Gambling.com Group CEO Talks Q1 Earnings, M&A Approach, And More

Charles Gillespie is Chief Executive Officer at Gambling.com Group GAMB, a provider of digital marketing services for the global online gambling industry. Gillespie recently took retail investor questions about Gambling.com Group’s Q1 earnings, business priorities, and competitive advantages via the Public.com investing platform. Here’s an exclusive recap of the Town Hall event for Benzinga readers.

Are you the umbrella for most of the gambling companies, or are you a separate entity?

Charles Gillespie: Gambling.com Group does not offer gambling services itself, and therefore we do not compete with companies like DraftKings and FanDuel. These online gambling companies are actually our clients (along with around 200 more), and as they grow and succeed, so do we.

We publish free-to-use websites which provide players an immense amount of information about the online gambling industry in the U.S. and abroad, such as Gambling.com, Bookies.com, and state-specific sites like BetOhio.com and BetMassachusetts.com.

We are paid by the online gambling companies to help them acquire new sportsbook and online casino players. Similar to how consumers looking to get deals on hotels or airfare will visit a travel aggregator service like Hotels.com, consumers looking for online gambling options turn to one or more of our websites.

Can you provide context about your business model, specifically performance marketing?
CG: We assist online sports betting and online casino operators in acquiring new customers. We do this by publishing a variety of high-quality websites which inform online players about the online gambling industry and help them compare online gambling sites to choose the best option for their requirements.

This is called performance marketing because online gambling websites only pay us when we successfully deliver them a new depositing customer (NDC). Another name for this is affiliate marketing. This cuts both ways — if we send them low-quality traffic we will be paid very little. However, if we send them high-quality traffic, we will be extremely well compensated. We are very good at driving high-quality traffic to our websites and then onto our clients’ online gambling platforms.

This approach drives our profitability (95% gross margin and Q1 Adjusted EBITDA margin of 40%) and strong revenue growth.

What sets your company apart from the competition, especially within a flooded market? 

CG: Indeed, we are not the only online gambling affiliate out there. We are, however, the one that has generated the fastest organic growth over the period from 2017-2022 with an organic growth CAGR of 50% and the only one publicly traded in the United States (there are a handful in Europe).

We were able to achieve this as we have the biggest and best names in the industry (Gambling.com, Bookies.com, Casinos.com, etc.) and because we have a proprietary stack of technology purpose-built to do one thing: online gambling affiliate marketing. All of our sites run off of this technology, and it enables us to out-execute our competition.

This strong growth has enabled us to reach scale without relying on acquisitions like some of our peers. We have done six proper acquisitions, whereas some of our peers have done over forty. This strategy has been dramatically more capital efficient for our shareholders.

On your earnings call, you touched on M&A appetite. When you look at potential companies for M&A, is this regarding the expansion of existing media properties or expanding to new and different areas of the market? 

CG: We generate substantial free cash flow, and as such, deploying it on acquisitions makes sense in our high-growth industry. We are very picky on M&A and only pull the trigger when we see clear value for our shareholders and, ideally, multiple ways to win.

We evaluate other online gambling affiliate businesses for additional scale as well as affiliate adjacent businesses which we feel would be complementary to our existing capabilities.

Can you talk about the seasonality involved in your industry, especially when it comes to sports betting? 

CG: The autumn sports season, when NFL kicks off, is really prime time, and that runs until about May when both the major U.S. sports leagues and soccer in Europe wrap up. That means that typically Q1 is the best quarter of the year, followed by Q4; Q2 and Q3 are typically the quietest. Depending on the number of NFL Sundays that fall in September, Q3 can pull up to higher performance.

Online casino is a big part of our business and is also seasonal, albeit to a lesser extent. Similar to all online businesses, consumers spend more time online in the winter and less in the summer. As most of our business is in the northern hemisphere, there is a slight tailwind in Q4 and Q1 and a slight headwind in Q2 and Q3 for the online casino business.

How does the Group plan on expanding its reach in the digital media ecosystem?

CG: We can grow the business through the expansion of our existing websites, the creation of new websites, acquiring more websites or by partnering with websites.

We have signed multi-year, strategic partnerships with two of the three largest daily newspaper groups in the United States, Gannett and McClatchy. These leading groups have partnered with us to increase their revenue in online gambling by utilizing our technology, data, deals, content and expertise.

The Gannett partnership was just signed in February and covers over 200 U.S. newspapers, including the USA TODAY, the only truly national U.S. newspaper which is not business oriented. Our content is already available at: usatoday.com/betting. This part of the USA TODAY website is entirely powered by GAMB’s technology, content and team. This is only one example of how we generate incremental revenue for Gannett. We expect this partnership to really come into its own this Autumn when the NFL kicks off.

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Public.com members can view the full Q&A in the app. Open To The Public Investing is a member of FINRA and SIPC. This content is not investment advice. Investing involves risk of loss.

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