CEO Charles Gillespie believes Gambling.com Group’s new Casinos.com brand has the potential to surpass the value of its flagship domain.
Gambling.com Group has generated record 107% year-on-year revenue growth to $21.3m in Q4 2022.
The affiliate business saw a 364% year-on-year increase in North American revenue to $10m due to a strong growth in New Depositing Customers (NDCs).
Revenue in the UK and Ireland grew 54% to a quarterly record $8.1m.
In Q4 2022, the group generated $6.9m of adjusted EBITDA, at a margin of 32%.
For full-year 2022, revenue grew 81% to $76.5m. Adjusted EBITDA reached 24.1m, at a margin of 31%.
Gambling.com said it delivered over 273,000 NDCs, representing growth of 133% compared to 2021.
CEO Charles Gillespie said the US will remain the company’s primary growth driver for 2023.
North American revenue is expected to account for most of the Group’s income this year, complemented by continued growth in more mature markets outside North America.
During the earnings call, Gillespie also pointed to the growth potential of the group’s recently acquired Casinos.com domain.
“We are very optimistic about the potential for this new project, particularly as it relates to customer acquisition for iGaming operators,” he said.
“The iGaming market in Europe is significantly larger than the sports betting market, and we expect the same will be true for North America as more jurisdictions come online.
“In our view, the long-term strategic value of this domain could surpass Gambling.com,” he added.
The formal launch of the website is expected this summer.
Gambling.com Group CEO Charles Gillespie: “The iGaming market in Europe is significantly larger than the sports betting market, and we expect the same will be true for North America as more jurisdictions come online.”
Gillespie added that he anticipates Q1 2023 to be another record quarter for the group.
“Our recent launches in Maryland, Ohio and two weeks ago in Massachusetts offer great evidence of the return we generate from our strategy to invest in premium domains and the new websites ahead of the launch of sports betting in any new state.
“We have had great early success in each of these markets led by our Bet Maryland, Bet Ohio and Bet Massachusetts properties,” he said.
Gillespie stressed that although several states in the US are considering sports betting and iGaming legislation during the current legislative season, the company is not expecting any additional states to legalise either activity in 2023.
However, the group’s long-term outlook for broad-based expansion of regulated online gambling in North America remains unchanged.
“We continue to expect states to regulate online sports betting where retail sports betting exists and states that have online sports betting to move towards regulated iGaming.
“And we continue to believe that we will grow our market share in the states we are already active in as we further refine and optimise our websites,” he concluded.
CFO Elias Mark commented on the outlook for the business in 2023:
“Our primary focus on organic growth remains unchanged.
“For the first two months of the year, we have not seen any deterioration of customer or consumer demand for online games. From our perspective, demand for performance marketing services for the online gaming industry remains strong.
“Our value proposition is enhanced as online operators continue to rationalise their marketing spend towards channels with tangible ROI.”
Truist Securities’ managing director Barry Jonas questioned CFO Mark on his views of the current M&A environment. Mark replied:
“We continue to be extremely active on the M&A front. We spend a lot of time examining deals, capital investigating the feasibility of various things, and looking at deals of all different shapes and sizes.
“We also remain as picky as ever. However, that doesn’t mean we are not doing the work in the background to evaluate everything we can.
“I think expectations from sellers have become slightly more rational. But having said that, the cost of capital has gone up pretty significantly, so it’s different, which is both a bit of a positive and a negative.
“But as I’ve said, we are very actively considering things that we think would create shareholder value.”
Current trading & outlook
For 2023, Gambling.com Group expects to post revenue in line with estimates.
The company projects to generate revenue between $93m and $97m, which represents year-on-year growth of 22% to 27%.
Additionally, the company expects adjusted EBITDA to range between $32m and $36m, reflecting a growth of 33% to 50%.
Shares in casino supplier PlayAGS are trading 25% higher after the business confirmed it had received a $10 per share all-cash acquisition offer from Inspired Entertainment.
Nasdaq-listed PlayAGS supplies a combination of slot products, table games and social casino solutions, with its roots in the Class II Native American gaming market in the US.
Inspired Entertainment – also listed on the Nasdaq – offers a portfolio of content, technology, hardware and services to gaming, betting, lottery, social and leisure operators, across both land-based and mobile channels across the world. The business is widely recognised for its virtual sports offering.
Reuters reported on rumours about a possible acquisition offer on Friday (12 August), before PlayAGS confirmed in an 8-K filing to the SEC that it had indeed received a non-binding indication of interest to purchase the business.
It clarified that the proposal was not accepted by the company and that it remains in preliminary discussions with “the third party” – commonly assumed to be Inspired Entertainment.
PlayAGS’ board of directors and management team will carefully review any proposal received to determine the course of action it believes is in the best interests of its shareholders, it said.
Having ended trading on Thursday at around $6, the $10 per share acquisition offer represents a premium of around 67% on PlayAGS’ share price.
As of 30 June, PlayAGS held net debt of $535.4m, meaning the $370m acquisition offer values the business significantly higher than the asking price.
Truist Securities estimated the total valuation of the bid to be around $875m, representing a sales multiple of 6.4x estimated 2022 EBITDA and 5.6x 2023 EBITDA.
Inspired, meanwhile, indicated its interest in potential M&A opportunities during its Q2 earnings call with investors last Wednesday. The firm’s CFO Stewart Baker said it was actively looking at a number of opportunities.
“We are certainly willing to use capital for M&A if it’s something that strategically fits with what we are trying to do. And there seem to be a lot of things around right now presenting themselves as possibilities,” he said.
Inspired marked its recovery from the effects of the Covid-19 pandemic during the latest quarter, as revenue grew by 71.8% year-on-year to $71.3m.
The growth was mostly driven by an increase in sales for Inspired’s virtual sports and land-based gaming segments, while its interactive segment recorded flat revenue year-on-year.
It also turned around its profits, registering net income for the quarter of $7.5m, compared to a net loss of $43.8m in the prior year period.
Adjusted EBITDA for the firm grew from $8m to $26.1m, as the results helped drive its share price from $11.28 prior to its Q2 results announcement, to as high as $13.50 in the following days.