FINANCIAL INFORMATION This section presents the Group's financial statements, including income, position, equity, cash flows, and detailed explanatory notes Financial Statements This section presents the unaudited interim condensed consolidated financial statements, including income, position, equity, and cash flows Interim Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) This statement details the Group's revenues, expenses, and net income (loss) for the specified interim periods | Metric | Three Months Ended Sep 30, 2023 (USD in thousands) | Three Months Ended Sep 30, 2022 (USD in thousands) | Nine Months Ended Sep 30, 2023 (USD in thousands) | Nine Months Ended Sep 30, 2022 (USD in thousands) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 23,458 | 19,649 | 76,122 | 55,158 | | Gross profit | 21,322 | 19,044 | 72,099 | 52,828 | | Operating profit | 4,715 | 156 | 13,608 | 2,182 | | Net income for the period attributable to the shareholders | 5,013 | 2,261 | 11,886 | 6,799 | | Net income per share, basic | 0.13 | 0.06 | 0.32 | 0.19 | | Net income per share, diluted | 0.13 | 0.06 | 0.31 | 0.18 | Interim Condensed Consolidated Statements of Financial Position (Unaudited) This statement provides a snapshot of the Group's assets, liabilities, and equity at specific reporting dates | Metric | September 30, 2023 (USD in thousands) | December 31, 2022 (USD in thousands) | | :--- | :--- | :--- | | Total non-current assets | 96,998 | 96,914 | | Total current assets | 44,484 | 41,961 | | Total assets | 141,482 | 138,875 | | Total equity | 108,780 | 87,109 | | Total non-current liabilities | 3,421 | 20,058 | | Total current liabilities | 29,281 | 31,708 | | Total liabilities | 32,702 | 51,766 | | Total equity and liabilities | 141,482 | 138,875 | Interim Condensed Consolidated Statements of Changes in Equity (Unaudited) This statement outlines the changes in the Group's equity components over the interim reporting periods | Metric | Balance at January 1, 2023 (USD in thousands) | Balance at September 30, 2023 (USD in thousands) | | :--- | :--- | :--- | | Capital reserve | 63,723 | 74,166 | | Treasury shares | (348) | (1,107) | | Share options and warrants reserve | 4,411 | 6,597 | | Foreign exchange translation reserve | (7,075) | (9,160) | | Retained earnings | 26,398 | 38,284 | | Total equity | 87,109 | 108,780 | - Total equity increased from $87,109 thousand at January 1, 2023, to $108,780 thousand at September 30, 2023, driven by net income and share-related activities15 Interim Condensed Consolidated Statements of Cash Flows (Unaudited) This statement details the Group's cash inflows and outflows from operating, investing, and financing activities | Metric | Nine Months Ended Sep 30, 2023 (USD in thousands) | Nine Months Ended Sep 30, 2022 (USD in thousands) | | :--- | :--- | :--- | | Cash flows generated by operating activities | 10,950 | 12,567 | | Cash flows used in investing activities | (12,483) | (26,895) | | Cash flows used in financing activities | (1,194) | (741) | | Net movement in cash and cash equivalents | (2,727) | (15,069) | | Cash and cash equivalents at the end of the period | 26,884 | 35,092 | - Cash flows generated by operating activities decreased by 13% YoY for the nine months ended September 30, 2023, while cash flows used in investing activities significantly decreased by 53.6% YoY18 Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) This section provides detailed explanations of accounting policies, risk management, acquisitions, and other financial disclosures 1. GENERAL COMPANY INFORMATION This note provides an overview of Gambling.com Group Limited, its incorporation, and core business operations - Gambling.com Group Limited is a public limited liability company incorporated in Jersey, founded in 2006, and redomiciled from Malta in May 202119 - The Group operates as a multi-award-winning performance marketing company, providing digital marketing services exclusively in the online gambling industry, focusing on iGaming, sports betting, and fantasy sports20 - The company publishes a portfolio of premier branded websites including Gambling.com, Bookies.com, Casinos.com, and RotoWire.com, along with over 50 local websites, attracting online gamblers and referring them to licensed operators20 2. BASIS OF PREPARATION AND PRESENTATION This note outlines the accounting standards and principles used in preparing the interim financial statements - The interim condensed consolidated financial statements are prepared in accordance with IAS 34, Interim Financial Reporting, and should be read in conjunction with the fiscal year 2022 audited consolidated financial statements21 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note details the key accounting policies applied, including those for new standards and significant transactions - The interim financial statements are prepared on a historical cost basis, consistent with the 2022 audited consolidated financial statements, and include all necessary adjustments for fair presentation2223 - The Group adopted new and amended standards in 2023, but they had limited or no impact on the financial statements25 - In January 2023, the Group made a $2.5 million cash payment for RotoWire deferred consideration, with $2.39 million reported in investing activities and $0.11 million (interest element) in financing activities26 - In April 2023, the Group settled BonusFinder contingent consideration totaling $20.09 million, paid with $10.178 million in cash and $9.912 million in ordinary shares27 4. RISK MANAGEMENT This note describes the Group's exposure to and management of financial risks, including market, credit, and liquidity risks - The Group is exposed to market risk (foreign exchange and interest rate), credit risk, and liquidity risk, managed through a financial policy approved by the board of directors33 - Foreign exchange risk primarily arises from EUR, USD, and GBP denominated financial assets and liabilities, with no derivative financial instruments used for hedging34 Credit Exposure (USD in thousands) | Metric | September 30, 2023 (USD in thousands) | December 31, 2022 (USD in thousands) | | :--- | :--- | :--- | | Trade and other receivables (excluding prepayments and deferred compensation cost) | 15,859 | 11,029 | | Cash and cash equivalents | 26,884 | 29,664 | | Total Credit Exposure | 42,743 | 40,693 | - Revenues from the largest single customer increased to 16% (Q3 2023) and 15% (9M 2023) of total sales, up from 11% (Q3 2022) and 9% (9M 2022), indicating increased customer concentration36 Aging of Trade Receivables Past Due but Not Impaired (USD in thousands) | Aging of Trade Receivables Past Due but Not Impaired | September 30, 2023 (USD in thousands) | December 31, 2022 (USD in thousands) | | :--- | :--- | :--- | | Between one and two months | 1,254 | 471 | | Between two and three months | 851 | 109 | | More than three months | 426 | 205 | | Total | 2,531 | 785 | - The credit loss allowance increased from $877 thousand at the beginning of 2023 to $2,136 thousand at September 30, 2023, reflecting overall business growth and an increase in aged trade receivables39 Financial Liabilities Maturity Profile (USD in thousands) | Financial Liabilities Maturity Profile (USD in thousands) | Less than 1 year | Between 1 and 2 years | More than 2 years | TOTAL | | :--- | :--- | :--- | :--- | :--- | | As of September 30, 2023: | | | | | | Deferred consideration | 18,642 | — | — | 18,642 | | Lease liability | 571 | 513 | 1,074 | 2,158 | | Trade and other payables | 4,966 | — | — | 4,966 | | Total | 24,179 | 513 | 1,074 | 25,766 | | As of December 31, 2022: | | | | | | Deferred consideration | 2,800 | 5,000 | — | 7,800 | | Contingent consideration | 19,860 | 12,471 | — | 32,331 | | Lease liability | 554 | 510 | 1,445 | 2,509 | | Trade and other payables | 3,328 | 290 | — | 3,618 | | Total | 26,542 | 18,271 | 1,445 | 46,258 | 5. ACQUISITIONS This note provides details on the Group's business acquisitions, including RotoWire.com and BonusFinder.com - On January 1, 2022, the Company acquired RotoWire.com for $14.7 million in cash, 451,264 ordinary shares, and $7.8 million in deferred consideration, aiming to accelerate U.S. expansion4647 - The RotoWire acquisition resulted in $10.776 million in goodwill, primarily due to SEO synergy for performance marketing48 - During the nine months ended September 30, 2023, the Company settled the first deferred payment of $2.5 million for RotoWire in cash50 - On January 31, 2022, the Group acquired BonusFinder.com for EUR10 million in cash, 269,294 ordinary shares, EUR3.832 million additional cash payable, and earnout payments up to EUR47.5 million, to support North American growth515255 - No goodwill was recognized in the BonusFinder acquisition, as the fair values of acquired assets and liabilities equaled the acquisition consideration54 - In April 2023, the Group settled $20.09 million in BonusFinder contingent consideration, with $10.178 million in cash and $9.912 million in ordinary shares57 - On June 30, 2023, the BonusFinder earn-out period was terminated early, replaced by a fixed consideration of EUR18 million payable in two installments (EUR5 million in July 2023, EUR13 million in April 2024)58 6. PROPERTY AND EQUIPMENT This note details the Group's property and equipment, including additions, depreciation, and net book amounts | Metric | September 30, 2023 (USD in thousands) | September 30, 2022 (USD in thousands) | | :--- | :--- | :--- | | Net book amount | 823 | 647 | | Additions | 294 | 350 | | Depreciation charge | (183) | (147) | - Cash paid for property and equipment acquisitions decreased from $350 thousand in 9M 2022 to $294 thousand in 9M 202364 7. LEASES This note outlines the Group's right-of-use assets and lease liabilities, including related expenses | Metric | As of September 30, 2023 (USD in thousands) | As of January 1, 2023 (USD in thousands) | | :--- | :--- | :--- | | Right-of-Use Assets | 1,557 | 1,818 | | Lease Liabilities | 1,821 | 2,072 | - Amortization of right-of-use assets was $339 thousand for 9M 2023, and interest expense on lease liabilities was $127 thousand67 - Short-term lease expenses were $373 thousand for 9M 2023, a decrease from $514 thousand for 9M 202268 8. INTANGIBLE ASSETS This note details the Group's intangible assets, including additions, amortization, and net book values | Metric | September 30, 2023 (USD in thousands) | January 1, 2023 (USD in thousands) | | :--- | :--- | :--- | | Net book amount | 88,505 | 88,521 | | Additions | 1,868 | N/A | | Amortization charge | (998) | N/A | - Cash paid for intangible assets and capitalized software developments decreased from $3,134 thousand in 9M 2022 to $1,868 thousand in 9M 202371 Intangible Assets (excluding goodwill) (USD in thousands) | Intangible Assets (excluding goodwill) | September 30, 2023 (USD in thousands) | December 31, 2022 (USD in thousands) | | :--- | :--- | :--- | | Net book value of assets with finite useful lives | 8,587 | 8,167 | | Net book value of assets with indefinite useful lives (Domain names and related websites) | 69,118 | 69,554 | | Total net book value of intangible assets | 77,705 | 77,721 | 9. TRADE AND OTHER RECEIVABLES This note provides a breakdown of the Group's trade and other receivables, including accrued revenue and prepayments | Metric | September 30, 2023 (USD in thousands) | December 31, 2022 (USD in thousands) | | :--- | :--- | :--- | | Trade receivables, net | 14,729 | 9,838 | | Accrued revenue | 417 | 575 | | Prepayments | 1,665 | 954 | | Total Current Receivables | 17,600 | 12,222 | - Trade receivables, net, increased by 49.7% from $9,838 thousand at December 31, 2022, to $14,729 thousand at September 30, 202373 10. CASH AND CASH EQUIVALENTS This note details the Group's cash and cash equivalents, including changes over the reporting period | Metric | September 30, 2023 (USD in thousands) | December 31, 2022 (USD in thousands) | | :--- | :--- | :--- | | Cash at bank | 26,884 | 29,664 | - Cash and cash equivalents decreased by 9.4% from $29,664 thousand at December 31, 2022, to $26,884 thousand at September 30, 202374 11. SHARE CAPITAL This note outlines the Group's share capital, including issued shares, repurchases, and secondary offerings | Metric | As of September 30, 2023 | As of January 1, 2023 | | :--- | :--- | :--- | | Issued and fully paid ordinary shares | 37,544,667 | 36,470,341 | - During 9M 2023, the Company issued 1,005,929 shares as a $9.912 million payment for contingent consideration related to acquisitions76 - The Company repurchased 77,683 shares for $759 thousand during 9M 2023 under a $10 million share repurchase program approved in November 202281 - In June 2023, a secondary offering of 4,887,500 ordinary shares by selling shareholders occurred, from which the Company received no proceeds but incurred $733 thousand in expenses83 12. CAPITAL RESERVE This note details the changes in the Group's capital reserve, primarily from share issuance for acquisitions | Metric | Nine Months Ended Sep 30, 2023 (USD in thousands) | Nine Months Ended Sep 30, 2022 (USD in thousands) | | :--- | :--- | :--- | | Opening carrying amount | 63,723 | 55,953 | | Issue of ordinary shares | 9,912 | 7,392 | | Closing carrying amount | 74,166 | 63,711 | - Capital reserve increased by $10.443 million during 9M 2023, primarily due to the issue of ordinary shares for acquisitions1584 13. SHARE OPTION AND WARRANTS RESERVE This note outlines the Group's share option and warrants reserve, including outstanding options and expenses | Metric | As of September 30, 2023 | As of January 1, 2023 | | :--- | :--- | :--- | | Total warrants and options outstanding | 5,852,864 | 5,562,984 | | Share options expense (USD in thousands) | 2,097 | N/A | | Share options granted | 359,666 | N/A | - The share option and warrants reserve increased from $4,411 thousand at January 1, 2023, to $6,597 thousand at September 30, 202386 14. SHARE-BASED PAYMENTS This note details the Group's share-based payment plans, including incentive plans and related expenses - The 2020 Stock Incentive Plan allows for awards of up to 2,905,535 shares, increasing by 2% of outstanding ordinary shares annually89 - Founders' Awards granted in July 2021 for 4,056,770 shares are subject to performance vesting based on market capitalization thresholds, none of which were met as of September 30, 202390 Share-based Payment Expense (USD in thousands) | Share-based Payment Expense (USD in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Equity classified share options expense | 696 | 750 | 2,307 | 2,338 | | Restricted shares expense | — | 41 | 483 | 62 | | Total share-based payment expense | 696 | 791 | 2,790 | 2,400 | - Total share-based payment expense increased by 16.25% from $2,400 thousand in 9M 2022 to $2,790 thousand in 9M 202397 15. TRADE AND OTHER PAYABLES This note provides a breakdown of the Group's current trade and other payables, including accruals | Metric | September 30, 2023 (USD in thousands) | December 31, 2022 (USD in thousands) | | :--- | :--- | :--- | | Current Trade payables | 1,414 | 1,235 | | Current Accruals | 4,370 | 4,292 | | Total Current Liabilities | 6,655 | 6,342 | - Current trade and other payables increased by 4.9% from $6,342 thousand at December 31, 2022, to $6,655 thousand at September 30, 202399 16. DEFERRED TAX This note details the Group's deferred tax assets and liabilities, including changes and recognized amounts | Metric | September 30, 2023 (USD in thousands) | December 31, 2022 (USD in thousands) | | :--- | :--- | :--- | | Deferred tax asset | 6,113 | 5,832 | | Deferred tax liability | (2,171) | (2,179) | | Deferred tax asset, net | 3,942 | 3,653 | - Net deferred tax assets increased by 7.9% from $3,653 thousand at December 31, 2022, to $3,942 thousand at September 30, 2023102 - The Group recognized a deferred tax asset of $5,386 thousand related to unutilized capital allowances of $60,515 thousand on intangible assets as of September 30, 2023105 17. REVENUE This note provides a detailed breakdown of the Group's revenue by customer, market, monetization, and product type - Top ten customers accounted for 46% (Q3 2023) and 47% (9M 2023) of revenue, with the largest customer contributing 16% (Q3 2023) and 15% (9M 2023)109 Revenue by Market (USD in thousands) | Revenue by Market (USD in thousands) | Q3 2023 | Q3 2022 | 9M 2023 | 9M 2022 | | :--- | :--- | :--- | :--- | :--- | | U.K. and Ireland | 6,858 | 7,097 | 23,749 | 20,090 | | Other Europe | 2,320 | 2,785 | 7,902 | 6,818 | | North America | 12,903 | 9,060 | 40,407 | 25,920 | | Rest of the world | 1,377 | 707 | 4,064 | 2,330 | | Total revenues | 23,458 | 19,649 | 76,122 | 55,158 | Revenue by Monetization Type (USD in thousands) | Revenue by Monetization Type (USD in thousands) | Q3 2023 | Q3 2022 | 9M 2023 | 9M 2022 | | :--- | :--- | :--- | :--- | :--- | | Performance marketing | 18,232 | 15,401 | 60,769 | 44,094 | | Subscription and content syndication | 2,189 | 1,999 | 5,880 | 4,820 | | Advertising and other | 3,037 | 2,249 | 9,473 | 6,244 | | Total revenues | 23,458 | 19,649 | 76,122 | 55,158 | Revenue by Product Type (USD in thousands) | Revenue by Product Type (USD in thousands) | Q3 2023 | Q3 2022 | 9M 2023 | 9M 2022 | | :--- | :--- | :--- | :--- | :--- | | Casino | 15,190 | 13,363 | 49,803 | 35,815 | | Sports | 7,930 | 6,142 | 25,518 | 18,966 | | Other | 338 | 144 | 801 | 377 | | Total revenues | 23,458 | 19,649 | 76,122 | 55,158 | - North America revenue grew 42% in Q3 2023 and 56% in 9M 2023 YoY, while U.K. and Ireland revenue remained consistent in Q3 2023 but grew 18% in 9M 2023 YoY159 18. OPERATING EXPENSES This note details the Group's operating expenses, including sales and marketing, technology, and general and administrative costs Sales and Marketing Expenses (USD in thousands) | Sales and Marketing Expenses (USD in thousands) | Q3 2023 | Q3 2022 | 9M 2023 | 9M 2022 | | :--- | :--- | :--- | :--- | :--- | | People costs | 5,274 | 4,361 | 15,893 | 12,014 | | External marketing expenses | 1,766 | 1,473 | 4,692 | 4,125 | | Amortization of intangible assets | 88 | 1,523 | 370 | 4,834 | | Total sales and marketing expenses | 8,636 | 8,523 | 25,644 | 24,339 | Technology Expenses (USD in thousands) | Technology Expenses (USD in thousands) | Q3 2023 | Q3 2022 | 9M 2023 | 9M 2022 | | :--- | :--- | :--- | :--- | :--- | | People costs | 1,876 | 1,178 | 5,341 | 3,275 | | Amortization of intangible assets | 233 | 114 | 628 | 291 | | Total technology expenses | 2,525 | 1,694 | 7,229 | 4,556 | General and Administrative Expenses (USD in thousands) | General and Administrative Expenses (USD in thousands) | Q3 2023 | Q3 2022 | 9M 2023 | 9M 2022 | | :--- | :--- | :--- | :--- | :--- | | People costs | 2,326 | 1,941 | 7,652 | 6,007 | | Share based expenses | 596 | 688 | 2,491 | 2,043 | | Legal and consultancy fees | 878 | 1,039 | 3,214 | 3,160 | | Secondary offering related costs | — | — | 733 | — | | Total general and administrative expenses | 4,831 | 4,686 | 17,297 | 14,318 | - Fair value movement on contingent consideration was $0 in Q3 2023, down from $(3,686) thousand in Q3 2022, due to the early termination of the BonusFinder earn-out period9118 19. FINANCE INCOME AND FINANCE EXPENSES This note outlines the Group's finance income and expenses, including net finance income and unwinding of deferred consideration | Metric (USD in thousands) | Q3 2023 | Q3 2022 | 9M 2023 | 9M 2022 | | :--- | :--- | :--- | :--- | :--- | | Total finance income | 968 | 3,093 | 1,674 | 7,412 | | Total finance expenses | 373 | 648 | 1,356 | 1,955 | | Net finance income | 595 | 2,445 | 318 | 5,457 | - Net finance income decreased significantly from $5,457 thousand in 9M 2022 to $318 thousand in 9M 2023, primarily due to lower foreign exchange gains120 - The unwinding of deferred consideration, related to RotoWire and BonusFinder acquisitions, amounted to $425 thousand for 9M 2023, and is expected to continue until April 2024120187 20. BASIC AND DILUTED INCOME PER SHARE This note presents the Group's basic and diluted net income per share and weighted-average share counts | Metric | Q3 2023 | Q3 2022 | 9M 2023 | 9M 2022 | | :--- | :--- | :--- | :--- | :--- | | Net income per share, basic | 0.13 | 0.06 | 0.32 | 0.19 | | Net income per share, diluted | 0.13 | 0.06 | 0.31 | 0.18 | - Diluted EPS increased by 117% in Q3 2023 and 72% in 9M 2023 YoY122 Weighted-Average Number of Ordinary Shares | Weighted-Average Number of Ordinary Shares | Q3 2023 | Q3 2022 | 9M 2023 | 9M 2022 | | :--- | :--- | :--- | :--- | :--- | | Basic | 37,402,935 | 36,467,299 | 36,988,690 | 35,613,073 | | Diluted | 38,711,429 | 37,289,010 | 38,176,200 | 37,324,222 | 21. INCOME TAX CHARGE This note details the Group's income tax charge, including current and deferred tax components and effective rates | Metric (USD in thousands) | Q3 2023 | Q3 2022 | 9M 2023 | 9M 2022 | | :--- | :--- | :--- | :--- | :--- | | Current tax expense | 420 | 383 | 2,413 | 900 | | Deferred tax benefit | (123) | (43) | (373) | (60) | | Total income tax charge | 297 | 340 | 2,040 | 840 | - The income tax charge increased by 143% from $840 thousand in 9M 2022 to $2,040 thousand in 9M 2023127 - The effective tax rate was 6% for Q3 2023 (vs. 13% in Q3 2022) and 15% for 9M 2023 (vs. 11% in 9M 2022)127 22. RELATED PARTY TRANSACTIONS This note outlines transactions with related parties, including key management emoluments and shareholdings Key Management Emoluments (USD in thousands) | Key Management Emoluments (USD in thousands) | Q3 2023 | Q3 2022 | 9M 2023 | 9M 2022 | | :--- | :--- | :--- | :--- | :--- | | Remuneration to key management and executive directors | 816 | 1,040 | 3,312 | 3,443 | | Non-executive directors' fees | 149 | 235 | 1,065 | 497 | | Total | 965 | 1,275 | 4,377 | 3,940 | - Total emoluments paid to directors (executive and non-executive) increased from $1,747 thousand in 9M 2022 to $2,348 thousand in 9M 2023129 - As of September 30, 2023, related parties held 4,707,626 share options and 66,136 restricted shares131 23. EVENTS AFTER THE REPORTING PERIOD This note discloses significant events that occurred after the reporting period, such as asset acquisitions - In October 2023, the Company acquired a domain name and related assets for EUR 6,000 ($6,401 thousand) in cash133 Operating and Financial Review and Prospects This section analyzes the Group's financial condition and results, covering revenue, expenses, non-IFRS measures, and key performance drivers SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This note cautions readers about forward-looking statements, highlighting inherent risks and uncertainties - The report contains forward-looking statements subject to risks and uncertainties, including global expansion, competition, financial performance, regulatory compliance, and acquisition integration134137 - Readers are cautioned not to rely on forward-looking statements as predictions of future events, and the Company undertakes no obligation to update them136 Overview This section provides a general overview of Gambling.com Group's business model and revenue generation strategies - Gambling.com Group is a performance marketing company providing B2B digital marketing services in the online gambling industry, primarily iGaming, sports betting, and fantasy sports137138 - Revenue is primarily generated through performance marketing (revenue share, CPA, or hybrid models) by referring online gamblers to licensed operators, with additional revenue from data subscriptions and content syndication139140 - The company relies on Search Engine Optimization (SEO) strategies and proprietary technology to attract online gamblers and optimize revenue by selecting the best commercial models142143 Results of Operations This section analyzes the Group's financial performance, detailing revenue, cost of sales, and operating expenses Revenue This subsection analyzes the Group's revenue performance, including growth drivers and geographical trends | Metric | Q3 2023 (USD in thousands) | Q3 2022 (USD in thousands) | Change % | Constant Currency Change % | | :--- | :--- | :--- | :--- | :--- | | Revenue | 23,458 | 19,649 | 19 % | 11 % | | Gross profit | 21,322 | 19,044 | 12 % | 4 % | | Operating profit | 4,715 | 156 | 2922 % | 2707 % | | Net income | 5,013 | 2,261 | 122 % | 106 % | | Metric | 9M 2023 (USD in thousands) | 9M 2022 (USD in thousands) | Change % | Constant Currency Change % | | :--- | :--- | :--- | :--- | :--- | | Revenue | 76,122 | 55,158 | 38 % | 35 % | | Gross profit | 72,099 | 52,828 | 36 % | 34 % | | Operating profit | 13,608 | 2,182 | 524 % | 510 % | | Net income | 11,886 | 6,799 | 75 % | 71 % | - Total revenue increased by 19% in Q3 2023 and 38% in 9M 2023 YoY, driven by growth across most geographical markets, particularly casino and sport products156 - North America revenue grew 42% in Q3 2023 and 56% in 9M 2023 YoY, becoming 55% of total revenue in Q3 2023157159 - Casino revenue grew 14% in Q3 2023 and 39% in 9M 2023 YoY, primarily from performance marketing in North America and the UK and Ireland164 - Sports revenue grew 29% in Q3 2023 and 35% in 9M 2023 YoY, mainly from performance marketing and subscription/content syndication in North America165 Cost of Sales This subsection details the Group's cost of sales and its impact on gross profit margins | Metric | Q3 2023 (USD in thousands) | Q3 2022 (USD in thousands) | 9M 2023 (USD in thousands) | 9M 2022 (USD in thousands) | | :--- | :--- | :--- | :--- | :--- | | Cost of sales | (2,136) | (605) | (4,023) | (2,330) | - Cost of sales increased by 253% in Q3 2023 and 73% in 9M 2023 YoY, primarily due to increased revenue and associated costs from media partnerships147166 Operating Expenses This subsection analyzes the Group's operating expenses, including sales, marketing, technology, and G&A costs - Total operating expenses decreased by 12% in Q3 2023 YoY, mainly due to lower amortization and the absence of fair value movement on contingent consideration167 - Total operating expenses increased by 15% in 9M 2023 YoY, driven by higher people costs across sales and marketing, technology, and general and administrative expenses, partially offset by decreased amortization168 Sales and Marketing Expenses (USD in thousands) | Sales and Marketing Expenses (USD in thousands) | Q3 2023 | Q3 2022 | 9M 2023 | 9M 2022 | | :--- | :--- | :--- | :--- | :--- | | People costs | 5,274 | 4,361 | 15,893 | 12,014 | | Amortization of intangible assets | 88 | 1,523 | 370 | 4,834 | | Total sales and marketing expenses | 8,636 | 8,523 | 25,644 | 24,339 | - Sales and marketing expenses were consistent in Q3 2023 (+1%) and increased by 5% in 9M 2023 YoY, with people costs rising due to new hires and salary increases, while amortization of intangible assets decreased significantly172173 Technology Expenses (USD in thousands) | Technology Expenses (USD in thousands) | Q3 2023 | Q3 2022 | 9M 2023 | 9M 2022 | | :--- | :--- | :--- | :--- | :--- | | People costs | 1,876 | 1,178 | 5,341 | 3,275 | | Total technology expenses | 2,525 | 1,694 | 7,229 | 4,556 | - Technology expenses increased by 49% in Q3 2023 and 59% in 9M 2023 YoY, driven by higher people costs, software/subscriptions, and amortization of capitalized development expenses179 General and Administrative Expenses (USD in thousands) | General and Administrative Expenses (USD in thousands) | Q3 2023 | Q3 2022 | 9M 2023 | 9M 2022 | | :--- | :--- | :--- | :--- | :--- | | People costs | 2,326 | 1,941 | 7,652 | 6,007 | | Secondary offering related costs | — | — | 733 | — | | Total general and administrative expenses | 4,831 | 4,686 | 17,297 | 14,318 | - General and administrative expenses decreased by 3% in Q3 2023 but increased by 21% in 9M 2023 YoY, primarily due to higher people costs and increased legal/consultancy fees, including $0.7 million for secondary offering costs181182183 Fair value movements on contingent consideration This subsection discusses changes in the fair value of contingent consideration liabilities from acquisitions - Fair value movement on contingent consideration was $0 in Q3 2023, down from $(3,686) thousand in Q3 2022, due to the early termination of the BonusFinder earn-out period on June 30, 2023147185 - For 9M 2023, fair value movement on contingent consideration was $(6,939) thousand, compared to $(6,535) thousand in 9M 2022147 Finance Income and Finance Expense This subsection analyzes the Group's finance income and expenses, including foreign exchange impacts | Metric (USD in thousands) | Q3 2023 | Q3 2022 | 9M 2023 | 9M 2022 | | :--- | :--- | :--- | :--- | :--- | | Total finance income | 968 | 3,093 | 1,674 | 7,412 | | Total finance expenses | 373 | 648 | 1,356 | 1,955 | | Net finance income | 595 | 2,445 | 318 | 5,457 | - Net finance income decreased significantly by 77% in 9M 2023 YoY, primarily due to lower foreign exchange gains147186 - Unwinding of deferred consideration, related to RotoWire and BonusFinder, amounted to $425 thousand for 9M 2023, up from $248 thousand in 9M 2022186187 Taxation This subsection details the Group's income tax charge, deferred tax assets, and unutilized tax losses | Metric (USD in thousands) | Q3 2023 | Q3 2022 | 9M 2023 | 9M 2022 | | :--- | :--- | :--- | :--- | :--- | | Current tax expenses | 420 | 383 | 2,413 | 900 | | Deferred tax benefit | (123) | (43) | (373) | (60) | | Income tax charge | 297 | 340 | 2,040 | 840 | - The income tax charge increased by 143% in 9M 2023 YoY, with a deferred tax asset of $0.5 million recognized from a notional interest allowance147188 - As of September 30, 2023, the Group had unutilized tax losses of $22.6 million, notional interest allowance of $15.6 million, and capital allowances of $60.5 million related to intangible assets189 Non-IFRS Financial Measures This section presents and reconciles non-IFRS financial measures, including adjusted net income and EBITDA Adjusted Net Income and Adjusted Net Income Per Share This subsection defines and presents adjusted net income and adjusted net income per share, excluding specific items - Adjusted net income excludes fair value gain/loss on contingent consideration, unwinding of deferred consideration, and certain employee bonuses related to acquisitions192 Adjusted Net Income (USD in thousands) | Metric | Q3 2023 (USD in thousands) | Q3 2022 (USD in thousands) | Change % | Constant Currency Change % | | :--- | :--- | :--- | :--- | :--- | | Adjusted net income | 5,407 | 6,035 | (10)% | (17)% | | Adjusted net income per share, diluted | 0.14 | 0.16 | (13)% | (18)% | Adjusted Net Income (USD in thousands) | Metric | 9M 2023 (USD in thousands) | 9M 2022 (USD in thousands) | Change % | Constant Currency Change % | | :--- | :--- | :--- | :--- | :--- | | Adjusted net income | 19,493 | 13,582 | 44 % | 40 % | | Adjusted net income per share, diluted | 0.51 | 0.36 | 42 % | 38 % | - Adjusted net income for 9M 2023 increased by 44% YoY, while Adjusted net income per diluted share increased by 42% YoY191 EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin This subsection defines and presents EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin, with reconciliation - Adjusted EBITDA is defined as EBITDA excluding non-recurring items, significant non-cash items, share-based payment expense, foreign exchange gains/losses, fair value of contingent consideration, and acquisition-related expenses198 EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin (USD in thousands) | Metric | Q3 2023 (USD in thousands) | Q3 2022 (USD in thousands) | Change % | Constant Currency Change % | | :--- | :--- | :--- | :--- | :--- | | EBITDA | 5,845 | 4,512 | 30 % | 20 % | | Adjusted EBITDA | 6,054 | 6,413 | (6)% | (12)% | | Adjusted EBITDA Margin | 26 % | 33 % | N/A | N/A | EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin (USD in thousands) | Metric | 9M 2023 (USD in thousands) | 9M 2022 (USD in thousands) | Change % | Constant Currency Change % | | :--- | :--- | :--- | :--- | :--- | | EBITDA | 15,573 | 13,693 | 14 % | 11 % | | Adjusted EBITDA | 26,146 | 17,214 | 52 % | 49 % | | Adjusted EBITDA Margin | 34 % | 31 % | N/A | N/A | - Adjusted EBITDA decreased by 6% in Q3 2023 YoY but increased by 52% in 9M 2023 YoY, driven by revenue growth partly offset by increased costs201 - Adjusted EBITDA margin decreased from 33% to 26% in Q3 2023 YoY but increased from 31% to 34% in 9M 2023 YoY202 Free Cash Flow This subsection defines and presents Free Cash Flow, adjusted for specific operating and capital expenditures - Free Cash Flow is defined as cash flow from operating activities adjusted for contingent/deferred consideration payments within operating cash flow, less capital expenditures203 Free Cash Flow (USD in thousands) | Metric (USD in thousands) | 9M 2023 | 9M 2022 | Change % | | :--- | :--- | :--- | :--- | | Cash flows generated by operating activities | 10,950 | 12,567 | (13)% | | Payment of contingent consideration | 4,621 | — | 100 % | | Payment of deferred consideration | 2,897 | — | 100 % | | Capital Expenditures | (2,162) | (3,484) | 38 % | | Free Cash Flow | 16,306 | 9,083 | 80 % | - Free Cash Flow increased by 80% to $16.3 million for 9M 2023 YoY, driven by increased operating cash flows (adjusted for consideration payments) and decreased capital expenditures207 Constant Currency This section explains the methodology for constant currency analysis to enhance comparability of results - Constant currency analysis adjusts for foreign currency exchange rate changes to enhance comparability of operating results, translating financial data using consistent exchange rates209 Key Performance Indicator This section identifies and analyzes the Group's key performance indicator, New Depositing Customers (NDC) - The key performance indicator (KPI) is New Depositing Customers (NDC), defined as a unique referral that triggers commission211 New Depositing Customers (in thousands) | Metric (in thousands) | Q3 2023 | Q3 2022 | Change % | 9M 2023 | 9M 2022 | Change % | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | New Depositing Customers | 86 | 68 | 26 % | 266 | 191 | 39 % | - NDCs increased by 26% in Q3 2023 and 39% in 9M 2023 YoY, demonstrating business growth primarily in casino and sports products213 LIQUIDITY AND CAPITAL RESOURCES This section assesses the Group's liquidity position, capital resources, and ability to meet financial obligations - The Group's principal liquidity sources are cash from its IPO and operations, with $26.9 million in cash and cash equivalents as of September 30, 2023214 - Management estimates adequate liquidity to fund operations for at least twelve months from the issuance date of the interim financial statements215 Working Capital This subsection analyzes the Group's working capital position and its components - Working capital increased to $15.2 million as of September 30, 2023, from $10.3 million as of December 31, 2022, driven by increased operating cash flows and trade receivables, partially offset by deferred consideration liabilities216 Cash Flow Analysis This subsection provides a detailed analysis of the Group's cash flows from operating, investing, and financing activities Cash Flow Summary (USD in thousands) | Cash Flow Summary (USD in thousands) | 9M 2023 | 9M 2022 | | :--- | :--- | :--- | | Cash flows generated by operating activities | 10,950 | 12,567 | | Cash flows used in investing activities | (12,483) | (26,895) | | Cash flows used in financing activities | (1,194) | (741) | | Net movement in cash and cash equivalents | (2,727) | (15,069) | - Operating cash flows decreased by 13% in 9M 2023 YoY, influenced by increased income before tax offset by changes in non-cash items and working capital218 - Investing cash outflows decreased by $14.4 million in 9M 2023 YoY, primarily due to lower initial payments for acquisitions compared to the prior year219 - Financing cash outflows increased to $1.2 million in 9M 2023 YoY, mainly due to share repurchases and deferred consideration interest payments221 CRITICAL ACCOUNTING ESTIMATES This subsection identifies and discusses the critical accounting estimates used in preparing the financial statements - Critical accounting estimates include revenue, share-based compensation, business combinations, incremental borrowing rates for leases, fair value movement in contingent consideration, and income taxes224 - No material changes or additions to critical accounting policies and estimates were reported compared to the 2022 Annual Report on Form 20-F226 Recent Accounting Pronouncements This subsection discusses the impact of recent accounting pronouncements on the Group's financial statements - No new IFRS or IFRS Interpretation Committee interpretations effective for 9M 2023 had a material impact on the interim condensed consolidated financial statements227 Quantitative and Qualitative Disclosures About Market Risk This section details the Group's exposure to market, currency, interest rate, credit, and liquidity risks, and mitigation strategies Market and Currency Risk This note discusses the Group's exposure to foreign currency fluctuations and macro-economic uncertainties - The Group is exposed to foreign currency risk, with sales and payments primarily in EUR, USD, and GBP, and cash balances denominated in these currencies231 - The Group does not use derivative financial instruments to manage foreign currency risk but monitors exchange rate fluctuations232 - Macro-economic uncertainty from increased inflation and interest rates could impact earnings and cash flow234 Transaction Exposure Sensitivity This note provides a sensitivity analysis of net income before tax to changes in foreign exchange rates Increase (Decrease) in Net Income Before Tax (in thousands) | Increase (Decrease) in Net Income Before Tax (in thousands) | USD | GBP | | :--- | :--- | :--- | | September 30, 2023 | 1,094 | 200 | | September 30, 2022 | 1,076 | 399 | - A 10% strengthening in USD and GBP exchange rates would result in average gains to net income before tax of $1,094 thousand and $200 thousand, respectively, for 9M 202335237 Interest Rate Risk This note describes the Group's minimal exposure to interest rate risk, primarily on cash balances - The Group has minimal exposure to interest rate risk, primarily on cash at bank balances, and considers it at an acceptable level238 Contractual Risk This note outlines how management monitors contractual performance to mitigate non-compliance risks - Management monitors performance against contractual conditions to mitigate the risk of material, adverse non-compliance with third-party contracts239 Credit Risk This note details the Group's credit risk exposure from cash and trade receivables, and its management - Credit risk arises from cash and cash equivalents and trade/other balances, with management using forward-looking information for expected credit losses240241 Liquidity Risk This note explains how the Group manages liquidity risk through cash management and financial forecasts - Liquidity risk is managed by maintaining sufficient cash and regularly reviewing cash requirements through short-term forecasts and medium-term projections242 Future Material Cash Requirements as of Sep 30, 2023 (USD in thousands) | Future Material Cash Requirements as of Sep 30, 2023 (USD in thousands) | Less Than 1 Year | Between 1 and 2 Years | More Than 2 Years | Total | | :--- | :--- | :--- | :--- | :--- | | Deferred consideration | 18,642 | — | — | 18,642 | | Lease liability | 571 | 513 | 1,074 | 2,158 | | Trade and other payables | 4,966 | — | — | 4,966 | | Total | 24,179 | 513 | 1,074 | 25,766 | - Deferred consideration of $18.642 million is due within one year and may be settled with up to 50% ordinary shares at the Group's option243 Capital Risk This note describes the Group's capital structure, comprised entirely of shareholders' equity - The capital structure is entirely comprised of shareholders' equity, managed to maintain financial flexibility and meet obligations244 Purchases of Equity Securities by the Issuer and Affiliated Purchases This section details the Company's share repurchase program, including its approval, funding, and activity - In November 2022, the board approved a program to repurchase up to $10.0 million of ordinary shares in open market transactions246 - The Company intends to fund the share repurchase program using current cash and cash equivalents and cash flow from operations247 - No repurchases of ordinary shares were completed during the three months ended September 30, 2023248 Signatures This section contains the required signatures for the Form 6-K report, confirming its submission - The report was signed by Elias Mark, Chief Financial Officer of Gambling.com Group Limited, on November 15, 2023250
Gambling.com (GAMB) - 2023 Q4 - Annual Report