Gambling.com Group Limited

hello everyone and welcome to gambling.com group's first quarter 2022 earnings results call i'm joined by charles galessi chief executive officer and co-founder elias mark chief financial officer this call is being webcast live within the investor relations section of our website at gambling.com corporate slash investors and downloadable version of this presentation is available there as well a webcast replay will be available on the website after the conclusion of this call You may also contact investor relations support by emailing investors at gdcgroup.com. I'd 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 defined by securities laws. These statements are based on information currently available to us that involve risk and uncertainty that could cause actual future results, performance, and business prospects and opportunities to differ materially from those expressed or implied by these statements. Some important factors that could cause such differences are discussed in the risk factors section of GAMWI.com Group's filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date of 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 security laws. During the call, there will also be a discussion of non-IFRS financial measures. Description of these non-IFR financial measures is included in the press release issued earlier this morning. In reconciliation of these non-IFRS financial measures, their most directly comparable IFRS measures are included in the appendix to the presentation and press release, both of which are available in the investors tab of our website. With that, I'll now turn the call over to Charles.

Thank you, Josh, and welcome, everyone. This morning, we reported our first quarter results that showed the best single quarter financial performance in the group's 15-year history. If you're following along with the slide deck, now I'm on slide four. Our core business performed brilliantly all quarter. Continued strong organic growth combined with the performance of our recent acquisitions helped drive 70% revenue growth against Q1 2021, which was our previous best quarter. We delivered adjusted EBITDA consistent with the prior year, as substantially higher revenue offset the increased investments in the organization we are making to support our organic growth initiatives. Our adjusted EBITDA margin in the quarter was 37%, and we delivered positive free cash flow despite continued investments in our domain portfolio. We delivered a record 67,000 new deposit customers, an increase of 91% against Q1 2021. This increase was driven by the expansion of our portfolio of domain names, websites, and partner sites. The investments we are making in technology and data science continue to benefit us organization-wide. Now I'm on slide five. We continue to deliver on our strategic objective to grow our North American presence with North American revenue growing over 500% to $10.6 million, representing for the first time a majority of group revenue. Online sports betting in New York launched in January, well ahead of the anticipated launch date, and we delivered a master class performance in the Empire State. According to our clients, we have been among the market leaders in terms of the number of new department customers delivered to them. In anticipation of the launch, we developed two New York-specific websites where sports bettors can find trusted, comprehensive, and up-to-date information on sports betting in the state. These states, NewYorkBets.com and EmpireStates.com, complement our flagship U.S. sports betting website, Bookies.com and Gambling.com. Shortly after the launch in New York, we successfully entered the Louisiana market, which was followed by the launch of Ontario shortly after quarter ends. We believe additional new market launches will continue to be a key driver of revenue growth over the coming years. Trading outside of North America was also solid and comfortably ahead of levels seen in Q4 2021. The UK saw strong trading, especially when considered that during the comparable period last year, we saw temporary demand increases during restrictive COVID measures. Our media partnership with McClatchy, announced in January, got off to a strong start in the quarter and delivered meaningful revenue and new depositing customers. Likewise, our recent acquisition of BonusFinder.com is already proving to be a great acquisition, delivering strong New depositing customer numbers in Q1 and providing a great platform to expand in the Canadian market and beyond. Work on applying our performance marketing platform to rotowire.com, acquired at the beginning of the quarter, is also progressing nicely in preparation for the seasonally stronger fall sports season in the U.S., where rotowire is well positioned to drive incremental revenue. Now on slide six. Our first quarter has served as strong validation of the investments we are making to drive organic growth in North America. Our portfolio of premier domain names for the U.S. market has already demonstrated its value, and we possess many more domain names and assets on standby awaiting legalization of online sports betting and iGaming in additional states. New sites on these premium domains are being built in-house on our technology platform, which will maximize the ROI for these capital investments over time. Now on slide seven. Over the past few months, we have seen new state launches in the U.S. greatly expand the total addressable market. New York's launch was followed by Louisiana's launch of online sports betting on January 28th, in time for the Super Bowl, and Arkansas's launch of online sports betting on March 4th, in time for March Madness. Shortly after the end of Q1, Ontario officially launched its newly regulated online casino and sports betting market on April 4th. The highly successful New York launch happened earlier than previously anticipated in the quarter and exceeded our expectations. Likewise, the group had a successful market launch in Louisiana. The market in Arkansas has been slow to develop at time of launch. In Ontario, we are well positioned, but given that online galing has been readily available in Canada for years, we did not see the same spike in demand around the launch date typically seen in well-managed U.S. state launches. Initial conversion rates with our partners in Ontario have been below expectations as our operators work out the kinks in their new customer acquisition pipelines. With the acquisition of BonusFinder.com, we are well positioned across Canada and expect the market to thrive at scale. For the rest of 2022, all of the focus is on Ohio and Maryland, which have already legislated sports betting but have not yet launched their regulated markets. We now do not expect that either state will launch in time for the NFL season in September, as we had previously anticipated at the start of the year. We see these states launching in late Q4 or even in Q1 2023. Likewise, the launch date of online sports betting in Canvas, which recently legislated, is not yet clear. Now I would like to turn the call over to our CFO, Elias Mark, to discuss our first quarter financial performance in greater detail.

Thank you, Charles, and welcome, everyone. As Charles mentioned, we saw our investments in the business during the second half of 2021 really start to pay off, and we delivered the best quarterly performance in the group's history. First quarter revenue of 19.6 million increased 70% compared to the prior year, or 84% on a constant currency basis, ahead of market consensus. The growth was primarily organic, complemented by growth our recent acquisition the increase in revenue was driven by growth in new depositing customers primarily within north american sports we began recognizing cost of sales in january as a result of our new media partnerships work vertical and the subscription business of the recently acquired rosewire.com in the first quarter being heard 1.2 million total operating expenses to 13.3 million. On a constant currency basis, operating expenses increased 7.5 million. This increase was driven primarily by additional headcounts across marketing, product, and sales functions, as well as increased amortization related to recent acquisitions. During 2022, we expect to incur additional amortization of approximately 4.5 million related to the acquisitions. We have also increased administrative expenses associated with operating as a public company. We continue to invest into our business as we see a clear path to substantial return on that investment over the coming years as existing states grow and new states launch. We are able to do so while retaining high margins and generating positive free cash flow. Like the rest of the world, we are experiencing some inflationary pressures, and we seek to mitigate those pressures by increasing the proportion of our operating expenses for more cost-efficient jurisdictions as we expand. We generated adjusted EBITDA of $7.2 million compared with $7.1 million in the prior year. This represents an adjusted EBITDA margin of 37%, as our investments in scaling the organization were offset by higher revenue. Net income totalled 4.5 million or 12 cents per diluted share compared to net income of 4.5 million and 14 cents per diluted share in the prior year. Looking forward, we expect net income and net income per diluted share to be significantly impacted by fair value movements as a result of revaluing our contingent considerations related to the acquisitions. To assist in comparability, We will present net income and net income per the literature adjusted for fair value movements beginning in the second quarter and continuing until the end of the BonusFinder.com earner period at the end of 2023. Total cash generated from operations of 3.6 million decreased compared to 6.7 million in Q1 2021. This was because of working capital expansion primarily driven by the rapid revenue growth as well as the increased proportion of North American revenue with slightly longer average credit period. We expect cash conversion to gradually improve over the coming months. We generated free cash flow of $1.4 million despite working gaps of expansion and our continued investments in our domain portfolio. We remain able to entirely fund our organic growth initiatives from operating cash flows and still remain free cash flow positive. New depositing customers in the quarter grew 91% to 67,000 compared to 35,000 in the prior year. This was driven by North American sports as well as the solid performance in the UK and Ireland. They retained cash balances as of March 31, 2022, totaling 33 million. The decrease compared to the 51 million at the end of last year as a result of the cash considerations paid for the recent acquisitions of Road2Wire.com and BonusFinder.com, as well as the main acquisitions. And this was partly offset by our operating cash flow. We are very pleased by the strong start of the year, and we continue to expect another year of record financial performance for the group, as both our core business and our acquisitions are performing well. As we look to the balance of 2022, given our growing exposure to North American sports calendar, we are subject to deeper natural seasonality patterns than we have experienced historically. The second quarter is the seasonally weakest with negative sports seasonality continuing into the first two months of the third quarter. This is followed by a seasonally stronger period starting with the launch of the NFL season and continuing through early April with September and March being the strongest months. Our growth expectations are also affected by the timing and quality of new market launches. The very successful New York market launched earlier than initially expected, forcing some pull forward of revenue initially expected in April into the first quarter. Looking towards the second half of the year, the expected market launches in Ohio and in Maryland are now looking more likely to occur towards the end of Q4 or in Q1 2023, rather than September. This pushes some expected revenue from Q3 and Q4 into 2023. On to slide nine. We reiterate our guidance for 2022. So we expect revenue in the range of 71 to 76 million, representing growth of 68 to 80%. We also expect adjusted EBITDA between 22 million and 27 million, representing growth of 20 to 47%. With that, I will turn it over to John.