Kinsey Grant: Hello, everybody and welcome to the Public Podcast. I'm your host, Kinsey Grant and I am so excited to be here with you today. This episode is going to be super informative. We have a stellar guest here to talk about online gambling and sports betting and earnings headed right your way right now, Charles Gillespie is Chief Executive Officer, Co-founder and a Director at Gambling.com Group. That's the ticker G-A-M-B. Gambling.com Group is a leading provider of digital marketing services for the global online gambling industry and was founded in 2006. Charles. Welcome to Public, how's it going?
Charles Gillespie: Things are going very well. Thanks for having me on, look forward to sharing our great story with your audience.
KG: Yeah, I'm excited to hear this story and I think that framing it as a story is really the way to start here. So let's hear a little bit about the beginning of the story. If you will, I want to hear more about your company. Do you mind giving me just a brief overview of your business model?Tell me a little bit about how your business works.
CG: Yeah, sure, no problem. So, what we do for the online gambling industry is basically the same thing that, say Hotels.com does for hotels. So if you wanna go to Paris, you're not gonna go to 10 different Parisian hotel websites to find a hotel or you're gonna go to hotels dot com or booking dot com or something like that and get all the information in one place and make a decision there. So, we basically do the same thing for the online gambling industry. So if you're gonna bet on sports and you're in, let's say Massachusetts, (just because Massachusetts just launched sports betting) there are a great many different places you could play at, online in Massachusetts, which are now legal and regulated. And, it, you know, our typical users that go to Google, they search for something like top Massachusetts sports books, they'll find one or more of our websites: we've got betmassachusetts.com, we've also got gambling.com, bookies.com and a lot of other sites, they'll find one of our sites, they'll find the information they're looking for. So, you know, top 10 sports books in, in Massachusetts and then they'll click and leave one of our websites, go to one of those sports books, register deposit play. And then we get paid, and, and what we do is called performance marketing because we only get paid when the traffic we send to these, online gambling companies performs when they actually sign up deposit in play. And if they don't, we don't get paid anything. And that's the the nature of the performance marketing model.
KG: So tell me a little bit about, you know, the, the bigger picture that's going on here and we'll get into earnings in a second. But I imagine it's been quite a, a transformative time and, you know, momentous several years for, for your business and for working in the space in which you work with the advent of, of legal gambling and legal, online gambling and sports betting in all, all sorts of different states. Tell me a little bit more about how you view that momentum's impact on your business.
CG: Yeah, it really has been a, a hell of a couple of years, but we started this all the way back in 2006. Myself and, and the COO we both went to UNC, we're both from North Carolina. And, we wanted to start a legal and proper business in the online gambling industry, even all the way back in 2006. And back then, there was no legal online gambling in the United States. So we left, and we ended up building this business in Europe. Our largest office has been in Ireland for a number of years. Our largest market has been the UK, for most of the history of the company. And, then in 2018, when the Supreme Court unblocked sports betting, across the US, we had to turn the ship around and point it back at the US and, and really kind of come full circle. So, we've seen this industry grow and grow and grow and we understand how early it still is in the US and kind of North American regulated online gambling market. You know, a lot of people look at New Jersey, which has had, online casino gaming for nearly 10 years. And sports betting for, you know, five years and they think that it's, it's done or it's mature or that, you know, everyone's already signed up for all the, all the online sports books already and there's kind of, you know, it's not gonna grow and, and we know that that's not the case. You know, we've seen big markets like the UK Ireland, even Sweden, Italy, you know, just grow and grow and grow, you know, 20 years after, they first regulated. So we see an incredible situation.
CG: You've got this, this industry which is high margin, high growth and booming all around the world, which basically did not exist in the United States for regulatory reasons. And then the doors have just been kind of flung open in 2018. And now you've got a majority of states with regulated sports betting. You got a handful of states with online casino and more are gonna come every single year. so you, you've taken, you're going from this situation where regulated online gambling in the United States was sub a billion. And, I don't even know what the latest figures are because it changes so quickly. But, you know, it's, I don't know, it's, you know, estimates are 40 or 50 billion in, in, you know, another five or 10 years, which is crazy. I mean, it, you can, it's impossible to think of another, industry where you've gone from sub a billion to 50 billion in the space of, you know, 10 or 15 years. So it, it really is an incredibly exciting industry. We do love this industry and, we're very happy to, to be bringing this business back to the United States. And of course, we did the IP O in 2021 which was, you know, we got the picture on the, on the wall behind me here. That's, that was clearly one of the big, one of the big days in our history.
KG: Yeah, I, I can imagine there is a, a ton of excitement and it seems to be a theme, you know, with all this momentum in mind, I want to talk about earnings. You reported earnings late last week, tell me what are three things you would want investors to take away from your most recent earnings report.
CG: Kind of three big lessons. So uniquely within the online gambling industry or at least within the publicly traded companies in the United States that focus on this sector. You know, basically, all of them are high growth but, but very few of them are profitable and very few of them are very profitable and we are both high growth and highly profitable. So, year-on-year growth in the quarter was 36%. Virtually all of that was organic growth. There was a tiny contribution from one month of an acquisition. But, you know, then we also had adjusted margin at 40% and free cash flow of over six million, you know, so we actually make money, you know, in, in, in kind of sharp contrast to a number of the more high profile names in the sector. Which obviously gets a lot of attention. And, and because of that, I think it's, it's, really a unique business. But, the thing I'd, I'd also call out is, look, we grew 33% year on year in North America.
CG: And that's against Q one last year, which had the monumental launch of sports betting in New York State, which, you know, I'm sure there's more than a few people listening to this from New York you know, the finance community there is, is great and very into sports betting and it was kind of all the rage in, in Q one last year and, and obviously that drove great results for us a year ago. And despite that kind of blowout number, those blowout numbers in North America a year ago, we still grew 33% year on year in North America, this Q one. But on the other side of the Atlantic and our other kind of main segment in the UK and Ireland, we actually grew 36% year on year, which is even faster than North America, which, again gets back to this idea that this industry keeps growing for a very long time, you know, they regulated online gambling in, in the UK in about 2005. And it, you know, and it, the industry is still growing the affiliates, you know, companies like us performance marketing companies, they're continuing to occupy a kind of bigger and bigger part of the player acquisition within the whole sector. And companies like ours are continuing to take market share within the affiliate performance marketing space. So, you know, to me it's, it's, it's really surprising that we grew even faster in the UK and Ireland, than North America. But, you know, they're both high growth and, and that's perfectly fine.
KG: Yeah, I think that this, this hint at this larger idea that, you know, you, you started this conversation with the story of your company, the story of this industry. I'm curious about whether this last quarter one that you, you know, just reported earnings for, does this impact the bigger picture story for your company at all? Does this change anything for you?
CG: I think Q one was, it was like it was a record quarter. But, you know, as a high-growth company, most quarters are supposed to be record quarters. So I think, you know, there wasn't any strategy shift or any sort of, I, I think, I think what was a remark about the quarter was just, it's, the fantastic numbers with us just focusing on the business. You know, there was no acquisitions, there was no, nothing out unexpected, nothing out of the ordinary and, and, and we still drove as strong of a performance as we did.
KG: Yeah, totally. So, with all of that in mind, I wanna understand a little bit more about the future and hear your perspective on the future. So we'll take a second here to kind of pivot to look ahead. Tell me a little bit about the rest of this year. What are your priorities look like as a company through the rest of 2023?
CG: Generally speaking in North America, we focus on, a couple of things. So new state launches are very important for us and we had a number of new state launches last year. This year, they're, we're not expecting to have any new states launch before the end of the year. And that's, you know, that's a very helpful tailwind. But despite that, you know, we've put out very, healthy guidance at the beginning of the year and we've already raised that guidance on the back of the Q one report that we had put out, last week. So, you know, even without new state launches, we're targeting revenue of, 90 where let me make sure I give you the exact, the right numbers here, the, the, the 95 to 99 million, you know, so, knocking on the door of 100 million this year. And, if we do get any new state launches, you know, because Kentucky is regulated, you know, North Carolina, is probably going to regulate, you know, do the legislation in the next kind of 23 weeks. We're very positive on North Carolina, it's an important state for us. And when those states after they legislate, then they actually need to publish a timeline to launch. And once we have clarity on that, we will add it to the guidance because there's nothing in the guidance now about new state launches. So when we know North Carolina is going live, when we know Kentucky is going live, then we'll, we'll be able to, to tell the market and, and adjust. But the other thing I really, have people think about, and what we are really focused on for the remainder of this year is our new media partnership with Gannet. So Gannet is the largest publisher of daily newspapers in the United States. They publish USA Today, you know, which is the only kind of truly non-business national newspaper in the United States, with a very good sports section. And we have partnered with Gannet to help them monetize sports betting. They know that they've got a huge opportunity with all these different digital media properties of theirs and this great big audience and they came to us to help them, maximize the opportunity and, and, and basically make money off of this industry. If you look at it from our perspective, you know, when we try to grow the business, we can, we can add content to the websites. We already have, we can build new websites, we can buy websites or we can partner with websites and, and that's what we've done with t so, now if you go to USA Today.com/betting, you'll see our content. So that's all us. We've built, you know, essentially this kind of mini site of sports betting information and, and we, you know, pipe that into USAtoday.com and that should be a pretty meaningful driver of revenue, into the end of the year, especially after the start of NFL. So, as you can imagine, the start of the NFL season is really the kind of coming out party, for, for sports betting, every year. You know, it's a, it's a time of the year when, people set up a lot of new accounts, people obviously bet on the NFL more than they bet on anything else. And, you know, being in position at the beginning of the autumn sports season is very important for all sports betting companies, including ourselves. So, we expect to be in a good place in September for that autumn season.
KG: Yeah, certainly, very interesting. And we'll, we'll have to check back in, in September too and I've got one last question for you here, Charles; you've talked a bit here about, you know, the, the bigger story, the broader industry trends and contours that are, are driving gambling as an industry right now, sports betting as an industry right now, I'm curious to hear your perspective on when, if at all, there is a tipping point, you know, you mentioned that the growth you're, you're seeing in Europe, in the UK and Ireland is still significant and still in some ways surprisingly significant, right? But I'm curious about if, you know, there's a point at which that growth might begin to slow down for the industry writ large. Tell me a little bit more about what that might look like if you think that might even come to fruition at all. What do you think the longer-term picture for the industry looks like?
CG: Well, I think, I think the growth, you know, by definition has to slow, but, you know, the question is really by how much, you know, and, and you know, how, how many years do we have left while it's still high growth? I.e.; more than kind of 30 plus percent a year. And I would think we've got probably, you know, at least a decade plus, possibly more. You know, not every state has regulated sports betting. Very few states have regulated online casino. And frankly, you know, it's just like a land-based, casino. You know, if you look at the size of the slots and you look at the size of the sports book, there'll be about, you know, 10 times as much space given to the slots. And that's because that's where the money is at. Sports betting is actually kind of a low-margin business. And, and in many, you know, a lot of people in the industry look at it as kind of, a player acquisition tool. It's a way to get someone through the door and then hopefully they stop and play some blackjack or, you know, some slots, which is a, a product in the casino which is a higher margin product. So I think, you know, you've got an enormous amount of regulatory progress left to be made, which, which I think will be made. online casino is a little bit of a tougher sell for some of these legislatures as you can imagine, but it wasn't so long ago that sports betting was inconceivable in, in so many of these states. So, you know, the, there's a kind of 50 plus 60 70 years plus, timeline of, increasingly regulating gambling in the United States and, and online is just kind of the latest, manifestation of that. So, we don't think there's any lack of, of momentum in, in the regulatory, from the regulatory standpoint. And as we, you know, get through the next couple of years, you'll get a couple of online casino states a couple more. And that will really seriously move the needle in addition to some more sports betting states, but even the existing states will grow. You know, there's, there's this kind of surge of interest when the state launches because you have all this pent-up demand which comes to market, and then things settle down. and, but once they settle down, then they grow consistently, you know, for, for, you know, probably 10 plus years. And that gives, you know, you look at the New Jersey numbers, they've had, you know, they've been doing this kind of longer than anyone and the numbers are, are fantastic and still growing. So, you know, it's, it's, and, and to very briefly touch on, you know, all things not North America, you know, this is a global industry, there's a lot of money being made around the world in this industry and it's not just English speaking markets, like, you know, the US, Canada, UK, and Ireland, you know, you've got Japan, which is probably gonna come online in the next, you know, a couple of years in a, in a legal way. You've got Brazil, which is regulating, you know, there's, there's a lot of, you know, practically every market in Europe is, is still growing, and, and, you know, profitable and, and, and very nice business for the online gambling operators. You know, our clients, as well as the online gambling affiliates, you know, performance marketing companies like ourselves. So, you know, everybody seems to focus on the US because, you know, we're listed in the US. Our investors are mainly in the US. Of course, it's kind of front of mind for them. But the amount of opportunity outside the US is, is easily as compelling as, as the US opportunity itself.
KG: Yeah, certainly very interesting to keep in mind and I appreciate the big picture thinking and the broad context here, Charles, this has been such a, a wonderful conversation. I really appreciate you taking the time sharing more about the story of your company and your recent earnings.
CG: Yeah, it's, it's been wonderful.
KG: So thank you so much for coming by.
CG: My pleasure.
KG: Of course and wanna once again, want to thank our guest Charles Gillespie, Chief Executive Officer, Co-founder, and a Director at Gambling.com Group. Once again, the ticker is G-A-M-B.Thank you all so much for listening. I'm Kinsey Grant and I will see you next time.