Shares Plunge Despite Record Revenue
Investors in Gambling.com Group (NASDAQ: GAMB) experienced a shock yesterday (May 16th) as the company’s stock price dropped over 7%. This sharp decline came after Gambling.com Group revised its full-year 2024 financial targets downward.
Solid Q1 Performance
However, the news wasn’t all bad. The company reported a positive first quarter (Q1) for 2024. Revenue soared by an impressive 9% year-over-year, reaching a record high of $29.2 million. This growth spanned across all of Gambling.com Group’s geographical markets, showcasing their global reach.
Profit Margins Affected by Investment
Despite the revenue increase, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for Q1 dipped slightly. Compared to the same period last year, adjusted EBITDA decreased by 5% to $10.2 million. This resulted in a 35% profit margin. The decline can be attributed to increased sales costs associated with media partnerships.
Confident in Future Growth
Gambling.com Group’s CEO and co-founder, Charles Gillespie, remained optimistic. He highlighted the company’s long-term investments in proprietary technology, diverse website portfolio, and strategic acquisitions as key drivers of consistent growth. Gillespie expressed confidence in the company’s future, stating, “We see a clear path ahead to generate substantially higher adjusted EBITDA and free cash flow as we continue to expand our leadership and influence across global online gambling markets.”
Year-Over-Year Market Growth
Elias Mark, Gambling.com Group’s CFO, chimed in, adding that all the company’s geographical markets exhibited year-over-year improvements. However, he acknowledged that the previous year benefited significantly from a surge of new US state launches in the online gambling industry.
Positive Customer Acquisition & Funding
On a bright note, Gambling.com Group successfully secured over 107,000 new depositing customers during Q1. Additionally, they secured a new $50 million credit facility to fuel potential future growth opportunities.
Guidance Adjustment Due to External Factors
However, Gambling.com Group was forced to revise its 2024 full-year revenue and adjusted EBITDA guidance. This decision stemmed from recent changes implemented by Google in early May regarding the treatment of commercial content on high-authority websites. These changes have temporarily “diminished the effectiveness” of Gambling.com Group’s media partnerships.
Revised Financial Outlook
As a result of the Google policy shift, the company now anticipates full-year revenue to fall within the range of $118 million to $122 million. This is a downward revision from their initial guidance of $129 million to $133 million.
Adjusted EBITDA Outlook Lowered
Similarly, Gambling.com Group now forecasts adjusted EBITDA to land between $40 million and $44 million. This represents a shift from their earlier projection of $44 million to $48 million. Despite the adjustment, the midpoint of the updated adjusted EBITDA outlook remains at $42 million, reflecting a projected 14% year-over-year growth.
Resilience and Long-Term Optimism
Despite the challenges presented by the evolving digital landscape, Charles Gillespie expressed confidence in Gambling.com Group’s ability to deliver strong year-over-year adjusted EBITDA and free cash flow growth. He emphasized, “With less competition in the search engine results pages, our owned and operated assets are better positioned for the long term than ever before.”
