Gambling.com Group Q4 Earnings Call Highlights

Core Insights - The company reported strong growth in its sports data services segment, with revenue reaching $11.8 million in Q4, accounting for 26% of total revenue, the highest percentage to date [1] - Total revenue for Q4 was $46.2 million, a 31% increase year-over-year, while adjusted EBITDA rose 5% to $15.5 million [5] - The company is diversifying its marketing strategies, with over half of its revenue now coming from non-SEO sources [10] Financial Performance - Adjusted net income for the quarter was $12.2 million, or $0.30 per share, remaining flat compared to the prior year despite increased interest expenses [2] - Adjusted free cash flow for Q4 was $7.5 million, reflecting adverse working capital timing [2] - Gross profit increased 19% year-over-year to $39.3 million, but gross margin declined to 85% from 94% due to higher sales costs [4] Operational Highlights - Adjusted operating expenses rose 32% to $26.9 million, driven by increased headcount from acquisitions and higher marketing costs [3] - The company onboarded 29 new clients in Q4, with revenue per client increasing by 50% in 2025 [7] - The enterprise data solutions segment is expected to be the fastest-growing area, with plans to expand coverage to 25 sports and 5,000 leagues [8] Marketing Strategy - The marketing business is facing challenges with search rankings, but has seen growth in revenue streams not dependent on organic search [10] - New depositing customers (NDCs) were 98,000 in Q4, down 32% year-over-year, yet marketing revenue increased by 4% [11] - The company is focusing on maximizing value per user rather than targeting a specific revenue mix, with revenue share for the overall group around 25% [13] Future Outlook - For 2026, the company projects revenue between $170 million and $180 million, with adjusted EBITDA expected to be between $50 million and $58 million, indicating modest growth but a decline in EBITDA year-over-year [14] - The guidance reflects strong growth in data services but is negatively impacted by ongoing investments and headwinds in the marketing segment [15] - A new product launch is anticipated in spring 2026, expected to contribute marginal revenue in that year but more significantly in 2027 and 2028 [16] Balance Sheet and Capital Allocation - The company drew $38 million on its revolving credit facility during the quarter, with cash totaling $15.8 million and $123.6 million in borrowings outstanding [17] - Share repurchases totaled 110,000 shares in Q4 and 672,000 shares for the year, with $14.4 million remaining under its authorization [20] Industry Trends - The company views prediction markets as an expanding opportunity, which could drive demand for data products and create consumer product opportunities [21]