Gambling.com Stock is a Compelling iGaming Growth Play

iGaming marketing company Gambling.com NASDAQ: GAMB stock recently nearly doubled on the sports betting momentum. Shares have since been pulling back. The Company operates iGaming and sports betting marketing sites like Gambling.com and Bookies.com to attain referral revenues much like a Trivago NYSE: TRVG of the digital gambling industry. The pandemic and subsequent reopening and restart of live events has spurred the post-pandemic growth of sports betting and iGaming. The pandemic caused a massive hole in state budgets forcing them to reconsider legalizing sports betting and iGaming. The Company an asset-light play directly on the pulse of the growth of the global iGaming. The Company recently obtained a temporary supplier license by the Arizona Department of Gaming to provide marketing and referral services for licensed state operators. The Company launched BetArizona.com to enable sports bettors to compared and sign up for the recent legal betting options online. With each state approval, the Company will continue to build out its referral site network. The site(s) contain news articles, comparison of sportsbooks, reviews and analysis and their individual offers as well as how-to betting guides, tax calculator tool as well as state-focused surveys. Prudent investors seeking exposure in the burgeoning iGaming and sports betting iGaming tailwinds can watch for opportunistic pullbacks in shares of Gambling.com.

Q2 FY 2021 Earnings Release

On Aug. 26, 2021, Gambling.com reported its Q2 2021 earnings for the quarter ended June 2021. Revenues rose 66% year-over-year (YoY) to $10.4 million. Net income was $2.4 million or $0.08 per diluted share compared to a net loss of (-$0.4 million) or (-$0.02) per diluted share in the year-ago period. Adjusted EBITDA rose 46% to $5.5 million equating to a 53% margin. The Company launched EmpireStakes.com, BetArizona.com, and IllinoisBet.com in the quarter. Gambling.com CEO Charles Gillespie commented, "Our second-quarter results (which were our first interim financial results as a public company) were highlighted by continued strong top-line growth, and based on our Adjusted EBITDA margins, we are among the most profitable names in the online gambling industry. Since our founding in 2006, we have built an affiliate marketing powerhouse with recognizable brands around the globe. Players trust our services to help them find a safe, fun, and legal betting experience while our B2C operator clients utilize our best-in-class technology platform to support their increasingly important customer acquisition initiatives. We are incredibly excited about the next step in this journey as a public company and look forward to sharing the success with our new investors."

Conference Call Takeaways

CEO Gillespie set the tone, “Given the recency of our IPO, I'd like to spend some time presenting an overview of Gambling.com Group. As a leading provider of player acquisition services for online gambling operators, our sites and services offer two basic but critically important functions in the online gambling ecosystem. First, we help B2C online gambling operators achieve their player acquisition targets by referring online sports betting and online casino players to them. And second, we simultaneously help those players by providing them with up-to-date information and tools to help them make the right choice when choosing an online gambling company, ensuring that they get a quality entertainment experience from a responsible company.” He continued, “Our leadership status is validated by the growing importance of our service to B2C gambling operators and the financial performance we have achieved as a result. In 2020, our revenue total $28 million, of which roughly 65% was derived from either hybrid or revenue share agreements, where we are entitled to an ongoing share of the future net gambling revenue of each of the referred players that we have sent to those operator clients. From 2017 to 2020, we have compounded our top-line at an annualized organic growth rate of 35%. In 2020, we grew 45% year-on-year. Again, all of which was organic. These figures serve as a testament to our proprietary technology platform and the high-quality content available at our branded destinations.”

Asset Light and Profitable Model

CEO Gillespie bluntly pointed out, “At the same time, unlike many in the industry, we are extremely profitable. We generated $14.6 million of adjusted EBITDA in 2020, a margin of 52% and generated free cash flow of $10.8 million as well. We have already nearly matched those results through the first half of 2021. Through the first six months of the year, we have generated $12.6 million of adjusted EBITDA and $9.5 million of free cash flow. We are a global company with offices in Dublin, Malta, Charlotte, and Tampa. And we employ a global workforce of more than 150 full-time team members. We have launched over 30 websites across 13 different markets and in 6 different languages, and we referred over 100,000 new depositing customer accounts to our online gambling operator clients in 2020.” He concluded, “We have built an affiliate marketing powerhouse for the global online gambling industry with widely recognized brands. We have leveraged these premium brands, including Bookies.com and the iconic Gambling.com to establish leading positions across our markets. Our main markets include the United Kingdom, Ireland, the U.S., and Canada, as well as several other European markets. We've experienced recent growth across all of our market segments, with particularly strong growth in Other Europe and North America. We're also very excited about the Netherlands which is expected to come online later this year. And as online gambling legislative momentum continues to build in the U.S., we expect to grow our share in what is expected to be the largest online gambling market in the world and our number one priority, growth market. Over 200 different online gambling operators currently use our services to support their customer acquisition efforts, including the most recognized names in the industry, such as DraftKings, FanDuel, BetMGM, Caesars, PointsBet, and many more.”

GAMB Price Trajectories

Using the rifle charts on the weekly and daily times frames enable a precision view on the price action for GAMB stock. The weekly rifle chart peaked on the $14.75 Fibonacci (fib) level. Since GAMB is a relatively recent IPO, the weekly indicators are still materializing. The weekly 5-period moving average (MA) is rising near the $9.79 fib but getting tested. The daily rifle chart uptrend is turning bearish with a falling 5-period MA at $10.30 getting very close to the 15-period MA at $10.00 for a potential crossover and breakdown on a stochastic mini inverse pup. Bulls need to trigger daily market structure low (MSL) buy signal on the breakout above $11.50. The daily upper Bollinger Bands (BBs) sit at the $15.46 fib. This one has a thin float as it only stands just above 7 million shares from the IPO. Prudent investors can wait for opportunistic pullback levels at the $9.24 fib, $8.74 fib, $8.11 fib, $7.62 fib, and the $7.22 fib. Upside trajectories range from the $12.43 fib to the $16.34 fib level.