Gambling.com (GAMB) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported record fourth quarter revenue of $46.2 million, up 31% year-over-year, with full-year revenues rising 30% to $165 million [5][18] - Adjusted EBITDA for the fourth quarter was $15.5 million, reflecting a 5% year-over-year increase, while the adjusted EBITDA margin decreased to 33% from 42% in the previous year [5][20] - Adjusted net income for the fourth quarter was $12.2 million, flat compared to the year-ago period, with adjusted free cash flow of $7.5 million for the quarter and $36.3 million for the full year [21][22] Business Line Data and Key Metrics Changes - The sports data services business grew 29% sequentially and 440% year-over-year to $11.8 million, accounting for 26% of total revenue, the highest percentage yet [5][18] - Marketing revenue rose 4% year-over-year despite challenges with SEO, with the company generating a majority of revenue from non-SEO sources for the first time [19][20] - Recurring revenue was 47% of total fourth quarter revenue, with subscription revenue contributing significantly to this figure [18] Market Data and Key Metrics Changes - The company noted that NDCs (New Depositing Customers) were down 32% year-over-year, indicating challenges in customer acquisition [21] - The company is facing regulatory headwinds in the U.K. and Finland, which are expected to impact performance marketing [23][24] Company Strategy and Development Direction - The company is actively reinventing its marketing business to build closer relationships with end users, focusing on scaling its CRM platform and offering more interactive content [7][10] - The strategy includes diversifying revenue sources away from SEO, with a focus on email, social media, and paid channels [9][12] - The company plans to launch a new product in the spring, which is expected to enhance its marketing capabilities and drive future growth [10][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the return to year-over-year growth in the fourth quarter, despite ongoing pressures on SEO revenue [9] - The company expects revenue for 2026 to be in the range of $170 million to $180 million, with adjusted EBITDA between $50 million and $58 million, reflecting modest growth but a decrease in EBITDA margin [6][23] - Management highlighted the potential for the sports data services business to grow in the high teens and see margin expansion, while acknowledging challenges in the marketing business [7][36] Other Important Information - The company has fixed the contingent consideration from an acquisition, allowing for better alignment of teams and resources [16] - The company repurchased 110,000 shares in the fourth quarter and a total of 672,000 shares for the year, with $14.4 million remaining in the share buyback authorization [22] Q&A Session Summary Question: Thoughts on U.K. tax increase and market implications - Management noted that while some brands may exit the market, the overall market remains robust, and there are opportunities for the company to benefit from the exit of competitors [28][29] Question: Guidance and challenges in performance marketing - Management indicated that regulatory headwinds in the U.K. and Finland have impacted guidance, with continued search volatility affecting performance [32][33] Question: Success in OpticOdds and growth strategies - The company has around 300 active customers on long-term contracts and expects to onboard more clients, with a focus on both upselling existing customers and acquiring new ones [37][38] Question: AI headwinds and market share - Management reported that referrals from LLMs (Large Language Models) are increasing, but challenges with Google search rankings persist due to spam and negative SEO attacks [42][44] Question: Strategic options and capital allocation - The company plans to prioritize deleveraging before focusing on share buybacks, with a strong business model that remains attractive despite market challenges [47][48] Question: Insights on new product impact on EBITDA - The new product is expected to have limited revenue contributions in the current year but is strategically important for future growth [60][64] Question: Long-term growth vision and M&A potential - Management envisions a return to growth in the marketing business and continued expansion in sports data services, with potential for M&A to enhance capabilities [74][76]