.2 million, while adjusted diluted net income per share increased 59% to $0.35 from $0.22 per share in the fourth quarter of 2023.
Elias Mark: During the quarter, we'll revise the way we define adjusted net income to more closely align with adjustments we make to adjusted EBITDA to improve the like-for-like comparability between periods.
Elias Mark: Full year, adjusted EBITDA increased 33% year over year to a record $48 7 million.
Elias Mark: So the adjusted EBITDA margin was 38% up from 34% in 2023.
Elias Mark: Free cash flow for 2024 was $41 6 million compared to 23 million in 2023 as a result of the growth in adjusted EBITDA.
Elias Mark: 85% of our full year adjusted EBITDA was conducted to free cash flow.
Elias Mark: During 2024, we've put approximately 3 million shares at an average price of just.
Elias Mark: Just about $9.06.
Elias Mark: Aggregates, we have repurchased eight 3 million shares representing almost 90% of the total outstanding shares.
Elias Mark: Price of $9 12, 12 cents.
Elias Mark: As of December 31st we had total cash of $13 7 million and we had $23 million drawn on our credit facility.
Elias Mark: On January 1st we made a payment of $70 million in cash and 10 million in stock or approximately 708000 shares.
Elias Mark: Holdings acquisition.
Elias Mark: I think that's all.
Elias Mark: We have now pulling down a total of 87 million.
Elias Mark: We have approximately 56 million fully diluted shares outstanding.
Elias Mark: At the end of February we expanded our credit facility from 100 million to 165 million.
Elias Mark: They extended the maturity date with us with a new syndicate of lenders.
Elias Mark: This gives us increased flexibility and headroom to continue to pursue both strategic acquisitions when the right opportunities right.
Elias Mark: To optimize our capital structure, and our pursuit of maximizing shareholder value.
Elias Mark: Our revenue guidance for 2025, its $117 million to 174 million would have many points, representing 35% year over year growth.
Elias Mark: The midpoint of our adjusted EBITDA range of 67 million to $69 million represents 40%.
Elias Mark: Yes.
Elias Mark: Any points of our ranges imply an adjusted EBITDA margin.
Elias Mark: Denied and Hawk scent.
Elias Mark: And I have both highlighted for 2025, we expect a resumption of growth in North America further global market share gains over 20% of revenues come from subscriptions and strong momentum as we exit 'twenty kind of thing.
Elias Mark: Finally, our guidance does not include contributions from any new acquisitions or any new market launches.
Elias Mark: While we do expect Missouri to law and sports betting in the second half of this year as per our policy. We will not include it in guidance until the launch date is confirmed.
Elias Mark: We expect full year incremental adjusted EBITDA of about $14 5 million.
Elias Mark: Holdings.
Elias Mark: And our guidance assumes an average euro to USD exchange rate.
Elias Mark: 1070, yeah.
Elias Mark: Yeah.
Elias Mark: Operator, we can now tactical over 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 to remove your question from the hill and for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star.
Speaker Change: He is.
Speaker Change: Our first question is from Ryan <unk> with Craig Hallum Capital Group. Please proceed.
Ryan: Good day Charles earliest Pete.
Speaker Change: M I.
Speaker Change: I hate to beat a dead horse here every quarter, but it's it's a recurring theme that I do want to start with as you guys continue to put up really really exceptional results across the board outperformed a lot of opportunities et cetera, and then we listen to your peers and everyone else in the houses are on fire and.
Speaker Change: Et cetera.
Speaker Change: What are you hearing from your customers I know I gaming is better than sports from a customer acquisition standpoint high intent users remain the focus but I guess are you seeing anything different in your negotiations and your commercial contracts in your price discussions et cetera, I'm just to try and reset kind of how you guys are doing relative to.
Speaker Change: To the industry.
Speaker Change: Hey, Ryan.
Speaker Change: The dead horse, we're happy to keep on beating.
Speaker Change: Look with these businesses its really about supplier of traffic that's kind of the big driver.
Speaker Change: Driving these businesses and selling of traffic that you can be.
Speaker Change: Some companies are better at selling it to the others for sure.
But by and large the operators are buying traffic and pay a reasonable price. If you have the traffic in the first place, but it's yeah.
Speaker Change: So when I think about the competitors in.
Speaker Change: You know the difference in 2024.
Speaker Change: Entering 2020 for we tried to telegraph very clearly in advance that it was going to be a challenging year for sports betting in North America.
Speaker Change: Given the launch driven performance in 2023.
Speaker Change: Yeah, I think the competitors just didnt necessarily fully appreciate that as much as we did.
Speaker Change: And because.
Speaker Change: Because we saw that coming at it.
Speaker Change: Gave us conviction to focus elsewhere during the year and that.
Speaker Change: Open the door for Austin, and maybe other competitors wanted thinking along these lines there like in the door for us to do that for Ya Bestbuy Com deal.
Speaker Change: Which of course has been.
Speaker Change: Hugely accretive for shareholders and a big success.
Speaker Change:
Speaker Change: With that deal, where we bolstered our already industry market position in the U K for casino added all meaningful European sports betting revenue and.
Speaker Change: Supercharged, our casino business and the rest of Europe.
Speaker Change: Yeah, the other headwinds for for the industry had been.
Speaker Change: Yeah, Theres been a couple of kind of basket case markets recently are the one that certainly comes to mind first is Brazil.
Speaker Change: A lot of affiliates adult or had built a very successful lucrative businesses in Brazil.
But it was all you know pre regulation.
Speaker Change: When the market actually regulates the rules change people start paying taxes.
Speaker Change: That's Brazil, so there's quite a few taxes as long as ganging Dude anybody they want you to run it through our Brazilian entity to pay withholding taxes and taxes add up quickly and we run this business.
Speaker Change: For free cash flow generation, and refocus and you've talked a lot about adjusted EBITDA, but our ability to convert it.
Speaker Change: Adjusted EBITA to free cash flow is incredible.
Speaker Change: And you know, Brazil, just never had the market.
Speaker Change: Dynamics that we thought were particularly attractive and we are very pleased with our deliberate wait and see approach to Brazil, I think for us that'll be fine in time, but you know if you had to be Brazil business, even though I've got some really hard costs that you need to work through and.
Speaker Change: In the long run off it will all be absolutely fine, but it's certainly a short or medium term headwind for.
Speaker Change: For some some affiliates.
Speaker Change: Very helpful. Thanks, Charles for my follow up question, just you mentioned optic odds the b to b opportunity within our odds holdings.
Speaker Change: In the prepared remarks, but curious what you're hearing from a feedback from your sports book customers, and then kind of specifically U S versus international there and where you're maybe getting a little more traction.
Speaker Change: Sure.
Speaker Change: So on the off take outside the the.
Speaker Change: The founders of the business the team there they are based in the states right. So they they had initially sold it to U S operators and focus on U S Sports and you know the kind of big thesis here is okay. We can we've got this long list of international operators that we can sell those two let's take this thing into Europe and further afield.
Speaker Change: Yeah kind of joking with them, if theres more operators within a block of our office and multifamily and there probably isn't you know all of the United States.
Speaker Change: It's where we're well on the way, but you know again.
Speaker Change: 80, 90 days since we closed the deal, but the top brass it.
Speaker Change: At Ostracods are on the ground in Boston right now are working out of our flagship office, there and and running dry with the client so.
Speaker Change: It's not going to all happen overnight, but we are.
Speaker Change: As we have said extremely positive about.
Speaker Change: The combination of our.
Speaker Change: International operator relationships in there.
Speaker Change: Their products, which solve such as obvious and clear problem for operators.
Speaker Change: On the I'll take outside the use cases really.
Speaker Change: Risk management, you know if your if youre going to trade bonds on Wall Street, you're going to have a Bloomberg terminal and you're not going to trade bonds, unless you understand where the market's at otherwise youre going to get taken to the cleaners and it's no different for sports betting companies. If they you know.
Speaker Change: We can offer a market in any given thing and you didn't know where the peers are at an end.
Speaker Change: To just do basic risk management, and and that's what they get with Asahi glass products.
Speaker Change: Excellent. Thanks, guys. Good luck.
Speaker Change: Our next question is from Jeff fan talent with Stifel. Please proceed.
Jeff: Hey, good morning, Charles Alex Thanks for taking our questions maybe.
Jeff: Maybe starting out on guidance, but could you just help us think about some of the nuances to growth by region that feed into that consolidated number I think you called out a reversion back to growth in North America, but you know if you can strip out ask Jim you know I would assume that that market shows the lowest growth, but just.
Jeff: Just anything on sort of the relative growth.
Jeff: Bye Bye region, that's embedded in the guidance and then from a quarterly cadence perspective, how should we think about seasonality. This year given the M&A give me increasing U S. Waiting and then some of the residual state expansion comps that you called out earlier in the prepared remarks. Thanks.
Jeff: Hey, Jeff So following the acquisition involves handing off to go out and see how the product mix for 2025.
Speaker Change: Look a bit different and that obviously has a lot to do with Bryan. So we expect that over 20% of our revenue to come from consumer and enterprise subscriptions, including Red water.
Speaker Change: And that will of course drive growth primarily in North America.
Speaker Change:
Speaker Change: In terms of the.
Speaker Change: The rest of the business the marketing business, where we will build upon our very successful 2024, and our international markets.
Speaker Change: And globally with NII gaming as we expect to see that international growth continue in.
Speaker Change: And we expect to see a return to growth in North American sports betting.
Speaker Change: North American sports betting affiliate plus all.
Speaker Change: All of our businesses plus growth with running why are we expect that our.
Speaker Change: North America will be the fastest growing region overall this year.
Speaker Change: Hum.
Speaker Change: But one thing to kind of bear in mind. When you look at the full year guidance and I'm trying to understand how the growth dynamics are playing out is that an important driver of the business. This year will be a change in traffic source mix okay.
Speaker Change: Because we're gonna have substantially lower amounts of traffic from media partnerships.
Speaker Change: That is a headwind to overall revenue growth, but it results in a much higher gross margins much higher gross margins flowing through to adjusted EBITDA and ultimately free cash flow.
Speaker Change: So it puts us in a substantially healthier position overall.
Speaker Change: We expect the marketing business to be fueled by more traffic and more M D CS and our model.
Functions for this year is assume essentially flat pricing dynamic so as usual the growth is driven by more traffic more M. D. CS.
Speaker Change: That's great. Thanks, a lot Charles and then for my follow up turning over to capital allocation I'm curious just how you're thinking about the relative return on on repurchases at these levels given the stock is as round tripped a bit here over the past month or so after you announced the <unk> acquisition relative to just starting to pay down some of those I think.
Speaker Change: You said $87 million on the revolver, just just anything on sort of how you're weighing.
Speaker Change: Capital allocation and the return on repurchases at current levels would be great. Thanks.
Speaker Change: Yeah.
Speaker Change: There's a view out there that have read every line of our SEC filings might have noticed that in the credit facility agreement. It does or it did prohibit us from doing buybacks. During 2025, we sign that credit facility agreement and then the markets kind of immediately dislocated so.
Speaker Change: We were happy to get that signed and closed but we've.
Speaker Change: We've gone back to the lending syndicate with a request to waive that provision so that we can be in the market. This year with buybacks. If we want to and we have received consent for that so.
Speaker Change: Yeah, we have an existing $10 million buyback authorization already in place from the board.
Speaker Change: And you know, we will continue to be smart and tactical about it.
Speaker Change: You know, it's not a means to return capital to shareholders, but you know when we think that the stock is completely mispriced and an mob.
You know not not showing signs of improving we.
Speaker Change: We'll be happy to intervene.
Speaker Change: That's great thanks very much.
Barry Jonas: Our next question is from Barry Jonas with truly Securities. Please proceed.
Speaker Change: Hi, This is Jeremy on for Barry Thanks for taking our questions any updated thoughts in terms of sweep sweepstakes as a potential opportunity and care to comment if you see predictive markets as an opportunity as well.
Barry Jonas: Yeah.
Barry Jonas: Suites is a funny one you know it's not exactly but most are mainstream.
Barry Jonas: Mainstream product, but it's a product, which consumers really want and it's a product which at least in some states seems to have a fairly.
Barry Jonas: Clear legal standing so.
Barry Jonas: Those.
Barry Jonas: The operator isn't sweeps our casinos are very aggressive they're very happy to buy traffic and they cause a lot of them. So it does drive up the pricing somewhat but.
Barry Jonas: We continue to take a very cautious approach to the entire category. It's interesting it's.
Barry Jonas: It's growing.
Barry Jonas: You know we tend to focus on regulated markets and are doing everything by the book. So we look forward to more clarity in how those products are regarded in terms of prediction markets. You know this isn't even newer kind of segment and it's super exciting.
Barry Jonas: This is a clear strong positive for us I think.
Barry Jonas: For multiple reasons.
Speaker Change: The CFT see regulation with the prediction markets as it's Mark here.
Speaker Change: But it is again, a product which people once and it's Saturday.
Speaker Change: It's basically new competition for state gaming regulators.
Speaker Change: You know there hasn't been any sort of a federal framework for any gaming.
Speaker Change: Gaming related products.
Speaker Change: This kind of is it.
Speaker Change: And to the extent that this that the.
Speaker Change: Regulation gets clarified in a way that this can grow quickly I think it certainly will and there's a lot of interesting companies big name companies with big balance sheets that are looking.
Speaker Change: Looking to answer this or already have.
Speaker Change: And we are talking to all of them are you know it.
Speaker Change: And the obvious a way for us to explore.
Speaker Change: Ahead of time and grow the business. So we look forward to seeing how that develops this year.
Speaker Change: Great and then as a follow up with multiple states considering higher taxes, what could the potential impact beta gambling dotcom and can you share if you've seen any impact from Illinois, thus far thanks.
Speaker Change: Yeah, Yeah, if they raise taxes it affects everybody in the ecosystem can etcetera that it comes down.
Speaker Change: You know some of these states are tiers those taxes. So it only 10 at most effects the tier one operators and affects the tier two and three operators less our best clients are the tier two and tier three operators. So.
Speaker Change: There hasn't been any tangible impacts from Illinois, and we will continue to advocate for sensible taxes.
Speaker Change: Thank you.
Clarke Lampton: Our next question is from Clarke Lampton with B P. I G. Please proceed.
Clarke Lampton: Thanks, Good morning, guys I have two please our first question I wanted to follow up on the.
Speaker Change: The question that Jeff posed around growth trends I don't know if this is for Charles or earliest maybe if he I get both want to weigh in here. If we were to sort of look at it even a little bit more simplistically. We've got a lot to sift through this year in terms of M&A state launches and media partnerships, if you distill it down.
Speaker Change: A little bit more what do you think your underlying sort of organic growth rates are going to be in 'twenty, five and and maybe in 'twenty. Six if you wanted to touch on an enterprise level. Our geographically and then the second question somewhat related to organic growth I'm curious if if we end up in situation in the U S where.
Speaker Change:
Charles Gillespie: The macro environment starts to degrade a little bit I'm curious Charles when you. When you think about the 20 years that you've been 20 years or so I guess that you've been building. This business what have you seen historically.
Charles Gillespie: In tougher environments in terms of your customer behavior their player standing in the way that that impacts your business does it tend to be more durable and then elastic or do you see periods of significant gyration any commentary you could offer there I think would be helpful. Thank you guys.
Speaker Change: I'll tackle the first one and then Oh, you can talk about organic growth there.
Speaker Change: The economy and that's growth industry, it's never really had much correlation at all to be honest.
Speaker Change: One its a high growth industries and industries, just kind of going through all the economic cycles has ever seen.
Speaker Change: But practically speaking it's not a it's not a major purchase right you know if you're going to buying foreign interest rates really matter to you.
Speaker Change: And you either buy the car or you don't but if you, but if you spend 100 Bucks a month betting on sports and.
Speaker Change: And you know things get a bit tight okay. We spent 80 bucks I'm betting on sports, but you still bet on sports and you still can participate in the activity you just dialed back a bit so.
Speaker Change: Historically and historically the industry has been incredibly resilient in the face of any sort of economic distress and I can't imagine it'll be any different this time.
Speaker Change: Okay.
Speaker Change: Yeah, if we moved many of our kids to the organic growth profile.
Speaker Change: If you look at our guidance in aggregate are guiding towards a 35% topline growth obviously.
Speaker Change: A large proportion of that will come from Alton.
Speaker Change: We've said that we expect about 14 and a half million of incremental EBITDA from that acquisition I think we we told the street at the time of opposition that that we have we expect contribution margins around the 50% Mark then that's it up.
Speaker Change: You can disaggregate that about 29 30 million all of that revenue would come from folding businesses.
Speaker Change: They remain their growth will come from our marketing business.
Speaker Change: And that would indicate organic growth in the low teens.
Speaker Change: That's that's let's say, it's a pretty strong growth very strong growth from our owned and operated websites, partly offset by a decline in Iraq and dropping from lower margin media objects.
Speaker Change: Thank you very much.
Speaker Change: Our next question is from Chad Beynon with Macquarie. Please proceed.
Chad Beynon: Hi, Good morning, Charles and L. A is a nice quarter and a happy March madness.
Chad Beynon: Wanted to start with just AI as a broader theme I guess as a as a pro and con can you kind of talk about internally.
Chad Beynon: You guys are doing with with AI to improve your performance marketing offering to help create a bigger moat bigger business and then from a competition standpoint are you have you seen anything in the past couple months, whether it's competition or.
Chad Beynon: Maybe something that we talked about earlier in <unk> and 'twenty four with with some of the Google changes, maybe some other items that could that could pose a threat. Thanks.
Speaker Change: Hey, Chad past sincere apologies for rescheduling the earnings call right in the middle of the first batch of games for won't try to schedule a little better next year and good luck with all your best.
Chad Beynon: In terms of artificial intelligence internally.
Speaker Change: It has been a boon across the organization and it is our theme for 2025.
Speaker Change: We've got a a two day AI only hackathon coming up and the.
Speaker Change: The best ideas coming out there that are going to investigate a matter of really amazing you know my background as a technologist and that's been instrumental here has accepted the culture of the company to be an early adopter of these new tools.
Speaker Change: It's benefiting us in a ton of different ways not just the obvious areas like technology architecture, and software development and it really touches the whole business.
Speaker Change: Some content I.
Speaker Change: I mean, even finance and HR C C.
Speaker Change: Gains with this and it's it's.
Speaker Change: Fundamentally it's essentially.
Speaker Change: Our capacity and our throughput on everything.
Speaker Change: <unk>, which has given us the license to be more ambitious across the organization in terms of the number of new projects and new products.
Speaker Change: We want to develop.
Speaker Change: If you think about artificial intelligence from an external perspective.
Speaker Change: As you can see from our numbers our core marketing business.
Speaker Change: Which is powered by natural search traffic.
Speaker Change: It continues to grow and just had a record quarter. Furthermore, if you look at Google's revenue and the number of search queries that are still going to Google.
Speaker Change: Also never higher.
Speaker Change: Pretty clear sign that this you know.
Speaker Change: The next wave of engagement on these AI powering experiences, it's fundamentally incremental to search and not a replacement.
Speaker Change: But at the same time I'm sure everybody has examples of Powell.
Speaker Change: They've moved some use cases away from Google to these AI and AI tools and LLS, but from our perspective, the high intent search traffic and make the most valuable commercial search traffic has kind of been the least affected by beans.
Speaker Change: Powered experiences.
Speaker Change:
Speaker Change: And where we're not getting traffic from these AI powered experiences we we get referrals from all of them. It's it's small, but it's growing rapidly.
Speaker Change: The chart is beautiful.
Speaker Change: And the users of these experiences are our highly qualified and other pre salt you've done a lot of work, they're taking the time to engage in L. I love to talk about something complex. So by the time it gets to our site there where they're ready to go and in what we're seeing you know again small numbers, but what we're saying.
Speaker Change: Is it these people are even more valuable than the high end sensors traffic coming off of Google.
Speaker Change: Yeah, when you get when we get traffic from it it's usually it's a citation right you know so they put some information that we published them to the answer and then they say, yes, but they only ever site, one or two sites like Google, where there's 10, so that really plays to our advantage as the owners of the biggest brands in the space.
Speaker Change: No I think it's going to be really hard for the small affiliates and they kind of long tail affiliates you know, there's not gonna be whereas you could maybe make a little bit of money in physician eight or nine on Google right.
That's already hard now that I think that's getting harder.
Speaker Change: So it gives us a lot of confidence that well.
Speaker Change: We will be positioned as a winner in this this new future of incremental AI use by consumers online.
Speaker Change: That's great thanks for that.
Speaker Change: And then just.
Speaker Change: A quick clarification.
Speaker Change: No sports is a smaller percentage of your overall business, but in Q4.
Speaker Change: The items that you talked about in terms of why the revenues were down year over year, you Didnt mentioned anything around hold so just wanted.
Speaker Change: Wanted to kind of circle back on how hold affects your business it doesn't sound like you're gonna see swings.
Speaker Change: The way I guess in the fourth quarter. It was a slight negative for some of your partners, but it's certainly something that they're focusing on and in 25 to increase hold so can you just remind us how all that kind of feeds into you know some of the Rev share deals and in a few.
Speaker Change: If that impacted Q4, and then more importantly from $25 if that could help the sports line. Thank you.
Speaker Change: So that does hold percentages naturally they only affects revenue share revenue and we are our proportionate revenue sharing revenue has been going up it went up meaningfully when we did the for you guys. So called acquisition.
Speaker Change: With the amount of.
Speaker Change: Revenue share revenue, we have in sports betting you know a lot of casino right and so the amount we have in and sports betting is is.
Speaker Change: Not huge and it's not a you know it's spread out between Europe and the U S. So if you have kind of negative.
Speaker Change: Operator whole dynamics and one you usually don't have it on a global basis, you might have it in Europe or the U S. But it typically doesn't happen in both at the same time.
Speaker Change: Thank you very much guys.
Speaker Change: Our next question is from Nike with the benchmark company. Please proceed.
Speaker Change: Hey, Charles L S. Peter.
Speaker Change: Peter Congrats guys and 24 are nice to see the strong.
Speaker Change: 25 guide and great to hear you can buy back stock here.
Speaker Change: I guess Charles on your odds holdings. Congratulations I don't think we've talk live on it I'm just curious how.
Speaker Change: The integration is proceeding for you guys. Obviously I think the team there is strong and sort of the synergies I guess that you see.
Speaker Change: Specifically.
Speaker Change: If you can share some of your ideas on how you plan to monetize the Ards data engine would be great and I have a follow up question.
Speaker Change: And Mike welcome to your first scan earnings call. Yeah. So as I said, we're only about 90 days then at this point, it's still early days, but you know they have an incredible team and.
Speaker Change: And I have a fantastic platform, we've integrated their data into a number of our existing sports betting products across our owned and operated websites we've got of widgets.
Speaker Change: Driven content all over the place right and you know why not only on the company that has the single best data in the World. Obviously, we're going to use that to power those internal tools. So that's obviously been very very positive. It's also helped us accelerate the development of some new features and tools for our owned and operated website.
Speaker Change: It's you know stuff like our same game part away content, which we were doing three three.
Speaker Change: Oh its holdings, but you know with their knowledge data everything else that they're bringing in you know we can we can certainly do that faster.
Speaker Change:
Speaker Change: Yeah.
Speaker Change: These are growth businesses and you you would of course expect to see.
Speaker Change: The number of clients and the number of subscribers grow on a year to year basis, and that's obviously, what's happening, but what it's been interesting that we've seen.
Speaker Change: Just here in the very beginning of the city.
Speaker Change: The average revenue per user on both a b to C ASEAN business and the average revenue per client on the optical that's b to B side is also up year on year.
Speaker Change: Nice sounds good.
Speaker Change: <unk>.
Speaker Change: Thanks, Charles D. A I guess on Missouri.
Speaker Change: Not in your guidance, so you're sort of baking in upside there, which is nice can you help sort of.
Speaker Change: My son, she can help us sort of size that opportunity there if not I understand that it would be great to sort of.
Better understand the growth that you think could come from Missouri, given obviously, we don't know what it's exactly going to go away, but I think we're getting a better idea.
Speaker Change: And then as you sort of think.
Speaker Change: You know you probably get this question all the time, but you you think medium term in the U S and I gaming regulation that just seems like we came into this year with.
Speaker Change: You know a lot of hope and confidence that we'd have the tailwind here on legalization and it seems like it's sort of just been grinding away here I don't know if we're in a better place or worse at this point to sort of cure.
Speaker Change: Curious your enthusiasm.
Speaker Change: When you start to look at 26 and beyond in terms of I gaming legalization in the U S. If you think there's some big unlock for you.
Speaker Change: But or sort of a believable I guess in the medium term.
Speaker Change: Yes.
Speaker Change: Yeah. The activity. Thus far this year has been mixed I think I think we will get a handful of things still in recession. The legislative sessions are not over and there's some still some some big opportunities out there and play I think there's a gimmick build filed in the last 24 hours.
Speaker Change: So we remain optimistic that we'll get something this year in terms of Missouri we.
Speaker Change: Reading the tea leaves the tea leaves I think they'll probably get at Lifelock football season that.
Speaker Change: That's certainly the hope and that obviously makes a difference for everyone, including the.
Speaker Change: The tax revenue that they're gonna get so fingers crossed for that and as we said 10 times today. It would only go into guidance once a week.
Speaker Change: Have clarity on that date.
Speaker Change: Alright, guys. Thank you good luck.
Speaker Change: As a reminder, it is star one on your telephone keypad, if he would like to ask a question. Our next question is from David Katz with Jefferies. Please proceed.
David Katz: Hi, good morning, everybody. Thanks for taking my question.
Speaker Change: I wanted to go back to a couple of things that you talked about earlier Charles one is.
David Katz: The prediction markets you know.
David Katz: I wanted to you were pretty definitive about it and I wanted to ask if you sort of view that as incremental to the Tam.
David Katz: Hum cannibalizing to the Tam.
David Katz: You seem to have sort of a I.
David Katz: You know I guess affirming view on those.
David Katz: And I'm curious, how you sort of see them in the landscape of your current set of operator clients.
David Katz: Hey, David.
David Katz: Yeah, I think it's net incremental to the Tam right I mean, it could cut into the traditional local state based regulated sports betting operations, but I think it'll be bigger than you know it'll be it'll grow the market more than it will impact for them.
David Katz: Obviously different completely different taxation profile. So when you think about.
David Katz: Money at the end of the day.
David Katz: More of it could flow through these C. S E T markets versus you know very highly regulated very heavily taxed state gaming revenue.
David Katz: And I think you know the big operators in United States I understand that right you know one of the day.
Speaker Change: M y.
We're not put it through that channel if they couldn't any legal right. So you know I think this is give me a fascinating space to watch.
Speaker Change: I think competition from a regulatory perspective is good.
Speaker Change: And I'm positive about it but it's it's you know we're at the beginning of this whole thing.
Speaker Change: Understood and then second just taken a lot of your commentary about AI.
Speaker Change: The operators, obviously spend time talking about responsible gaming AR and AI as a tool in that regard is there potentially a role for you to play and eating operators from that perspective as well.
Speaker Change: It's a great question you know most of them.
Speaker Change: We don't tend to get.
Speaker Change: Obviously, we don't have as much player data as the operators do right. They are not our customers and in many cases, we're just sending traffic yet and we don't know anything about that traffic. So we're not as well positioned to identify problem gambling as the operators.
Speaker Change: But we are certainly are here to help if they think there's if there's any data points in our ecosystem that can be added into their machine learning models to help them recognize those patterns of problem gambling behavior and intervene more quickly with those players.
Speaker Change: Good luck thanks, congrats on your quarter.
Speaker Change: There are no further questions at this time.
I would like to turn the call back over to management for closing comments.
Speaker Change: Thanks, everybody for joining us today and please enjoy March madness, and we'll catch up with you in May.
Speaker Change: 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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