Gambling.com Group Limited

Hello, everyone, and welcome to Gambling.com Group's second quarter 2021 earnings results call. I'm joined by Charles Gillespie, Chief Executive Officer and co-founder, as well as Elias Mark, Chief Financial Officer. This call is being webcast live within the investor relations section of our website at gambling.com slash corporate slash investors, and a downloadable version of the presentation is available there as well. A replay will also be available on the website after the conclusion of this call. You may also contact investor relations support by emailing investors at 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, consists of 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 and business prospects and opportunities to differ materially from those expressed in or implied by these statements. Some important factors that could cause such differences are discussed in the risk factors section of Gambling.com Group's filings with the Securities and Exchange Commission. Forward-looking statements speak only as of today, 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 measures. A description of these non-IFRS financial measures is included in the press release issued this morning, and reconciliations of these financial measures to their most directly comparable IFRS measure are included in the appendix to the presentation and press release, both of which are available on the Investor tab of our website. I'll now turn the call over to Charles.

Thank you and welcome, everyone, to our second quarter earnings results call and our first as a public company.

The successful listing of our shares last month on the NASDAQ global market was a monumental event in the company's history, and we are incredibly excited about the opportunities that lie ahead of us. To our new and prospective shareholders, thank you for your support and interest in Gambling.com Group. We look forward to sharing our future success in the fast-growing online gambling industry with you. I'd like to start by reviewing the highlights from our second quarter and other notable events subsequent to quarter end. Revenue for the quarter grew 66% compared to last year. Through the first half of the year, revenue has more than doubled compared to 2020, increasing 111%. Most impressively, all of our growth was organic, and we are among the fastest-growing companies in the online gambling industry. Net income for the quarter was $2.4 million, or $0.08 per diluted share, significantly better than the prior year. Our adjusted EBITDA totaled $5.5 million, which was a 46% increase from 2020. Free cash flow of $3.1 million was down slightly due to higher capital expenditures related to the purchase of U.S. domain names and capitalized development costs aligned with our strategy of growing our presence in the U.S. market. We also launched new websites during the quarter, including Empire Stakes, Bet Arizona, and Illinois Bet, which provides bettors with trusted and up-to-date state-specific information to help them find the best online sportsbook to place safe and legal wagers. We have also completed the re-dom affiliation of the business from Malta to the Channel Island of Jersey in late May. And as I mentioned, after the quarter end, we completed the successful public listing of our ordinary shares on the NASDAQ global market in July under the ticker symbol GAMB. Shortly after, we announced the addition of Dan DiRigo to our board of directors. Dan most recently served as the CFO of MGM Resorts International and was a member of the team that created what is now known as BetMGM. Dan's experience as the CFO of a publicly traded S&P 500 casino and hospitality company will be an invaluable asset as we execute our growth strategy as a public company. Given the recency of our IPO, I'd like to spend some time presenting an overview of GAMI.com Group. As a leading provider of player acquisition services for online gambling operators, our sites and services offer two basic but critically important functions in the online gambling ecosystem. First, we help B2C online gambling operators achieve their player acquisition targets by referring online sports betting and online casino players to them. And second, we simultaneously help those players by providing them with up-to-date information and tools to help them make the right choice when choosing an online gambling company, ensuring that they get a quality entertainment experience from a responsible company. Our leadership status is validated by the growing importance of our service to B2C gambling operators and the financial performance we have achieved as a result. In 2020, our revenue totaled $28 million, of which roughly 65% was derived from either hybrid or revenue share agreements where we are entitled to an ongoing share of the future net gaming revenue of each of the referred players that we had sent to those operator clients. From 2017 to 2020, we have compounded our top line at an annualized organic growth rate of 35%. In 2020, we grew 45% year on year again all of which was organic. These figures serve as a testament to our proprietary technology platform and the high-quality content available at our branded destinations. At the same time, unlike many in the industry, we are extremely profitable. We generated $14.6 million of adjusted EBITDA in 2020, a margin of 52%, and generated free cash flow of $10.8 million as well, We have already nearly matched those results through the first half of 2021. Through the first six months of the year, we have generated $12.6 million of adjusted EBITDA and $9.5 million of free cash flow. We are a global company with offices in Dublin, Malta, Charlotte, and Tampa, and we employ a global workforce of more than 150 full-time team members. We have launched over 30 websites across 13 different markets and in six different languages, and we referred over 100,000 new deposit and customer accounts to our online gambling operator client. For those of you following along with the slides, I'm now on slide six. While this may be our first earnings call as a public company, we have been in the business since 2006. and we are an established global player in a rapidly expanding industry. We have built an affiliate marketing powerhouse for the global online gambling industry with widely recognized brands. We have leveraged these premium brands, including bookies.com and the iconic gambling.com, to establish leading positions across our markets. Our main markets include the United Kingdom, Ireland, the US, and Canada, as well as several other European markets. We've experienced recent growth across all of our market segments, with particularly strong growth in other Europe and North America. We are also very excited about the Netherlands, which is expected to come online later this year. And as online gambling legislative momentum continues to build in the U.S., we expect to grow our share in what is expected to be the largest online gambling market in the world and our number one priority growth market. Over 200 different online gambling operators currently use our services to support their customer acquisition efforts, including the most recognized names in the industry, such as DraftKings, FanDuel, BetMGM, Caesars, PointsBet, and many more. I'm now on slide seven. A critical piece of our success has been our technology-first strategy. Our investment in our technology solutions over the years has resulted in an internally developed proprietary platform that offers us a wide moat compared to our peers. It is what drives our outperformance in terms of organic revenue growth and differentiates us from our competition. This platform mainly consists of four distinct components, each one of which was developed internally and was purpose-built to help us operate efficiently and continue to scale. We have a gambling-specific content management system that acts as the central repository for all of the content we produce and publish. We have an in-house publishing system which makes our websites ultra-fast and assures consistent and high-quality execution of our search engine optimization strategies. We also have a bespoke advertising server which helps us manage the timing and appearance of the offers from our B2C gambling operator clients across our network of websites. And finally, through our carefully refined business intelligence system, we have clean data to understand the user intent and behavior across our network and power our next generation optimization technology, which is based on modern data science and machine learning strategies. When combined, These sophisticated tools help us determine the most profitable path for each player that visits our websites, a process that has been optimized over the past 15 years. Critically, these tools allow us to control the traffic flow of players. We refer to online gamblers and efficiently manage risks like customer concentration. Now on to slide eight. Our growth strategy centers around three core initiatives. Number one is our planned expansion in the United States, pursuing market share by deploying assets on both a national and state-based level, as well as adding U.S. content to our international destinations. The U.S. is the future of the global online gambling industry and is our main priority. Second is growing our global strategic presence, targeting regulated markets with significant growth potential and increasing our share in more mature markets such as Australia, the UK, Italy, Austria, Switzerland, and Germany. It also includes our entrance into new countries that come online, such as the Netherlands. We are particularly excited about the regulation of online gambling across a variety of Canadian provinces. In Ontario alone, there's a population of more than 13 million people, equivalent to the population of Pennsylvania, which is the fifth largest state in the U.S. And third, we plan to pursue strategic acquisitions targeting under-monetized digital media assets with strong user engagement. We are also evaluating a more opportunistic growth strategy in areas of the world like Latin America. The bottom line is that our technology platform is market agnostic and affords us a strong starting position in new markets where regulation comes online. Now on to slide nine. We are uniquely positioned to grow market share and what we ultimately expect to be the world's largest online gambling market, the United States. We have culturally been an American company since inception with American co-founders and more American members of our senior management team than any other nationality. We are also already licensed to operate and currently active in 10 states and will seek licensing in all US states where we expect a viable and legal market. We look forward to the start of pre-registration in Arizona this Saturday. When competing in a large and competitive market, visibility, recognition, and trust with consumers is essential. The domain gambling.com has been the category-defining name for the industry since before the regulation of online gambling in the U.S. It is a unique and one-of-a-kind asset, and there is only one gambling.com. Similarly, we have positioned bookies.com to be a leading destination for sports betting content in the U.S. Gambling.com is a highly profitable, historic mainstay of the online gambling affiliate world, and we intend to elevate bookies.com to the same position. And lastly, we possess an experienced management team with a flawless track record. Myself and my co-founder, Kevin McChrystal, have been with the business since inception as CEO and COO. We will leverage our 15 years of experience in the global online gambling industry to achieve a leading position in the U.S. market in the years to come. On the slide 10, for context, the global online gambling, excuse me, the online gambling industry in the U.S. is expected to grow at a compound annual growth rate of 39% between 2019 and 2025. That compares to the global expectation of 10% per year over the same time period. Industry forecasts expect the market to reach roughly $16 billion by that time and possibly $30 billion at maturity. On top of that, the potential for online share of the total market to grow is massive. Today in the U.S., the proportion of overall gambling revenue that comes from the online segment is tiny at just 2% to 3%. and expected to grow to 10% by 2025. We believe the UK serves as a high quality proxy for the potential for online uptake in the US over the coming years. The UK, which is our most mature market and where we have operated the longest, online gambling in the UK, online gambling constitutes nearly 50% of the total gambling market today and is expected to continue to grow to nearly 60% in 2025. Clearly there's a massive opportunity in the US for the transition away from land-based gambling to online gambling. In short, we are an established high growth and highly profitable global player in a rapidly expanding industry. And we are just starting to grow our share in what is the fastest growing and is expected to be the largest online gambling market in the world. We have a proven and scalable model backed by proprietary technology solutions that drive our success. And we have a proven management team with an acute knowledge of the U.S. market as well as a global presence. The global online gambling market, and particularly the U.S. market, is an area of massive growth. And we are uniquely positioned to thrive regardless of which online gambling operators prevail as the market leaders. With that, I'd like to turn the call over to our CFO, Mr. Elias Marks.