Gambling.com Group Limited

16th is primarily due to the fact that our team was able to respond immediately to the changes and recalibrate our portfolio of owned and operated sites faster than had been initially expected. To date, the effects of the Google policy shift have also been less pronounced than originally expected. The second bigger picture factor is to highlight is the critical value we continue to create for our B2C online gambling operator clients. For nearly 30 years, performance marketing has proven to be one of, if not the biggest, source of new players for growing operators. We estimate that about 40% of the iGaming and 30% of the sports betting customers and operators' databases in established markets were delivered by the performance marketing channel. While these percentages are lower so far in North America, we expect that they will continue to trend toward the established markets as levels as players continue to mature and certainly as iGaming expansion eventually takes hold. Most importantly, as demonstrated by our Q2 results, we believe we are consistently growing our industry share on a global basis, and we are better positioned than ever before with the right assets technology, and teams to further this growth. And the third factor I want to remind everyone of this morning is the relentless digitization of the gambling and advertising worlds. While in certain established markets online gambling revenue dwarfs land-based gambling revenue, many of the world's largest economies are still at the beginning of their relationship with this industry. And digital advertising continues to grow in importance and influence as it offers marketers the highest level of visibility and certainty for the return on their investments. With our portfolio of platinum brands, such as Gambling.com, Bookies.com, and Casinos.com, we are in the sweet spot of this convergence, controlling the valuable, high-intent audience determined to become customers at our clients' websites. These factors combined with our strong first half performance now give us confidence to raise our revenue and adjusted EBITDA guidance for this year. The midpoints of our new guidance now reflect year-over-year revenue growth of 15% and adjusted EBITDA growth of 24%. This confidence in the business is the reason we have repurchased over 6% of our outstanding shares to date. We also remain as active as ever in evaluating M&A opportunities and will not hesitate to pursue the right targets. Our balance sheet and free cash flow generation enable us to both repurchase shares and fund acquisitions. And finally, we remain confident we are on a clear path towards generating $100 million in adjusted EBITDA given our exemplary execution, high cash flow generation, organic market share gains, and disciplined execution. M&A growth focus. Now let me turn the call over to Elias for a review of the second quarter financial highlights and details on our revised full-year outlook.

Thank you, Charles. Revenue of $30.5 million was a second quarter record as we delivered more than 108,000 NDCs to customers, up 19% compared to the year-ago period. The 18% year-over-year revenue increase primarily reflects strong growth in iGaming revenue across Europe. Revenue in the UK and Ireland rose 18% year-over-year. Other Europe was up 111%, and rest of the world revenue grew 70%, following strong performance by Gambling.com and our other owned and operated assets, and the initial contributions from the acquired FreeBest.com and related assets. Revenue in North America was stable year-on-year when factoring out the atypically strong OSB performance we saw in Q2 last year, which we discussed at the time. Inclusive of such performance, North American revenue was down 8% year-over-year. Gross profit increased 16% or 4 million year-over-year to 29.1 million. Cost of sales grew 60% year-over-year to 1.4 million, but was down 36% from the first quarter. Our cost of sales, which are directly related to our media partnership revenues, were higher in the second quarter than we anticipated at the time our Q1 call, as a higher level of this business was sustained through the quarter than expected at the time. Gross margins increased to 95% from 92% in the first quarter. Total operating expenses declined 15% to 20.8 million, reflecting the elimination of fair value movement in contingent consideration and a modest decrease in G&A, partially offset by increases in sales and marketing and technology expenses. Adjusted EBITDA increased 19% year-over-year to a second quarter record 11.2 million compared to 9.4 million in the year-ago quarter. The Q2 adjusted EBITDA margin of 37% was up from 36% in the year-ago quarter. Adjusted net income for the second quarter of 2024 rose 13% to 7.4 million from 6.5 million in the year-ago period, while adjusted diluted net income per share of 20 cents increased 18% from 17 per share in the second quarter of 2023. Operating cash flow of 0.2 million includes 7.2 million of the final BonusFinder.com payment. Excluding this payment, operating cash flow would have been 7.4 million. Free cash flow was 6 million in the second quarter compared to 8.7 million in the year-ago quarter, reflecting working capital movements and increased capital expenditure related to our new offices in the U.S. During the second quarter, we repurchased approximately 834,000 shares at an average price of 8.17 per share. To date, we have repurchased approximately 2.3 million shares at an average price of $8.76, representing more than 6% of the total outstanding shares. Earlier this week, we completed repurchases for the entirety of the previous 20 million share buyback authorization. Yesterday, the Board approved an additional 10 million authorization to continue share repurchases. June 30th, we had total cash of $7.5 million, a $17.8 million quarter-on-quarter decrease, reflecting cash utilized for share repurchases, the final cash payment of $13.6 million for BonusFinder.com, and the initial $20 million cash consideration paid for the acquisition of FreeBets.com and related assets. As of June 30th, we had drawn a total of $18 million on our $50 million credit facility. This morning, we raised our guidance for 2024 revenue to now be between 123 million to 127 million, with a midpoint representing 15% year-over-year growth. The midpoint of our new higher adjusted EBITDA range of 44 million to 47 million represents 24% year-over-year growth. Looking at some of the factors that comprise our outlook for the year, we continue to see strong demand for consumer sign-ups for new player accounts and operator demand for performance marketing services. As Charles highlighted, we expect to manage our portfolio websites to grow revenues in 2024 despite the impact of the Google policy change on our media partnerships. For the full year 2024 period, our guidance does not include contributions from any new acquisitions. The guidance also assumes no additional US state launches beyond the recent launch in North Carolina. We now expect full year cost of sales of 6.5 million, of which 3.7 million was incurred in the first half of the year. Finally, our guidance assumes an average Euro to USD exchange rate of 1.09 throughout 2024. Operator, We are now happy to open up the line for questions.

Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and one on a telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. The first question comes from Jeff Stanchel with Stifel. Please go ahead.