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Gambling.com Group's Q2 Earnings Recap

Gambling.com Group's Q2 Earnings Recap

Gambling.com Group's CEO, Charles Gillespie, voices over Q2 earnings.

Gambling.com Group's Q2 Earnings Recap
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Aired Aug 22, 2023
The CEO of Gambling.com Group, Charles Gillespie, gives an overview and unpacks findings from the company's record-breaking second quarter.

Kinsey Grant: Hello everybody and welcome to the Public Podcast. I'm your host Kinsey Grant. And today's show is brought to you by Gambling.com Group. Joining us as today's guest is Charles Gillespie, who is the CEO at Gambling.com Group. And a little bit about Gambling.com Group, they're a provider of digital marketing services for the online gambling industry. I'm so excited to have Charles here on the Public Podcast today to talk about earnings. It's certainly been a busy couple of weeks for the company and certainly for Charles. So super grateful to have you here. and hear a little bit more about how this last quarter went for you. So thank you so much for joining me today, Charles.

Charles Gillespie: Thanks, Kinsey. My pleasure. We've got a great Q2 in the bag, so happy to answer all your questions about it.

KG: Of course. Yeah, let's jump right in. You know, you mentioned that we had a great Q2. It was last week that Gambling.com Group. And one more time, that ticker is $GAMB. You released your second-quarter earnings. There were some pretty big numbers in there. One that certainly stuck out to me was that revenue grew 63 percent. So I'd love to hear your perspective on how that increase came to be. Tell me a little bit more about some of the factors that influenced that growth in revenue of 63 percent.

CG: Well, as many of your listeners will know, online gambling, in particular sports betting in the United States, has really kind of exploded over the last couple of years. And that's what drove the increase. So we grew North American revenue by 115% to 13.4 million. So that's over half of our nearly 26 million in revenue for the quarter. And that's where pretty much all the growth came from.

KG: So as sports betting and online gambling has become more popular, I would love to understand a little bit better how you differentiate yourself from what I imagine is a growing cohort of competitors. Tell me a little bit more about what that strategy is for differentiation in an industry that is growing at a pretty rapid clip across the board.

CG: Well, we differentiate ourselves from the other publicly traded companies in the United States in the online gambling industry by simply having a different business model. We are not an online gambling operator like Fanduel, DraftKings, BetMGM, Caesars, et cetera. Those companies are actually our clients. So as you see them advertise everywhere they can and try to grow those businesses, they're spending a chunk of that money with us. And therefore we are growing much faster than the market in the United States, but we essentially offer investors a way to play the secular growth in online gambling in the United States without having to pick a winner. You know, is it going to be DraftKings? Is it going to be Fanduel? Well, it's going to be all of them actually. But where, you know, we will have a very nice business in the U S regardless of who ends up at the top of the pile.

KG: So I'm curious about with all this being said that you have this unique perspective having exposure to some of the other bigger players in the space, in the gambling space, the online gambling space specifically. Tell me a little bit about what areas of the industry you're paying the most attention to right now. You know, that could be any particular sort of pockets of the market that you're watching, especially just as we're headed into the back half of Q3 and the rest of this year. Are there any parts of the online gambling industry that have been growing really quickly, that have been catching your attention, that you are feeling ready to share about?

CG: Sure, yeah. The main thing that's driving a lot of our business and the other companies in our space in the US is these new state launches. The next new state to launch is Kentucky. They're going live with sports betting on September 28th. So for us, that's mainly a Q4 phenomenon. We'll get three days of revenue in Q3, but it's really gonna hit us in Q4. We updated our guidance last week when we released earnings and the way we manage these new states is we don't add in the effects from these new state launches until the launch specifics are crystal clear, which in the case of Kentucky, they now are. So we added Kentucky into the guidance for revenue and in particular that took us to a range of 100 to 104 million. So we now expect to generate on the low end, 100 million in revenue this year. The next state that's gonna go live is North Carolina, which is very exciting for us because we're actually from North Carolina. Me and the co-founder, Kevin, were both born and raised in Charlotte, both went to UNC, and Kevin now lives back in Charlotte running our North American team. So North Carolina is gonna be fantastic for us when it finally comes online. There's no launch specifics yet, although we estimate it'll be Q1 of next year. And therefore it's not in our guidance. Well, we haven't actually introduced any guidance for 2024, but, you know, the way the analysts are modeling things out, you know, we've been clear not to add in any of these new states and as in when we get specifics on the, on the launch in North Carolina, we'll quantify that and, and that should show up in the analyst reports.

KG: All right. And in terms of state-by-state legislation, I'm curious about how the momentum feels right now. Does it feel positive? Does it feel like there are any big headwinds in terms of legislation to legalize vetting in these states? And with that in mind as well, what are your thoughts on anything at the federal level? Are there any expectations that you have around that?

CG: Yeah. My hope and prayer at the federal level is that they do absolutely nothing. This has become, and it frankly always was, a state's rights issue. And if the feds come in and actually try to do anything, it could be great or it could be horrible. If they mess it up, they mess it up for all 50 states, which from the kind of industry's perspective, that's putting your eggs in one basket. We're quite happy to have everything done on a state-by-state level because that allows for more variance. Certain states can try different things, different models work better than others. At the state level, they fix their mistakes much more quickly than at the federal level. So to the extent a state regulates online gambling in a kind of boneheaded way that doesn't help anyone, then they can go and fix it the next year. So we're quite happy with that state-by-state approach. You've already got over 25, over half the US has got regulated online sports betting. The next wave we expect will be online casino games. You've got a handful of states now that have online casino games, but that's really where our business will take a big leap forward. If you think about the profitability of online casino versus online sports betting, it mirrors what you see in a land-based casino. Okay. If you walk into a casino in Las Vegas, the sports book is tiny and there's a football field or two worth of, of slot machines. Uh, and, you know, that's for obvious reasons. They make a lot more money off the slots than they do off of the sports book. And it's no different online. Uh, so as we get new States coming online for online casino, that's, you know, really the heart and soul of our business, we do very, very well with sports betting, but we have historically done even better with these online casino games. And when I say that, I mean, helping people find online casinos, right? You know, again, we are the comparison shopping site to help people find these sites, we don't actually operate the online casino games ourselves, but, you know, we bought casinos.com, the domain name at the end of last year, which from our perspective is the single most desirable domain name to have in the industry. We relaunched that in July. So there's a brand new website up and running at casinos.com. And we think that'll be a big part of our growth over the next several years is that becomes as big as gambling.com in time.

KG: Yeah, it's certainly interesting to think about how sports betting, to your point, being available legally in half the country right now might sort of lay the framework for the scaling of online gambling in a more pure-play sense of the word. How does that manifest in your business? You know, tell me a little bit about how the experience with sports betting over the last couple of years has informed any plans to scale into the online gambling space once that becomes the conversation du jour as we're talking about legalization.

CG: Yeah. Well, you know, our corporate history is we kind of come from the online casino side. So we, I wouldn't say we've learned a whole lot about online casino over the last several years. More than we've learned about online sports betting is that's become a very meaningful part of our business. But if you look at it from the political standpoint in the US of actually regulating these activities, there's a pretty clear path. So step one, they regulate retail sports betting, you know, not online. You have to walk into a physical store somewhere, interact with a human or some sort of kiosk, and then you can make your sports bet. They realize after they do that, that they completely miss their revenue targets in terms of what they expected to make off of regulating that new activity because it doesn't scale. It's an individual location. Maybe there's a couple locations, but it doesn't have the same economics at all as an internet-based business. States will then come back to it and they'll add on online sports betting after having started with retail. Then they make a bit more money. It, you know, they become, they make some meaningful progress toward their revenue objectives for regulating online gambling, but they're still not there. So the next thing they then do is regulate online casino games. You know, in one state having this conversation right now is New York. You know, they, there were semi-serious conversations earlier this year about the prospect of actually regulating online casino games in New York and, um, you know, New York's a big state. It's, uh, it's, it's going to really move the needle when they finally do that. Uh, but these conversations, they take a couple of years, you know, the first time someone proposes this, it doesn't even get off the ground, but then they propose it next year. And people actually take it a little more seriously and they have a proper debate, but it doesn't go all the way through. And then the third year, yeah, they're more familiar with the issue. They've heard some of the arguments before. It's not as scary as it used to be. And it makes, you know, you can make a real push at actually getting this stuff approved. So, you know, just because you get a state considering, you know, online casino and it not going through. It's actually a sign of progress. And, and, uh, in time, we think quite a few, if not. The majority of states in 10 years will actually regulate online casino games.

KG: Yeah, certainly some very interesting insight to consider the sort of the growth curve, right? So, you know, you mentioned Kentucky in the back half of this year, potentially North Carolina in early 2024. What else would you like to share with investors as you head into Q3 and beyond? Anything else that's top of mind right now?

CG: Well, the start of football is a big deal for us and the rest of the industry. You know, we've got a lot of great assets out there, but one of the newest assets that we have is the usatoday.com website. So we've cut a strategic media partnership with Gannett, the company that owns the USA Today. They're also the incidentally, the largest publisher of newspapers in the United States. And what we do there is we help them monetize online gambling, sports betting and casino in exactly the same way that we do with gambling.com and our other websites. So for USA Today, if you go to usatoday.com/betting, that's us. That's our content, our technology, our advertising, all of it. And what we do there is create that compelling content, put it onto the usatoday.com website. We help them. We help Gannett drive a new audience into the website as well, a high-intent audience, users that are keen on opening up new sports betting accounts. And then we monetize it. Basically, we pass that traffic along to the operators under our commercial agreements, and we share the economics with our media partner, Gannett in that case. We've done a lot of work on that to get that ready for the start of the NFL. And that deal was only announced at the beginning of this year. So it's a relatively new deal, and we expect to kind of see it come into its own in September and in Q4 with NFL. Obviously, that's one of the biggest drivers of engagement in sports betting, and in particular in setting up these new accounts.

KG: All right, well, certainly an exciting time to have this chat. And it has been so wonderful to hear a little bit more about how Q2 was, and what the expectations are for Q3 and beyond. So Charles, thank you so much for joining me today. I really appreciate your time.

CG: It's great to be here Kinsey. Thanks again.

KG: With that, thank you once again to our guest, Charles Gillespie, CEO of Gambling.com Group. Thank you so much, Charles, for joining us. And thank you to all of you for listening. We will be back soon with even more updates from the sports and gambling world in no time. Thank you again for listening. This is the Public Podcast, and I'm Kinsey Grant.

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