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Gambling.com Group Limited Reports Third Quarter 2021 Financial Results

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Gambling.com Group Limited, a leading provider of digital marketing services active exclusively in the global online gambling industry, today announced its operating and financial results for the third quarter ended September 30, 2021.

Third Quarter 2021 Financial Highlights

  • Revenue of $10.1 million grew 37% compared to $7.4 million in the same period for the prior year
  • Net income of $4.7 million, or $0.13 per diluted share, compared to a net income of $2.3 million, or $0.08 per diluted share, in the same period for the prior year
  • Adjusted EBITDA of $3.5 million decreased 14% compared to $4.0 million in the same period for the prior year, representing an Adjusted EBITDA margin of 34%1
  • Free cash flow of $0.8 million decreased 81% compared to $3.9 million in the same period for the prior year2

Third Quarter 2021 Business Highlights

  • Completed successful public listing of common shares on the Nasdaq Global Market under the ticker symbol “GAMB”
  • Announced appointment of Mr. Daniel D’Arrigo to Board of Directors
  • Received temporary supplier license from the Arizona Department of Gaming to provide marketing services to licensed operators in the state and launched free-to-use comparison of legal online sports betting services on BetArizona.com
  • Launches of Marylandbets.com, casinosource.nl and gambling.com/nl providing bettors in Maryland and the Netherlands with trusted and up to date gambling information to help them place safe and secure legal wagers
  • Completed acquisition of domains suitable for targeting the US market

“Our financial performance in the third quarter remained strong as we grew revenue by 37% compared to the prior year and, despite the third quarter being the seasonally slowest quarter of the year, delivered an Adjusted EBITDA margin of 34%,” said Charles Gillespie, Chief Executive Officer and co-founder of Gambling.com Group. “Importantly, after the quiet summer months of July and August, we delivered all-time-high revenue in September. With the launch of Arizona and the kickoff of the NFL season, we saw a significant uplift in U.S. revenue in September and our U.S. performance exceeded our internal expectations. Entering the quarter with good momentum we are encouraged by the start to our seasonally stronger fourth quarter. We remain highly focused on prudently growing the Company through both sustained organic growth and future accretive acquisitions which we continue to actively pursue”

1 Adjusted figures represent non-IFRS information. See “Non-IFRS Financial Measures” and the tables at the end of this release for an explanation of the adjustments and reconciliations to the comparable IFRS numbers.

2 Adjusted figures represent non-IFRS information. See “Non-IFRS Financial Measures” and the tables at the end of this

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release for an explanation of the adjustments and reconciliations to the comparable IFRS numbers.

Third Quarter 2021 vs. Third Quarter 2020 Financial Highlights

THREE MONTHS ENDED
SEPTEMBER 30,

CHANGE

2021

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2020

$

%

(in thousands USD, except for
share and per share data,
unaudited)

CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME DATA

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Revenue

$

10,123

$

7,406

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$

2,717

37

%

Operating expenses

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(7,722

)

$

(3,931

)

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$

(3,791

)

96

%

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Operating profit

2,401

3,475

(1,074

)

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(31

)%

Income before tax

2,694

2,609

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85

3

%

Net income for the period attributable to the
equity holders

$

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4,675

$

2,303

$

2,372

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103

%

Net income per share attributable to ordinary
shareholders, basic

0.14

0.08

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0.06

75

%

Net income per share attributable to ordinary
shareholders, diluted

0.13

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0.08

0.05

63

%

n/m = not meaningful

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THREE MONTHS ENDED
SEPTEMBER 30,

CHANGE

2021

2020

$

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%

(in thousands USD, unaudited)

NON-IFRS FINANCIAL MEASURES

Adjusted EBITDA

$

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3,464

$

4,027

$

(563

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)

(14

)%

Adjusted EBITDA Margin

34

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%

54

%

n/m

n/m

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Free Cash Flow

754

3,917

(3,163

)

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(81

)%

n/m = not meaningful

THREE MONTHS ENDED
SEPTEMBER 30,

CHANGE

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2021

2020

Amount

%

(in thousands, unaudited)

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OTHER SUPPLEMENTAL DATA

New Depositing Customers (1)

27

28

(1

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)

(4

)%

(1)      We define New Depositing Customers, or NDCs, as unique referral of a player from our system to one of our customers that satisfied an agreed metric (typically making a deposit above a minimum threshold) with the customer, thereby triggering the right to a commission for us.

AS OF
SEPTEMBER 30,

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AS OF
DECEMBER 31,

CHANGE

2021

2020

$

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%

(Unaudited)

(in thousands, USD)

CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION DATA

Cash and cash equivalents

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$53,160

$8,225

$44,935

n/m

Working capital (2)

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55,064

10,059

45,005

n/m

Total assets

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91,648

45,383

46,265

n/m

Total borrowings

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5,919

5,960

(41)

n/m

Total liabilities

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11,373

11,171

202

n/m

Total equity

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80,275

34,212

46,063

n/m

(2)      Working capital is defined as total current assets minus total current liabilities.

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n/m = not meaningful

Revenue

Total revenue in the third quarter increased 37% to $10.1 million compared to $7.4 million in the comparable period for the prior year. On a constant currency basis, revenue increased $2.3 million, or 30%. The increase was driven by improved monetization of NDCs that we attribute to a combination of technology improvements and changes in product and market mix. NDCs decreased 4% to 27,000 compared to 28,000 in the prior year.

Our revenue disaggregated by market is as follows:

THREE MONTHS ENDED
SEPTEMBER 30,

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CHANGE

2021

2020

$

%

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(in thousands USD, unaudited)

U.K. and Ireland

$

4,483

$

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4,311

$

172

4

%

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Other Europe

2,718

1,162

1,556

134

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%

North America

2,270

1,081

1,189

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110

%

Rest of the world

652

852

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(200

)

(23

)%

Total revenues

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$

10,123

$

7,406

$

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2,717

37

%

Revenue increases were primarily driven by organic growth in our Other Europe and North American markets.

Our revenue disaggregated by monetization is as follows:

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THREE MONTHS ENDED
SEPTEMBER 30,

CHANGE

2021

2020

$

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%

(in thousands USD, unaudited)

Hybrid commission

$

2,808

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$

3,847

$

(1,039

)

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(27

)%

Revenue share commission

829

794

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35

4

%

CPA commission

5,455

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2,535

2,920

115

%

Other revenue

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1,031

230

801

348

%

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Total revenues

$

10,123

$

7,406

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$

2,717

37

%

Revenue increases were driven primarily by additional CPA commission and Other revenue. The increase in Other revenue was driven primarily by bonuses related to achieving certain operator NDC performance targets.

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Our revenue disaggregated by product type from which it is derived is as follows:

THREE MONTHS ENDED
SEPTEMBER 30,

CHANGE

2021

2020

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$

%

(in thousands USD, unaudited)

Casino

$

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7,965

$

6,354

$

1,611

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25

%

Sports

2,076

858

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1,218

142

%

Other

82

Advertisement

194

(112

)

(58

)%

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Total revenues

$

10,123

$

7,406

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$

2,717

37

%

Revenue increases were driven by growth in revenue from casino and sports products.

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Operating Expenses

THREE MONTHS ENDED
SEPTEMBER 30,

CHANGE

2021

2020

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$

%

(in thousands USD, unaudited)

Sales and marketing expenses

$

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3,587

$

1,790

$

1,797

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100

%

Technology expenses

1,123

663

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460

69

%

General and administrative expenses

2,978

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1,402

1,576

112

%

Allowance for credit losses and write offs

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34

76

(42

)

(55

Advertisement

)%

Total operating expenses

$

7,722

$

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3,931

$

3,791

96

%

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n/m = not meaningful

Total operating expenses increased by $3.8 million to $7.7 million compared to $3.9 million in the prior year. On a constant currency basis, operating expenses increased by $3.5 million to $7.7 million compared to $4.2 million in the prior year. The increase was driven primarily by headcount across Sales and Marketing, Technology, and General and Administrative functions as we invest in the Company’s organic growth initiatives as well as increased administrative expenses associated with operating as a public company.

Sales and Marketing expenses totaled $3.6 million compared to $1.8 million in the prior year. The increase was driven primarily by increased wages and salary expenses associated with increased headcount and professional services.

Technology expenses totaled $1.1 million compared to $0.7 million in the prior year. The increase was driven primarily by increased wages and salary expenses associated with increased headcount partially offset by capitalized development costs.

General and Administrative expenses totaled $3.0 million compared to $1.4 million in the prior year. The increase was driven primarily by increased wages and salary expenses associated with increased headcount, professional services, and insurance expenses.

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Earnings

Adjusted EBITDA decreased by 14% to $3.5 million compared to $4.0 million in the prior year representing an Adjusted EBITDA margin of 34%. The decrease was driven primarily by increased operating expenses partly offset by increased revenue.

Operating profit in the third quarter decreased 31% to $2.4 million compared to $3.5 million in 2020. The decrease was driven primarily by a decrease in Adjusted EBITDA and an increase in share-based payments expense.

Net income in the third quarter totaled $4.7 million, or $0.13 per diluted share, compared to net income of $2.3 million, or $0.08 per diluted share, in the prior year. The increase was primarily driven by the recognition of deferred tax assets related to the transferred intangible assets.

Free Cash-flow

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Total cash generated from operations of $1.4 million decreased 65% compared to $4.0 million in the prior year. The decrease was driven primarily by decreased adjusted EBITDA, the settlement of non-recurring IPO-related expenses and income tax payments. Free cash flow totaled $0.8 million compared to $3.9 million in the prior year. The decline was the result of decreased cash flow generated from operations and increased capital expenditures consisting primarily of the acquisition of domain names and capitalized development costs.

Balance Sheet

Cash balances as of September 30, 2021 totaled $53.2 million, an increase of $45.0 million compared to $8.2 million as of December 31, 2020. Working capital as of September 30, 2021 totaled $55.1 million, an increase of $45.0 million compared to $10.1 million as of December 31, 2020.

Total assets as of September 30, 2021 were $91.6 million compared to $45.4 million as of December 30, 2020. Total borrowings, including accrued interest, totaled $5.9 million compared to $6.0 million as of December 31, 2020. Total liabilities were $11.4 million compared to $11.2 million as of December 31, 2020.

Total equity as of September 30, 2021 was $80.3 million compared to $34.2 million as of December 31, 2020.

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The increases in working capital, total assets, and total equity were driven primarily by the net proceeds received from the IPO and operating profit and net income generated by the Company.

2021 – 2023 Financial Targets

Total Revenue Growth

> Average 40%

Adjusted EBITDA Margin3

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> Average 40%

Leverage4

< Net Debt to Adjusted EBITDA 2.5x5

2021 Outlook

Elias Mark, Chief Financial Officer of Gambling.com Group, added, “Our third quarter results came in a bit above our expectations and after slow summer trading our financial performance accelerated in September to close out the quarter with the best month in the Company’s history. Our Adjusted EBITDA margin of 34% in the quarter was healthy despite a seasonally slow quarter and investments in scaling the organization for organic growth initiatives and operating as a public company. This is consistent with our prior guidance that our near-term margins may deviate from our average 40% target as we invest in our organic growth plan and pursue our M&A strategy. For the full year, we are reiterating our expectation to achieve both above 40% year-on-year organic revenue growth and approximately 40% Adjusted EBITDA margin. We remain in a very strong financial position after the IPO last quarter which offers us significant optionality going forward to execute our growth plan and each of our capital allocation priorities.”

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Conference Call Details

Date/Time:

Thursday, November 18, 2021, at 9:00 am EST

Webcast:

https://www.webcast-eqs.com/gamb20211118/en

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U.S. Toll-Free Dial In:

877-407-0890

International Dial In:

+1-201-389-0918

To access the call, please dial in approximately ten minutes before the start of the call. An accompanying slide presentation will be available in PDF format within the “News & Events” section of the Company’s website.

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Hacksaw Gaming and DraftKings Score Again in Ontario

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2023 saw Hacksaw Gaming go live in West Virginia and New Jersey and now we have made our long-awaited entry in Ontario, Canada. Securing this trio has hit new heights and hopes for further successes throughout the rest of this year.

DraftKings Casino entered the iGaming market in Ontario in May of 2022 and partnered with Hacksaw Gaming in the back end of the same year. As Ontario’s regulated iGaming market only went live in April of 2022, the pair have given an outstanding performance with effective launch strategies and expansive footing in North America.

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“The benchmarks we have set as a partnership are remarkable and we are ready to take on more challenges continuing into 2024,” the Chief Executive Officer for Hacksaw Gaming, Marcus Cordes, said.

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Exploring Canada’s video Game Market: Survey Insights

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Technology has become a great source of entertainment to many. Video games particularly have garnered interest from all demographics. In Canada, the gaming industry has experienced significant growth, fuelled by increased accessibility to gaming platforms and the growth of online gaming communities.

Statistics indicate that a large percentage of Canadians are engaged in gaming activities, whether it be playing console or PC games, mobile games, or online multiplayer games. The popularity of video games extends beyond leisure pastimes, with many Canadians participating in gaming competitions, attending gaming conventions, and consuming gaming-related content on platforms like Twitch and YouTube.

The number of video game users in Canada reflects how broad the sector is, from mobile games to digital video games, download games and live streaming. In 2024, the gaming sector will see millions of users in each of these categories. Statista projects 13.38 million users for digital video games and 7.35 million users for online games respectively. It estimates that revenue in the Canadian video game market is expected to reach US$3,925.00m in 2024, so it is no surprise to observe the increasing popularity of the sector.

Well-known online casino provider BetVictor has compiled some key points from major surveys detailing the video game market to give further insight into its makeup and potential. The gaming culture in Canada is growing, which means the type of games and genres will grow along with the sector. Statista recently conducted a survey of 1 576 respondents aged 18 – 64 who are avid video game players, with telling results. ​​In December 2023, a survey about preferred video game genres in Canada revealed the top four genres as being Action, Action – adventure, Adventure and casual games accounting for 31% of respondents’ preferences.

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David Winter, Marketing Manager at BetVictor notes that “We’ve seen a steady increase in the popularity of action-themed and adventure-themed slots and many providers are exploring how to expand further into this market.”

The popularity of Action games such as platform and fighting games can be attributed to various factors, such as: social interaction, accessibility and inclusivity, social appeal, and cultural influence. With such a diverse audience, all these factors are crucial to understand the appeal of Action games.

In the digital age, gaming has transcended mere entertainment to become a cornerstone of culture, and nowhere is this more evident than in Canada. From coast to coast, a diverse community of gamers is thriving, reflecting the country’s inclusive spirit and passion for technology. Whether it’s the casual gamer enjoying a quick session on their smartphone or the dedicated enthusiast meticulously building a custom gaming PC, Canada offers a welcome haven for all kinds of gamers.

Diving deeper into the Statista results, Strategy games accounted for 29%. This shows us that players have a strong interest in tactical and decision-making games. While role-playing (RPG) and sports games garnered 22% each, simulation and shooters trailed slightly behind at 21% and 20% respectively.

MMO (massively multiplayer online games), as well as MMORPGs (massively multiplayer online role-playing games) and MOBA (multi online battle arenas) came in at 13% and 8% respectively, representing a significant but niche following. With such a diverse array of preferences, the survey underscores the multifaceted nature of interests among Canadian gamers. It highlights the need for game developers to cater for a wide range of genres and gameplaying styles in the Canadian market.

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From action shooter games to role-playing adventures, the industry has something for every gaming enthusiast in the Canadian market. Overall, the popularity of video games in Canada reflects a growing cultural phenomenon, where gaming has become a mainstream form of entertainment and a significant aspect of modern-day leisure activities.

Statistics anticipate a compound annual growth rate (CAGR) of 7.10% for 2022-2027, resulting in a projected market volume of US$24.52bn by 2027. Canada’s online gaming market is experiencing a surge in popularity, with a surging number of Canadian players engaging in immersive virtual reality experiences.

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iGaming Ontario Seeks Proposals for a Centralized Self-exclusion Solution Until April 24, 2024

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iGaming Ontario (iGO) is currently seeking proposals for Ontario’s centralized self-exclusion solution for igaming from now until April 24.

Partnering with iGO on this multi-year project offers a unique and exciting opportunity for forward-thinking and innovative organizations prepared to make a lasting positive impact on the igaming landscape in Ontario. Interested organizations can visit iGaming Ontario’s dedicated procurement page on MERX to review all NRFP details and prepare their submissions for this high-profile initiative.

The successful bidder will develop a system that:

  • Integrates seamlessly with all Ontario igaming operators’ systems, including Ontario Lottery and Gaming Corporation (OLG)’s igaming site.
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  • Implements Know Your Customer (KYC) identity verification, registration, renewal, and reinstatement processes that are intuitive, simple, and offer supporting information.

How to Participate in the Bidding Process?

The Centralized Self-Exclusion (CSE) Solution, along with other iGO current and past bid opportunities, can be found on iGO’s MERX page.

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Have a question?

Use the question and answer tool provided on iGO’s MERX page to submit any questions you might have. Please note that iGaming Ontario will only entertain questions about open bidding opportunities in accordance with government directives.

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