Gambling.com: Q2 2022 53% Growth Offset by Expense Increases

Gambling industry affiliate services provider Gambling.com Group released Monday its financial report for the second business quarter of 2022, posting 53% growth in revenue.

Impressive Revenue Growth

For the three months ended June 30, 2022, the provider of performance marketing and digital marketing services to gambling operators generated $15.9 million in revenue, significantly increasing its result of $10.4 million for the respective three-month period in the year before.

Commenting on the quarterly results, Gambling.com CEO and co-founder Charles Gillespie outlined the exceptionally strong growth of over 300% the group achieved across US markets and the company-wide growth of over 50% the business delivered in the quarter.

“The strength of our business model was also on display, as we continued to deliver strong Adjusted EBITDA and Free Cash Flow despite the second quarter being the seasonally weakest and while investing in the organization to drive future growth,” Gillespie stated.

Cost of sales for the reported quarter came out at $495 million leaving Gambling.com Group with $15.4 million in gross operating profit, nearly 15% more than what the business reported in the second quarter of 2021.

Gambling.com posted increases in expenses across the board: $8.5 million in sales and marketing expenses, up 174% when compared to the %3.1 million in Q2 2021, $1.5 million in technology expenses, up nearly 60% on the $944,000 in Q2 2021, and $4.8 million in administrative expenses, an increase of 41% year-over-year. The group also accounted for $2.8 million in cost of fair value movement in contingent consideration.

Expense Increases and Exchange Rates

The group ended the second quarter with an operating loss of $2.2 million as, similarly to its full-year 2021 performance, the increase in revenue was more than offset by the increase in expenses. The Q2 2022 operating loss reversed an operating profit of $3.2 million in the respective quarter of the year prior.

Adjusted EBITDA was $3.6 million registering a decrease of 34% from the $5.5 million in Q2 2021 and the adjusted EBITDA margin, 23%, was also down from the 53% registered in Q2 2021.

The decrease in adjusted EBITDA did not bother Gambling.com’s chief financial officer Elias Mark, who stated that the group had delivered on both its revenue and adjusted EBITDA targets “ahead of the street consensus and generated strong free cash flow in the quarter.”

Cash flow from operations was $3.5 million, down 27% from $4.7 million in the respective quarter of 2021. Free cash flow also decreased year-over-year to $2.9 million, from $3.1 million in Q2 2021.

Mark also noted the strong trading in the group’s more mature markets in the UK and Ireland where the business mostly experienced the adverse effect of the weakening pound versus dollar exchange rate, incurring $6.6 million in exchange rate differences on translating foreign currencies in the quarter.

On the company’s full-year outlook, Mark said that the business “remains well capitalized and in a strong position to meet the financial outlook for the year,” while Gillespie noted that the group “offers the best value proposition for online gambling operators’ investments in customer acquisitions.”