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Greetings, and welcome to the Grandstand Limited Second Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Peter McGough, Investor Relations. Please go ahead, sir.

Hello, everyone, and welcome to Grandstand's Second Quarter 2026 Results Call. I am Peter McGough, Senior VP of Investor Relations and Capital Markets, and I'm joined by Kevin McCrystle, Co-Founder and Chief Executive Officer; and Elias Mark, Chief Financial Officer. This call is being webcast live through the Investor Relations section of our website at granstand.com/investors, and a downloadable version of this press release is available there as well. A webcast replay will be available on the website after the conclusion of this call. You may also contact Investor Relations support by e-mailing [email protected].

I would like to remind you that the information contained in this conference call, including any financial and related guidance to be provided, consists of forward-looking statements as defined by securities laws. These statements are based on information currently available to us and involve risks and uncertainties that could cause actual future results, performance and business prospects and opportunities to differ materially from those expressed in or implied by these statements.

Some important factors that could cause such differences are discussed in the Risk Factors section of Grandstand's filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date the statements are made, and the company assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. During the call, there will also be a discussion of non-IFRS financial measures.

A description of these non-IFRS financial measures is included in the press release issued this afternoon and reconciliations of these non-IFRS financial measures to their most directly comparable IFRS measures are also in the press release, which is available in the Investors tab of our website. I'll now turn the call over to Kevin.

Good afternoon, everyone, and thank you for joining our 2026 second quarter conference call. We have quite a bit to share with you today, including our second quarter results and outlook for the full year as well as our recent corporate rebranding and the introduction earlier this week of our new roll card product. Elias will follow with a review of the second quarter financial results in detail before we open it up for questions.

Looking at our operating performance in the second quarter, revenue of $37.8 million and adjusted EBITDA of $7.7 million were in line with our expectations. We also generated nearly $10 million in adjusted free cash flow, which is a positive indication on the health of our business and our ability to generate attractive levels of cash flow. The restructuring we announced in May is now substantially complete with the bulk of the associated costs incurred in the second quarter. Cost savings from the restructure will benefit margins in the second half of the year, underpinning our full year guidance, which we reiterated today.

Looking a little further out, we will exit 2026 with a significantly higher adjusted EBITDA and free cash flow run rate and an expanded margin profile for the business. The second half margin profile will carry forward into 2027. Our business has grown and diversified significantly since our IPO, and our recent rebrand reflects these changes. Grandstand captures where the business is today and importantly, where we will continue to invest and grow. We have established our position as the intelligence layer at the heart of the sports and gaming ecosystem.

Our portfolio of data, technology, content and audience solutions help power informed decisions across sports, gaming and entertainment, serving both consumers and partners. Our consumer brands have built trust with each of their unique audiences developed over more than 20 years and will continue to reach millions of users under the Grandstand umbrella. We started as a U.K. gaming comparison hub and over time, added products targeting new global audiences around sports betting, fantasy sports and Las Vegas.

Now in addition to recommending the best places for users to play online, we are developing more of our own products to directly service the problems users face in the market, thus deepening the relationship with each user. The data, technology and advertising tools we developed initially for consumer audiences have significant application for partners in the wider sports, gaming and entertainment ecosystem.

Today, we have multiple partner solutions across 5 core areas: sports data, which includes real-time off data, line movement, injuries and sports content, namely via optic OS. Advertising with our ad tech and commercial solutions connecting operators to consumers; Partner audience monetization through Grand Sam Partners, a technology and commercial support platform that provides media companies, apps, communities and influencers with the infrastructure to monetize their audiences at scale. Entertainment and ticketing solutions through Spotlight Vegas and now fintech with the recent launch of Roll Card, which I will come back to soon. Clearly laying out our partner solutions helps us discover more B2B opportunities.

We will continue to report based on sports data services and marketing. Sports Data Services revenue grew 12% year-over-year in Q2 with B2B continuing to be the accelerating growth driver. Sports Data revenue is on track for growth in the teens this year with significantly higher growth coming from our B2B Opti OS solution. B2B now makes up the majority of revenue for the Sports Data Services business and is pacing to grow well in excess of 50% this year compared to last year. Optic Ops is the intelligence layer, powering informed decisions in sports, processing more than 1 million requests per second. New B2B data deals in Q2 were led by quant and market-making partners who value the speed of our data. 40% of our new deals were international partners, and we continue to see success upselling existing clients. OpticOdds is also rapidly becoming the sports data layer for consumer AI.

Perplexity went fully live into production in early July. OpticOdds is the 11th most invoked connector in Perplexity ahead of massive enterprises like Gmail, Google, Drive, Slack, Notion and Snowflake. API daily volume requests are still climbing by the day, all before the natural catalyst of the NFL season. Q2 total marketing revenue was down 10% year-over-year to $26.5 million, driven from declines in SEO revenue, but we saw strong growth in North America and from our partner audience monetization platform, Grandam Partners.

Our marketing business has dramatically diversified from a year ago with non-SEO marketing revenue now accounting for 67% of our marketing business. While gross margins for our non-SEO channels are lower, the OpEx requirements tied to these revenues are also much lower than for organic SEO. The restructure heavily targeted fixed costs in the marketing business, which will result in improved margins going forward. As we move into the second half of the year, we see a clear path to returning the marketing business to growth for the 2027 full year. I also want to highlight that even at the lower marketing revenue run rates, our marketing operations continue to generate attractive levels of cash flow.

Now we can finally talk about Roll Card, our new fintech solution. It's a purpose-built FDIC-insured high-limit debit card for sports betting, casino and prediction markets. Payments and money movement remain a high friction point in gaming for both consumers and operators. Card has been designed as a high-limit, low-friction debit card built with a betting consumer in mind. The revenue model is based on interchange generated from dollars deposited into sportsbooks, casinos and prediction markets. Gold card customers are in cash back and qualifying deposits. The underlying deposits that drive handle and trading volume are in the tens of billions of dollars, a low single-digit market share for gaming, betting and trading deposits forecast a $50 million to $100 million revenue opportunity in the next 5 years.

The majority of handle and trading is concentrated into a smaller cohort of players that actively bet across multiple platforms. Gold card was designed to serve that cohort of players. The value proposition for the cardholder is simple, safe, private, high-limit, low-friction debit card to manage the funding of their betting and trading strategies. The cardholders will be incentivized with cashback program and other premium benefits that we will introduce to enhance cardholder experience and loyalty. card is backed by Grand Sam's sports, gaming and entertainment audience. That existing audience relationship provides Gold card direct reach to high-intent customers from the start.

In addition, our existing relationships with prediction markets, online operators and land-based operators will expedite the go-to-market motion. The Well card payments platform is a clear example of Grant Sand developing value-added solutions as a fintech intelligence layer for payments and sports, gaming and entertainment, creating a deeper connection between both consumers and partners.

Looking forward, the balance of 2026 is setting up for a typical seasonal pickup as we move into the North American sports season, which will drive revenue growth. We will also benefit in the second half of this year from a restructure related to fixed cost savings, which will drive margin improvement. The restructure wasn't just about resetting our cost structure. It was an intentional shift to layer AI at the core of how we operate and then build teams around it. The AI-enabled restructure has allowed us to reduce management layers and empower more nimble teams. Repetitive processes have been and continue to be automated, while work velocity is increasing. We are continuing to innovate in how we utilize the AI tools available.

We are now rolling out Momento, our context layer that sits underneath our tools and gives them the company's memory. The benefit compounds the more we use it by remembering relevant knowledge across the business. We're also moving to multi-agent harness to provide access to the best models while keeping token costs in check.

Grandstand is now positioned to sell more of our own product suite directly to our audience, including Rollcard, OSgem, Rotowire and Spotlight in addition to our performance-based advertising. Keeping our audience within our own ecosystem allows us to deepen engagement while increasing revenue opportunities. Enterprise data growth and a diversified marketing business are positioning Grandstand for a return to revenue and adjusted EBITDA growth as we move through 2026 and into 2027. With that, I will turn the call over to Elias for a review of our second quarter financial results and further detail on our guidance for the year.

Thank you, Kevin. Second quarter revenue of $37.8 million and adjusted EBITDA of $7.7 million were in line with expectations. Adjusted free cash flow was $9.6 million. The operating dynamics for the first quarter were carried forward into the second quarter and total revenue was down 5% year-over-year with lower marketing revenue offsetting continued strong growth in data services. Data revenue of $11.2 million grew 12% year-over-year, entirely driven by strong growth in enterprise sales. Data revenue was 30% of total revenue in the quarter, and the majority of data revenue was enterprise revenue. Marketing revenue of $26.5 million declined by 10%.

Strong growth in partner audience monetization and in North America, including from prediction markets, was offset by declining revenue from organic search and for markets outside of North America. Adjusted EBITDA in the second quarter was $7.7 million. Adjusted EBITDA margin was 20% and gross margin was 84% in the quarter compared to 35% and 93% in the year ago period. The lower margin reflects the higher cost of sales and marketing expenses associated with the diversified marketing business, partly offset by lower people costs.

We have executed on the previously announced restructure plan. As a result, we entered the third quarter with a reduced headcount of approximately 25%, and we'll see $13 million of lower fixed costs on an annualized basis, driving margin expansion moving forward. We incurred $3.2 million of restructuring costs, of which $1.1 million was settled during the first quarter -- for the second quarter and $2.1 million will be settled during the third quarter. Adjusted net income was $2.5 million and adjusted net income per share was $0.05 compared to $13.4 million and $0.37 in the year ago period. The decline reflects the lower adjusted EBITDA and higher interest expense in the quarter and unrealized foreign exchange gains positively affecting the year ago period.

Adjusted free cash flow was $9.6 million compared to $8.2 million in the year ago period. Cash conversion in the quarter was unusually high because of working capital timing differences following the first quarter where it was unusually low. Over the first 6 months of the year, 81% of adjusted EBITDA was converted to adjusted free cash flow. Whereas timing differences can affect a single quarter, we expect that our low CapEx business model will continue supporting such cash conversion in the 70% to 80% range, allowing us to both delever and continue investing in product innovation.

At the end of the second quarter, we had total cash of $8.8 million and total liquidity of $33.3 million, inclusive of undrawn credit facilities of $24.5 million. During the second quarter, we continued to delever by prepaying $10.4 million of solving deferred consideration, achieving a 10% annualized discount and by repaying $2.8 million on our term loan. This was financed by free cash flow generation and an $8 million drawdown on the credit facility revolver. At the end of the quarter, we had $122.3 million of interest-bearing liabilities and $26.5 million of remaining deferred consideration.

Finally, on our guidance. We are reiterating our outlook for the full year to be in the range of $165 million to $170 million and adjusted EBITDA to be in the range of $45 million to $60 million. The implied margin reflects the mix shift in marketing revenue, roll card launch expenses and modest revenue and fixed cost savings from the restructure benefiting the second half of the year.

We expect positive seasonality in the second half of the year to drive strong sequential revenue growth. Paired with $6.5 million of fixed cost savings from the restructure, this will drive margin expansion and significantly higher adjusted EBITDA and adjusted free cash flow in the second half of the year. We expect that trajectory to carry forward into 2027 and drive strong year-over-year adjusted EBITDA growth with expanded margins in the low 30s. And with that, we will turn it over for questions.

[Operator Instructions] The first question we have comes from Jeff Statinael of Stifel.

Why don't we start with the new product launches. That's where we've been getting the most questions since you announced it and including tonight. Kevin, can you just maybe talk to the decision internally to expand sort of a bit further outside what I would call your kind of historical swim lane with payments and maybe how you think about your right to win in the competitive environment in that space?

Yes, sure, Jeff. I mean, first off, payments are the biggest friction in U.S. gaming, and it's a space we've been eyeing since PASPA. We've been doing this in this space for 20 years and have a deep understanding of the issues users and operators face. And as we continue to build out our audience, want to find more ways to provide value to them directly rather than just referring to operators. It's a large space.

As I mentioned there, $50 million to $100 million upside, margins in the mid-30s. -- we have the audience that we can sell into, which is really helpful to give us a launch pad for the business. We have partnerships in the ecosystem with operators and everybody else we need to work with. We have all the pieces we need to run this business already as we've been developing our owned and operated audience, our partner audience, our ad tech and various pieces, we can use that to sell into roll card. So we think that's going to give us a great advantage.

That's great. And then for our follow-up, maybe switching gears over to the guidance. It looks like the midpoint implies about 5% revenue growth in the back half versus flat in Q1 and down 5% in the second quarter. Elias, you called out a few tailwinds in the prepared remarks, but maybe can you just rank order for us some of the growth drivers as you see it that bridge you back into the mid-single-digit range? And I think I caught this, but is it fair to assume sort of growth improve sequentially through Q3 into Q4 and continue into 2027?

Yes. As we enter the third and in particular, the fourth quarter, we have some seasonality coming into play that will help us reverse the trend in our marketing business where we've seen a decline. We think the marketing business over the second half of the year will be roughly flat, and we see the data business continue growing in the teens. So that's kind of the components on the revenue side.

And just to be clear, did anything change with your assumptions on Roll card in the back half and for the revenue guidance?

No, Roll card was included in our original guidance. We do assume a modest start to the ramp of this year. It's a bit of trial and error in the beginning. So it does include a small contribution for Grandstand, but that was baked into our guidance and nothing has changed since launch a couple of days ago.

The next question we have comes from Barry Jonas of Truist Securities.

I wanted to dig further into roll card. Kevin, is there a way to help think about the long-term market opportunity for the card and I guess, the payment platform in general as a whole?

Yes. So the primary way we make money is on interchange on deposits into operators. And that is a very large market of deposits into operators. So taking a reasonably small, say, 1% to 2% interchange fee on that and taking a reasonably small market share is alone a pretty big opportunity there. We are not going to scale this immediately into that $50 million, $100 million, that's going to take years to do. But we think on a 5-year time line, it could get quite large. Expect something like 80% to 85% gross margins prior to marketing on that business. There are additional ways we can monetize besides interchange, but that's kind of more medium term. Right now, we're focused on that piece of the business.

Great. And then I just wanted to dig in a little into Oddsjam. I think we've seen a proliferation of competitive tools, potentially AI-driven. Maybe just talk about how you plan to keep Oddsjam's current positioning and where you sort of sit in terms of the product development and how you'll sort of compete with up-and-coming competitors.

Yes. There are certainly plenty of start-ups, whipping up kind of worst versions of Odds jam with AI and pricing it lower. We are still competitive with that. We're building new core features to increase more of a moat for start-ups. The most important thing we've been focused on this year is rebuilding our social distribution engine since the end of the earn-out. And I think we're in a much better place now for NFL and expect that to stabilize. But an important piece of Oddsjam, and I think it's the same for Rotowire is to understand how we report. We report by revenue type, not by brand.

And so there's a lot of additional value coming from Rotowire and Oddsjam. We're seeing very strong growth in North American marketing and decent piece of that is supported by RotoWire and Oddsjam, which goes under the marketing revenue. Additionally, Oddsjam is a key support driver for roll cards. So there's multiple ways for us to win with Oddsjam, not only with the data, which also flows into optic odds, but there's a marketing opportunity on top of that, the roll card support, and we are -- I don't want to get into the features themselves, but developing a much deeper feature set, which would be very challenging for new products to compete with.

The next question we have comes from David Bain of B. Riley Securities.

And we're with Texas Capital, but that's fine. It's been helpful. But maybe first, could you take a step back and share longer-term margin expectations for the marketing business and the levers within that number, including maybe some bifurcation of SEO versus non-SEO? So any kind of detail would be helpful.

Yes. I think it's helpful to start in H2. We expect from Q2 through to the rest of H2 to roughly double the contribution from the marketing business. A significant portion of our restructure was tied to fixed costs related to the marketing and SEO business, which will help the margins of that business. into the end of the year and then a run rate going into next year. So the margins will expand this year. We don't have a year or 2 for that to happen.

If we look at the mix shift within the marketing business, about 2/3 of the business at run rate is from sources other than of the business is very diversified as it is. And the expectation is to have contribution margins moving forward in the 40s from the business, which compares to contribution margins on the data side in the mid-60s.

Just on the EBITDA side, if we look at blended EBITDA margins in totality, we're guiding towards low 30s for the second half of the year, and that's where we see the business performing coming into 2027 as well. The data side of the business will continue to scale in '27 with very high incremental margins. The marketing business, we expect to have a very modest growth but positive growth in '27, and that should have a neutral margin effect. And the balance there is roll card, which will have much lower margins in the scaling.

Awesome. Very helpful. And then could you provide a Google SEO action update, if there is one, just specifically related to the offshore Sam in the international markets and just other overall negatives that's been taking place for the SEO, maybe action from their end or yours as well, any outcomes or visible upcoming relief from that standpoint?

Yes. SPA is getting better. Google has seemingly done a better job of dealing with that. That said, the overall SEO positioning is roughly unchanged. There's a slight decline from Q1 to Q2. That's just normal seasonal trends. Obviously, a larger decline year-over-year. The regulatory environment in a handful of the countries where we have predominantly SEO-focused businesses have not been helpful. U.K. is an example of that, where we're seeing CPAs down about 15%. But we are seeing some positives there. In the North American business, the marketing is up pretty substantially, and that is -- also includes SEO. So it's not down everywhere. That's for sure. But in terms of the future, SEO is certainly not going away.

We are really focused on diversifying away from SEO. So we're less impacted by whatever the future of Google is. This includes many channels, but ultimately building direct user relationships that allow us to sell subscriptions, fintech, tickets, et cetera, to those audiences and also cross-sell into affiliate platforms. I mentioned I mentioned the subscription business that we have revenue associated with those as well. Rotowire, in particular, has been doing very well with SEO. And that goes into the marketing business, but it's from Rotowire.

The next question we have comes from David Katz of Jefferies.

I think I wanted to keep going down that same vein, Kevin, maybe just left off and talk about the non-SEO sort of portion of the business and the marketing piece of the business. You said doing very well. Can you maybe take us just a little bit further and give us a long-term aspirational any qualitative sizing or sense of where you think that can go since it seems to still be growing pretty well.

Yes. As we referenced, the non-SEO is now about 2/3 of the marketing business. It's the same channels we've talked about before, some mix of CRM, paid and social, but Grand Sam Partners is also a big piece of this. That's our partner audience monetization platform, which provides technology, commercial tools and whatnot to external media companies and help them monetize their audience at scale. That's up over 100% year-over-year and is roughly the same proportion of SEO to non-SEO as our overall marketing business.

We're also doing more advertising deals. So I think brand exposure rather than just performance deals. We are diversifying globally, but a lot of that impact we're seeing now is in North America. And with that, the North American business is -- North American marketing business is going strong. North American marketing is up 63% year-over-year and marketing is about 57% of our total North American business. And this is partly brands and partners, which I mentioned. Prediction markets are starting to ramp acquisitions. So we have a new partner in the market to work with. And in the U.S., it's -- a lot of it's sports. So World Cup was helpful in Q2, but that was roughly as expected.

We will see some larger NDCs at a slightly lower value per NDC with that, but rev share will also pick up long term with that. SEO is still holding up there in North America. But there's a very significant run rate for the marketing business. Everybody asks us when is sports data going to be larger than marketing. And the answer is probably not for a little while. On a contribution basis in a few years, that seems possible or likely. But until revenue, the marketing business is going to keep growing. We've talked for a long time about diversifying, but we have a diversified marketing business now with 2/3 of it being non-SEO. It can grow very substantially from where it's at today.

Understood. Appreciate all of that. With respect to prediction markets, it's obviously almost impossible to have a call and not spend some reasonable amount of time on that. Can you just help us think about the size level and the proportion that, that can bring, given how quickly that's growing and what your avenues of engagement are there?

Yes. We've historically primarily talked about prediction market in terms of our data business, and that is still going strong. As I mentioned earlier, a lot of these market makers and quant funds are now entering the space and utilizing our data. We are, though, doing more on the marketing side than we were previously. It's really useful to have another player in the market that needs traffic and users, and we're happy to supply that.

Brand is not cannibalized by these prediction markets. It's really the opposite. They're providing an additional participant in the market looking for users. And it seems like it's going to push the rest of the market to be a little more aggressive in the NFL season in terms of acquisition. So we think it will be helpful all around. Hard to say right now in terms of the size of the prediction market as I think when we talk Q3, we'll have a better frame on that. This is the first NFL season with a full push there.

[Operator Instructions] The next question we have comes from Chad Beynon of Macquarie.

Just with respect to the guide and holding that in relation to the in-line second quarter, I think you've said marketing should be roughly flat for the year. Sports up in the teens. But can you kind of help us think about what would get you to the low or high end, particularly of that revenue guide given that we have about 5 months left in the year?

Yes. So to clarify, we expect the marketing business to be roughly flat in H2 as it was down in H1, it will be marginally down for the full year. If we look at the range of guidance, what would really push us towards the top of the range would be a recovery in SEO that would go through very quickly. The data side of our business is a little bit easier to forecast and it would have less of volatility in expectations.

The primary growth drivers right now are the sports data, B2B, the enterprise sales and North American marketing. So those are the 2 pieces. They're both growing at a pretty good pace right now. So if they grow a little bit faster, that's what would get us to the top of the range.

Great. And then on North America, maybe a 2-parter here. There has been another player that's kind of climbing the ranks in terms of market share, some slight shifts there on the podium. So wondering how your diversification looks amongst customers? And then secondly, with respect to Alberta, any comments in terms of if it's been a successful customer acquisition period up there?

I'll take your Alberta question first. That launched in Q3, so not in these Q2 figures. It has been a reasonably successful launch. I think our market share is about what it normally is in these things. It is not the biggest province and it's not a really spiky launch. It's going to be a flatter, more prolonged launch, but we are doing reasonably well in Alberta. So I feel good about that. In terms of your first question, I guess you're a little vague in terms of the new market participant. What are you referring to exactly?

Just with respect to Fanatics recent move in iGaming share.

In iGaming, Yes. Look, iGaming for us is pretty stable.

For sports betting, actually for both, actually, it's probably better to phrase it that way.

Yes. As I mentioned earlier, I think having additional players beyond the traditional OSB partners in the market is pushing everybody to be more aggressive in terms of their acquisition, and we benefit from that. We are working closely with them with Fanatics, and I expect that to go well. In terms of the iGaming side, that's pretty consistent, not too much moving sharply there in terms of sports betting. I think we're lined up nicely for the fall with our North American marketing business being the key driver within our marketing business, that is primarily sports-based or very heavily sports based. And so we do see more seasonal trends on the U.S. calendar rather than the historical -- when we were more international casino, it was a slightly different trend line there. So we expect a strong September moving to NFL.

The next question we have comes from Mike Hickey of StoneX.

Maybe just the first one, Kevin, on your data business continues to be a real window of strength here for you guys. Can you talk about your product pipeline for the sports data business and what new products or capabilities you're most excited about?

Yes. Excited about all of the sports data B2B, to be frank. But we -- as noted, with the creation markets, the market makers, there's a new buyer of data. International is still going strong. A year ago, that was 0 of the business, and now it's 40% of new sales. And we're increasingly upselling a lot of existing clients as we slowly build out new feature set within Opti. We did talk in Q1 about non-sports data entering. That went live pretty recently. So we'll need to take a couple of months to kind of see what comes there. But we plan to continue building more products on top of Optiq to power more of what operators need from us. We started as this kind of trading risk management and can move on to power more of the -- what they need to power their entire sports book.

You guys, it's nice to see you hit consensus numbers this quarter. Obviously, it's -- you've gone through a challenging environment to give guidance and you've restructured your business. It looks like SEO is stable somewhat here, that is growing nicely. Do you feel like, Elias, you've sort of reached a point now where your business is stable enough that you have greater confidence in your forward guidance or your ability to forecast growth?

Yes. Our internal feeling is that we have [Audio Gap] stable place. I don't know that's going to be a primary growth driver for us going forward. I think it will be a nice business. The U.K. is still a market that there's a lot of operators. So if you look at the total market size, the offshore is eating into it. There's a handful of operators that are exiting the market, but there's still a lot of operators that all have an appetite for traffic that we can help offer them. So I think it's going to be a nice cash cow business for a long time, but probably not a primary growth driver.

I say the same for international in general, whereas a lot of these other international markets are more SEO dependent than we are in North America. And again, that's something that we are evolving as well, but we're ahead of pace in North America with the diversification.

At this stage, there are no further questions on the conference. I will now hand back to Kevin McCrystal for closing comments. Please go ahead, sir.

Thanks, everybody. Obviously, it's not too long ago, I took over as CEO, setting in nicely, moving one step at a time. The initial priority was the restructure and related team changes. Next, we wanted to reset the corporate identity, which we've done, finally are able to launch roll card. We're extremely focused on granular execution across all projects and tightly managing our cash flow. We feel really good about where the business is now. Things have stabilized. There's a lot of growth prospects on the horizon. So thank you very much, and look forward to chatting next time. Thank you.

Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.

Good afternoon, ladies and gentlemen, and welcome to Gambling.com Group's First Quarter 2026 Earnings Conference Call. [Operator Instructions] I would like to advise all parties that this conference call is being recorded.

Now I will turn things over to Peter McGough, Senior VP of Investor Relations and Capital Markets. Thank you, and you may proceed, please.

Good afternoon. Hello, everyone, and welcome to Gambling.com Group's First Quarter 2026 Results Call. I'm Peter McGough, Senior VP of Investor Relations and Capital Markets, and I'm joined by Kevin McCrystle, Co-Founder and incoming Chief Executive Officer; Charles Gillespie, Gambling.com Group's Co-Founder and current Chief Executive Officer; and Elias Mark, Chief Financial Officer.

This call is being webcast live through the Investor Relations section of our website at gdcgroup.com/investors, and a downloadable version of the presentation is available there as well. A webcast replay will be available on the website after the conclusion of this call. You may also contact Investor Relations support by e-mailing [email protected].

I would like to remind you that the information contained in this conference call, including any financial and related guidance to be provided, consists of forward-looking statements as defined by securities laws. These statements are based on information currently available to us and involve risks and uncertainties that could cause actual future results, performance and business prospects and opportunities to differ materially from those expressed in or implied by these statements. Some important factors that could cause such differences are discussed in the Risk Factors section of Gambling.com Group's filings with the Securities and Exchange Commission. Forward-looking statements speak only as to the date the statements are made, and the company assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws.

During the call, there will also be a discussion of non-IFRS financial measures. A description of these non-IFRS financial measures is included in the press release issued earlier this morning. And reconciliations of this non-IFRS financial measures to their most directly comparable IFRS measures are included in the appendix to the presentation and press release, both of which are available in the Investors tab of our website.

I'll now turn the call over to Kevin.

Good afternoon, everyone, and thank you for joining our 2026 first quarter conference call. Given that I will be formally taking over as CEO next week, I will also lead the call today. Elias will follow with a review of the first quarter results, and then Charles will offer some closing comments before we open it up for questions.

First quarter revenue was $40.4 million, in line with last year, while adjusted EBITDA was $9 million. Our sports data services business grew 13% year-over-year to $11.2 million and accounted for 28% of total revenue, the highest percentage yet. This growth was offset by a 5% revenue decline in our marketing business, which continues to be impacted by the previously discussed challenges with search ranking as well as more recent regulatory headwinds we highlighted on our Q4 call. Elias will provide more details on our first quarter financial results, but I do want to highlight that we generated attractive adjusted free cash flow in Q1 and expect revenue, adjusted EBITDA and free cash flow to expand in the second half of the year.

As I noted, sports data services revenue was up 13% year-over-year. The year-on-year growth primarily reflects continued improvement on the enterprise side of the business, catching up to the consumer side. For the first time, revenue contribution roughly equal for both offerings.

Our B2B OpticOdds business continues to be the catalyst of our strong sports data services performance. OpticOdds growth in Q1 was driven by 94% new deal growth compared to Q1 '25, including international partners up 178% year-over-year. Total active partners were up 24% quarter-on-quarter. 86% of OpticOdds customers are now API customers rather than just traditional odd screen partners, which was the initial focus of the business.

A key driver of our ability to have the most innovative sports data enterprise solutions is our increasing integration with customer AI touch points. As an example, OpticOdds now has an MCP integration into Claude, allowing our enterprise customers to use Optics data where they're already spending their workday. By integrating with the #1 enterprise AI tool in the world, our already incredibly sticky enterprise odds product is even stickier. More recently, OpticOdds entered into a partnership with Perplexity to be the odds data provider across their product suite with an expected launch date before the end of Q2.

Turning now to our marketing business. Revenue of $29.2 million in Q1 reflects the negative SEO trends we have been discussing for several quarters. There's been some bifurcation between smaller new sites and larger brands within SEO as some of our larger brands such as RotoWire are showing more positive rankings. We are continuing to focus on a more concentrated portfolio of brands and diversifying revenue streams, marketing channels, and CRM reengagement on these larger brands.

There are two other impacts in the marketing business to call out. First, the change in U.K. and Finland regulation we highlighted on the Q4 call had a modestly worse-than-expected impact on performance in Q1, and revenue from revenue share agreements was impacted by unfavorable outcomes in the quarter, causing a decline in the rev share hold percentage versus deposit.

We continue to make steady progress diversifying our marketing revenue away from SEO. In Q1, our non-SEO revenue exceeded SEO revenue for the second consecutive quarter, and we expect that trend to continue. There's a near-term margin impact as these channels scale. We do expect margins to begin gradually expanding in the second half of 2026 and into 2027.

We have spent years building internal platforms to optimize engagement and monetization across our portfolio. This audience monetization platform bundles our ad tech, data tech, business intelligence, [ data ]. Over the past years, we have begun leveraging these tools and technology to help us more effectively monetize third-party audience by allowing external partners to access a wide range of technology, commercial relationships, and know-how.

In a rapidly evolving digital ecosystem, we are diversifying how we market our owned and operated brands but also developing a platform to engage and monetize users across a wide variety of partner assets and communities. Previous iterations of what we then called media partnerships that narrow our focus on SEO.

Partnership platform revenue was up 3x year-over-year for Q1. As part of our channel diversification initiative, this does have an impact on our cost of sales, but we can scale this platform to low OpEx requirements. As we continue the R&D efforts to expand our technology capabilities and our internal portfolio, it will open up new types of partners where we can leverage our technology to grow their business as we both share the revenue.

We've been focused on AI adoption for the past 18 months. The work so far has proven the effectiveness of AI-first agentic workflows. Now we're taking the next step, moving from AI assisting our teams and making AI the foundational layer of how the entire organization operates. That shift is significant and it's driving a real change in how we work. AI tools allow us to move faster, adapt more quickly, and deliver more product, marketing and sales innovation, all while doing so with smaller, nimbler teams focused on building. This way of working puts a premium on human agency with our people bringing their expertise and craft to direct what AI produces. We have already made significant progress with 80% of new codes being generated by AI today.

Alongside this, we are resetting our team structures, roles, and processes to fit an AI-first world. That means embracing context layers, skills, and agents across the company. The result is a flatter organization, fewer management layers, and everyone from senior leadership down focused on building automations, products, and go-to-market campaigns that compress time lines and drive efficient growth. We are confident this transition to AI-first ways of working will allow us to move faster and with fewer people.

Highlighted in this afternoon's press release, we have proposed a strategic restructuring, which is expected to affect a reduction of approximately 25% of our workforce. The annualized savings will be approximately $13 million. Given the timing of the streamlining of the organization, we expect about half of this amount will be realized this year, beginning in Q3, with the full amount realized in 2027. The $13 million of annualized savings is net of an increase in AI usage costs associated with our transition to an AI-first company. This restructure resets our organization to work more effectively in an AI-first environment.

With that, I will turn the call over to Elias for a review of our Q1 financial results and detail our guidance for the year.

Thank you, Kevin. First quarter revenue of $40.4 million was flat year-over-year and in line with expectations with continued strong growth in data services of 13%, offsetting a 5% decline in marketing service. Data revenue was 28% of total revenue in the quarter, the highest proportion here.

Total recurring revenue, including subscription revenue and revenue share arrangement, was 49% of total revenue. The 13% year-over-year growth in data services was driven by growth in enterprise services that, for the first time, was roughly of equal size to consumer data sets.

The 5% year-over-year decline in marketing revenue was driven by a continued impact from low-quality search results and the regulatory headwinds in the U.K. and Finland that were discussed on the fourth quarter call. The proportion of revenue from traffic source other than organic search was well over 50% and a bit higher than forecasted in the quarter, leading to increased resiliency but lower contribution margins from [indiscernible] As we continue to execute on the traffic diversification strategy for the marketing business, cost of sales grew year-over-year from $2.2 million to $6.1 million. And as a result, gross profit declined 11% to 34.4 million. Gross profit margin was 85%, consistent with the fourth quarter and comparing to 94% in the year ago period.

Operating expenses, exclusive of non-cash amortization of acquired intangible assets, transaction bonuses, and other nonrecurring costs grew 12% year-over-year to $28.2 million, primarily driven by higher external marketing expenses related to traffic diversification strategies and higher subscription costs from increased AI usage.

Total headcount at the end of the period was down approximately 5% year-over-year before the restructure of takes effect.

Adjusted EBITDA in the first quarter was $9 million and the adjusted EBITDA margin was 22% compared to $15.9 million and 39% in the year ago period. The lower margin reflects the higher cost of sales and external marketing expenses associated with our traffic diversification strategy.

Adjusted net income of $3.8 million and adjusted net income per share of $0.09 compared to $16.5 million and $0.46 in the year ago period. The decline reflects the lower adjusted EBITDA and higher interest expense and tax charges. It is worth noting that the year ago period included finance income of $3.9 million related to foreign exchange movements distorting comparability.

Adjusted free cash flow went to $3.9 million compared to $10.3 million in the year ago period, reflecting the lower adjusted EBITDA and slightly higher capital expenditures related to product sales.

During the quarter, we settled $6.2 million of deferred consideration and transaction bonuses related to the OddsJam acquisition, and we repaid $2.8 million on our term loan.

As of March 31, we had total cash of $8.4 million, total liquidity inclusive of the undrawn revolver of $40.9 million, and we had $121 million outstanding on our credit facility.

As Kevin covered, we've initiated a group-wide restructure to support our move to AI-first working principles and a flatter organization. The restructure is expected to reduce headcount by 25%, driving approximately $13 million of annualized cost savings. Given the timing of the restructure, we expect to realize around half of the $13 million in cost savings in the second half of 2026. This would drive margin expansion and significantly grow adjusted EBITDA and free cash flow generation sequentially in the second half of 2026 and beyond. Our consistently strong free cash flow generation enables us the flexibility to both delever and continue to invest in organic growth.

Let me turn now to guidance. This afternoon, we updated our full year 2026 guidance for revenue to be in the range of $165 million to $170 million and adjusted EBITDA to be in the range of $45 million to $50 million. The implied margin reflects the effects of mix shift in marketing revenue, partially offset by cost savings from the restructuring in the second half of the year. We expect margin expansion and significant sequential growth in revenue and adjusted EBITDA in the second half of the year.

With that, I'll hand it over to Charles for his closing remarks.

Thanks, Elias. Given this is my last earnings call, I want to take the opportunity to say thank you to everyone who has supported me over the past 20 years. It takes a village to build an enterprise like Gambling.com Group, and I am grateful to everyone in all corners of the world who has pitched in over the past 2 decades to help realize the vision Kevin and I shared for this business. Many sincere thanks to each and every one of you.

Going forward, I intend to remain active as Executive Chairman in the business, handling key strategic conversations and supporting Kevin as best I can. I remain the company's second largest shareholder, and I have no intention of changing that.

I am thoroughly excited about the company's product pipeline, which includes additions to winning products like OpticOdds, growth opportunities for the marketing business, as well as new innovative products, which are in development. I have no doubt whatsoever that Kevin is best placed to lead the organization into its next chapter, commanding our product direction, talented team, and increasingly broad AI initiatives.

I've always been keen to zoom out and paint a big picture, especially on earnings calls, which are, by definition, very short. So I will leave everyone with one more big picture perspective on where the company is going. I've been a student of the AI revolution from the beginning. I read Ray Kurzweil, The Singularity Is Nearer in 2008, and no book before or since has shaped my understanding of the future as profoundly as that one. Nearly 18 years ago, his predictions for exponential technological advancement are bang on schedule and accelerating exactly as he said they would.

With that backdrop in mind, Kevin and I have been making deliberate moves to ensure the AI revolution is a tailwind for GAMB, not a headwind. We diversified the marketing business away from sole reliance on SEO. We acquired a data business with arguably the most comprehensive odds database in the world, and we made a bet on live experiences with Spotlight.Vegas. These were not unrelated decisions. They were part of a high conviction strategy, which includes our product pipeline that will ideally position GAMB for enduring success in the age of AI.

Thank you again. Operator, we're ready to take questions.

[Operator Instructions] The first question comes from Ryan Sigdahl from Craig-Hallum Capital Markets.

Congrats, Charles and Kevin, on your new roles. I want to start with a regional question. I guess both of them are probably going to be regional. But the UK&I revenue is down 30%, which directionally isn't all that surprising, the magnitude is. I guess, can you discuss what you're seeing from behavior in the market from players as well as what you're hearing from, ultimately, your customers there during Q1? And then if anything has changed after the tax went effective in April?

Ryan, Yes. Look, the trends are really the same that we talked about in the Q4 announcement. LTVs are going down in the U.K. A little bit of that was due to SEO, not just regulation. But there's still a high demand for traffic. So there's no shortage of operators looking for deals. It's still a robust marketplace but, yes, LTVs are moving down a bit and traffic has been a little lower as well.

Anything notable change in the last post quarter, April, May?

Well, what's notable for us is since the beginning of Q2 or mid-April, we have seen -- starting to see some increase in green shoots on SEO traffic for Gambling.com specifically, which with how unpredictable Google has been, we don't want to put into guidance right now, but we see as the first kind of positive shift in Google since the middle of last year. So that does have an impact on the U.K. or would if it persists. But the overall market itself in the U.K. is generally what we expected. It was marginally worse in a couple of areas, but roughly the shape that we expected.

On the U.S., if I look at some of the KPIs from the breakout in the press release between marketing and data and then North America versus other markets, pretty sure marketing in the U.S. or in North America, I should say, was nicely up in Q1, but curious if you're willing to comment on specifically marketing business in the U.S. and then the dynamics going on there. I know we've heard from several operators arguing that CPAs have increased in Q1. But just curious any comments specific to the U.S. marketing business?

Yes. We have seen an increase. We obviously report on North America, which includes U.S. and Canada. And -- [ but ] we've seen an increase in Q1 in marketing. So our growth there is not just sports data. We -- I mentioned RotoWire in the notes there earlier, the comments earlier, and they're not -- has seen some positive movement.

This audience monetization platform is active in the U.S. market and Canada as well and is growing. That's up -- yes, NDCs are up, I think, about 60% from Q4 on that. So that helps as well. We're able to leverage our kind of scale in the marketplace and pricing power, plus all the tools we have to support a lot of these competitors that maybe have a small number of really high-value customers in their audience. We can help them monetize that audience with our platform. So a couple of different things in the U.S., but it is a positive story for us.

The next question comes from Jeff Stantial from Stifel.

Starting off on the restructuring initiative. Outside of this space specifically, there's been a bit of a debate in terms of how much human involvement is truly needed to manage the structure and the quality of the code that's being written with assistance from AI and that sort of risk of going too lean. I guess, Kevin, how did you think about sort of the risk from pushing too hard and too fast and risking potentially compromising content quality or speed when you structure this go-forward strategy? And then as a housekeeping, apologies if I missed it. But Elias, can you just quantify for us the one-time implementation costs?

Do you want to take the implementation? I can start with that first question. We didn't quantify that, but we anticipate the restructuring expense to be in the region of $2.5 million, right about there.

Yes. In terms of how we think about transitioning to AI-first, our restructure wasn't -- it's not like we cut our development team by half. There was some there as well, but it was really across the entire business. The software development gets a lot of focus. But when we think about product development, what we see now is everybody is able to ship and build without necessarily having to run through the traditional processes of the design and build process. So we're able to kind of get product out there a lot faster with these new systems. But it's all parts of the business.

We have a lot of folks across the group that work, say, on SEO business, that we still need writers and editors and humans creating content, but the production of that content can be a lot faster. There's all sorts of pieces of that process that we're able to automate so that the humans involved have a lot of leverage and are able to kind of move faster, hopefully be more effective as well.

Quality is key. We're really focused on this, that you have craft, just because you can get an easy output from AI doesn't mean that's good enough. You still need to really review the quality and make sure that's there. And you need to also review the direction in the first place, right? If you could build anything or if you can build everything, like what are we going to build? What does great look like? And so there's a strong focus on that right now. But there's a lot of tools which just allow things to happen faster, whether it's context layers, skills, agents, all those things combined, we can enable people to just generally be more productive.

Jeff, I'd just add that I think there's more risk in not moving fast enough than moving too slow. So we want to be at the forefront on this, and that means we need to be leaning in and very proactive.

Yes. And this has been a shift for us for some time. And so not all parts of the group have caught up at equal pace where we are kind of ahead, where we have been ahead with AI adoption, the productivity is really noticeable. So I'm not as worried about the -- you mentioned speed. If anything, this should only help speed.

That's great. And then maybe just switching gears over to guidance. You hit on a lot of this already. I think the main points were sort of the impact from the regulatory changes in the UK&I and Finland being a little bit worse than expected. But Elias, can you -- just to clarify, relative to the guidance that you put forth at Q4, what has changed incrementally?

Yes. So what's changed incrementally is a faster shift in away from SEO channels. Now we had anticipated to see this shift, but it has happened a little bit faster than we expected. If we look at how that affects the numbers from how we initially guided, we will have a lowering of revenue expectations by around $5 million. That comes from carrying forward the lower SEO run rate in the business. You will have an increase in cost of sales of approximately $5 million, which comes from the mix shift, and that is offset by around $5 million of lower adjusted operating expenses. Within that, we expect to save around $6.5 million from the restructuring as discussed, which is partly offset by about $1.5 million higher marketing expenses. So that's kind of the bridge, if you like, but it's all driven by the mix shift expectations.

Yes. And it's important to think about this year in kind of 2 halves, right, H1 and H2. The mix shift is accelerating. There's the SEO side, but there's also the non-SEO side of the marketing business, which is growing at a slightly different profile. But as we go into H2, we're going to have a significantly better cost base to match where revenue mix is at. And we expect revenue, EBITDA, and cash flow to accelerate in H2. So we think the kind of second half of the year is going to be quite strong. We're saying that, look, some of this impact is going to persist through Q2, but starting in Q3, then definitely into Q4, we will be in a much stronger position.

The next question comes from Barry Jonas from Truist Securities.

This is Jeremy on for Barry. Can you explain to us the timing for the management change announced? And is this a signal for any changes to your overall strategy?

Jeremy, Charles here. It's all racked up and Kevin is more or less already operating as the group CEO, but we wanted to present a very choreographed and planned transition. We have our AGM next week. And at the conclusion of the AGM, we're going to have some new directors joining us, and Kevin will be official next week.

Yes. In terms of the strategy, Charles and I are aligned on the group strategy with the restructure and focus on AI-first workflows, I'll be changing how we operate the team to achieve the vision. That is something we'd be doing with or without the succession taking place. Charles is a technologist and will continue supporting strategy and ideas around AI frontier opportunities.

But we're focusing resources on opportunities that have the highest ROI. SEO is still a great business, albeit with lower growth opportunities. So we're shifting resources to other areas, and we'll continue to do so. AI will also enable us to scale the business without having to continue growing the team. So even if revenue goes up substantially, we don't expect team size to match that. But Charles and I have been on the same page for a long time, and the strategy is roughly the same.

Got it. That's helpful. And then how has your prediction market revenue been trending? And what's the level of growth you're seeing from those customers?

Yes. Prediction market operators are keen to acquire customers. We are seeing the CPA offered are lower than we've seen from sportsbooks, both now and kind of at the peak. On the data side, we've discussed Optics servicing network of traders and market makers that around prediction markets. That's continuing. But in Q1, we started to send more traffic, affiliate traffic to prediction markets as well. So we expect that to continue to ramp throughout the year. It's an additive new type of partner for us, which is important. It's continuing. It's not massively different than what we described in Q4, but there's positive momentum. Obviously, prediction markets are taking a lot of mind share as well. So we're trying to ride that.

[Operator Instructions] The next question comes from Chad Beynon from Macquarie.

Elias and Kevin, sorry, I just wanted to go back to the guidance for a second. Revs at the midpoint down by 8%, EBITDA down by $7 million. And Elias, I know you walked through some of the things. But with the $7 million of saves from the restructuring, so what is going to be the bridge down from that adjusted number? What's the main impact? Is it an investment in the marketing expenses? Because I feel like some of the other things you mentioned kind of netted out. So just trying to get a sense of the margin guide down from looks like 28% at the mid -- or I'm sorry, 30% down to 28% and when we'll see those increases in marketing expenses if that's what it is?

Yes. So we've already seen the increases -- some increases in marketing expense at the run rate basis. If we look at the cost side, we're expecting about $6.5 million of cost savings to come through in the second half of the year from the restructure. And we expect that to be largely offset by increases in marketing expenses of about $1.5 million and increases in cost of sales, which comes from the growth in the partner platform primarily of around $5 million.

Kevin here, Chad. It's worth noting that the broad strokes of the restructure driven and the cost cutting associated were partially anticipated in the guidance previously given. We had been thinking about this for a while. We weren't quite ready to do it. We are now. So that's why we made the decision. But it's not a total savings from guidance that was somewhat baked in.

Okay. Perfect. And then on the buyback or capital allocation here, I'm assuming just given the needs of the capital for the earn-out and current leverage, do you have much flexibility to buy back stock at these levels? I know you had repurchased some in the fourth quarter. This quarter, you hadn't. But what's your appetite with the stock at these levels and adjusted visibility on the cash flow side?

Yes. Our focus is on delevering the balance sheet. We're always interested in ways to grow the business, but we don't plan on -- and manage the stock as well, but we did not plan on doing buybacks in the short term. Free cash flow and free cash flow conversion should improve over the second half. It could open opportunities. But right now, we want to use our cash to delever, and that's the primary target.

The next question comes from Mike Hickey from StoneX.

Just two. First on marketing, trying not to be redundant here, but if you can sort of discuss maybe your non-SEO traffic diversification initiatives and how those are sort of balancing against the search pressure, obviously, that's been ongoing. And when you think the business sort of reaches a tipping point where SEO volatility starts to become less impactful in the near-term, you may have said 4Q on that, but I wasn't 100% sure if that was just because of the cost reductions versus just the balancing of the mix within the segment. And then, Kevin, I know you're guarded, but you have announced a new product initiative as well. So it would be great to get an update there. And then we have a second question.

I'll answer the second part first. Well, going forward, we'll talk about new products when they're live in the market. So I'm not going to go over that today. But in terms of the non-SEO diversification, look, this is the second quarter where non-SEO was larger than SEO. It was close to 60% of the marketing business in Q1. The non-SEO is growing rapidly across CRM, paid media, LLM referrals, and audience monetization platform.

So the non-SEO is a higher percentage of our marketing business in Q1 than Q4. And so I think we're nearing that tipping point, if not at that tipping point you mentioned, where non-SEO growth more than offsets SEO headwinds. And there's some encouraging trajectory that we're seeing here recently.

So CRM is the most compelling opportunity there. It plays nicely with all the other channels, and it's fundamentally a reengagement and conversion tool for audiences developed through every channel. And then paid media is a big space. We've been careful not to scale too fast given the payback is not immediate. Apps and social communities are areas where we see significant opportunity to develop deep connections with key consumer cohorts.

We're also just doing a lot of testing all over the place. And AI automation is opening up possibilities that would not have been feasible until very recently. The partner audience monetization platform also diversifies us from SEO. So it helps there as well. I think we pretty much are at that tipping point. We've been talking about this mix shift for a while. It's moved even a little faster in Q1 than expected, and Q2 will be roughly similar. And so that's part of this reset of the team will better align resources where we see growth going forward.

On the second question on data continues to be a strong segment. Can you just talk about maybe the biggest drivers behind the recent acceleration of OpticOdds partner growth and how sustainable you think that enterprise demand can be for you?

And then on the new customer wins, are these -- it sounds like it's more than just traditional sportsbook. It sounds like prediction market, some AI engines here, media companies. But just, I guess, where you're seeing these new customers coming from beyond just traditional sports books? And then I got a wildcard.

I'll wait for the wildcard. To start, we definitely see the growth to be consistent going forward. It's one of the best parts about that business. The core strategy remains consistent with Q4. We want to add new customers, especially by tapping into international markets and non-sportsbook partners. Customers were up 24% Q4 to Q1. International penetration has gone from 15% to 28% of active customers over the past year. We're layering on new features, which react to partner needs, and the multi-product adoption is accelerating across the platform.

We mentioned the AI focus is on deeper LLM integration to help our partners maximize value. Claude has integration has been a hit. This Perplexity one is really interesting. That's not live yet. That will be live soon. I'm glad we can talk about it though. And it's just a way for people to engage with the data we have and the tools that they're using elsewhere.

It gives the company direct exposure to the growth and user adoption on these next-generation AI platforms. I mean it's exactly where we want to be with our product.

Yes. And in terms of the non-sportsbook partners besides the kind of AI stuff, there's some of the prediction market ecosystem, you have traders and market makers. There's various media companies. We sell data to sports teams, all kinds of stuff.

On the operator side, though, there's -- we sell to everybody. And if you think about it, there's more small and medium operators than large ones. So that naturally creates potential for a new deal pipeline. We have different solutions for each type and the deal size does not necessarily correlate to the operator size. It just depends on how much of the Optic stack they're integrating with. So we're continuing to innovate there and just reacting to what the market is looking for.

The wildcard question, guys, it just sort of occurred to us your name, Gambling.com just doesn't seem to really represent who you are today and where your growth is in the future? Have you guys thought of sort of rebranding or changing your name?

Charles here. Your spider senses are pretty strong, Mike. We are considering something. But of course, we won't talk about that until it's ready to go. But Gambling.com, the product at this point, is a smaller portion of Gambling.com Group, the business' overall portfolio than it's probably ever been. Thus, I would agree that there is some potential merit and logic to thinking about a different brand.

The next question comes from Clark Lampen from BTIG.

I have two. The first one is on gross margin trajectory. Just trying to think about, I guess, sort of medium-term direction. It sounds like with the non-SEO business growing to represent more and more of the revenue mix, I know that there are a lot of different channels sort of bundled underneath, I guess, the sort of the non-SEO blanket term. I'm just curious, are there meaningfully different media costs associated with like some of those different channels such that we should think about, gross margins in 2027 being meaningfully different than what we're seeing, I guess, in sort of 2026.

Second question that I have, and then I'll leave it there is just on what you guys are seeing in terms of customer acquisition costs, maybe not so much in Q1, but in the early stages of Q2 and as we progress towards some of the bigger events over the balance of the year with World Cup and then the start of the NFL season, some other -- some operators have called out very different trends from an acquisition cost standpoint, i.e., significant increases that have essentially priced them out of the market. Others have said there's been some easing lately. Just would be great to get your perspective on where we are now and where we're going.

I'll take the first one first on gross margin, that's primarily on the marketing business, though there's some elements on the consumer side of the sports data. We have already seen a large uptick in that on the marketing business. The gross margins will continue to grow, but proportionately should not. I think that's now at a level that makes sense. So I wouldn't expect very significant shift there. And as the sports data B2B side grows, that's not really as dependent on gross margin. So we expect that to stay relatively stable from where we're at now.

On acquisition costs, look, we're in a lot of different markets around the world, and I think it's a totally different picture in every market for every product type. The World Cup is coming. We do see that to -- historically, these big events are pretty low LTV customers. And often, that even means just rev share deals for us on those. And we expect the World Cup to be that more of an NDC opportunity than an immediate revenue opportunity.

The prediction markets are obviously starting to take some mind share in the U.S., and we're starting to see competition change a little bit. The prediction market CPAs are quite low. We're seeing a lot of the traditional operators in the U.S. focus more on the casino side where they kind of own the space a bit more. And those CPAs are holding up. We're not seeing a big change there.

I think on the U.S. side of the business, the operators are seeing their CPAs go up generally because of this new competition across all their channels, not necessarily affiliate, I think particularly on the branding side. It's a little bit more challenging for them to get in front of users with everybody referencing prediction market data in the media and social. So that's having an impact on them. But our rates are really not that different. It's just based on LTV, right? So as long as we're providing a strong LTV, we can kind of work with them on finding the right value.

Clark, I'll just give you a little more color on the non-SEO channel margin profile. If you think about CRM, the margins are enormous because it doesn't really -- there's no paid -- no COGS per se. It's just our team running it. But then you've also got paid media, which has very meaningful COGS. So when you look at it all together, it blends down to a nice business, but there are very different margin profiles within those different non-SEO channels.

Yes. And when we think about the business differently, like just what's the contribution from each item and if you look at some of the businesses like a content-driven business is really heavy on OpEx, less so on COGS. We have some other channels, which may have more cost of sales but lower OpEx. And so we're just trying to kind of manage each of those individually and then blend together. Again, I think the gross margin is not going to go back to where it was, but it shouldn't meaningfully change from here. But our overall margin should increase starting in H2. And, yes, we expect to be back in H2 to the [ 30s ] on margin. EBITDA margin, specifically, not gross margin.

There are no further questions and this does conclude today's conference. Ladies and gentlemen, thank you very much for joining us today, and you may now disconnect your lines.

Greetings, and welcome to the Gambling.com Group Fourth Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Peter McGough, Senior VP of Investor Relations and Capital Markets. Please go ahead.

Hello, everyone, and welcome to gambling.com Group's Fourth Quarter 2025 Results Call. I am Peter McGough, Senior VP of Investor Relations and Capital Markets, and I'm joined by Charles Gillespie, Gambling.com Group's Co-Founder and Chief Executive Officer; Kevin McCrystle, Co-Founder and Chief Operating Officer; and Elias Mark, Chief Financial Officer.

This call is being webcast live through the Investor Relations section of our website at gambling.com/corporate/investors and the downloadable version of the presentation is available there as well. A webcast replay will be available on the website after the conclusion of this call. You may also contact Investor Relations support by e-mailing [email protected].

I would like to remind you that the information contained in this conference call, including any financial and related guidance to be provided, consists of forward-looking statements as defined by securities laws. These statements are based on information currently available to us and involve risks and uncertainties that could cause actual future results, performance and business prospects and opportunities to differ materially from those expressed in or implied by these statements.

Some important factors that could cause such differences are discussed in the Risk Factors section of the Gambling.com Group's filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date the statements are made, and the company assumes no obligation to update forward-looking statements to reflect actual results changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws.

During the call, there will also be a discussion of non-IFRS financial measures A description of these non-IFRS financial measures was included in the press release issued earlier this morning, and reconciliations of these non-IFRS financial measures to their most directly comparable IFRS measures are included in the appendix to the presentation and press release, both of which are available in the Investors tab of our website.

I'll now call -- turn the call over to Charles.

Good morning, and thank you for joining our fourth quarter 2025 conference call. We generated record fourth quarter revenue of $46.2 million, up 31% year-over-year adjusted EBITDA rose 5% year-over-year to $15.5 million. Our Sports Data Services business grew 29% sequentially and 440% year-on-year in the fourth quarter to $11.8 million and accounted for 26% of total revenue, the highest percentage yet, grew 15% sequentially from the third quarter and 4% year-over-year.

While the previously discussed challenges with search rankings persisted in the fourth quarter, this was offset by growth in revenue, not dependent on organic search referrals, which exceeded revenue from SEO-related sources for the first time. We have scaled non-SEO marketing revenue quickly in the second half of 2025 and continue to expect increasing revenue from these channels going forward. This strategy has made marketing revenue more diversified and less volatile at the price of somewhat lower margins.

For the full year, revenue and adjusted EBITDA were up 30% and 19%, respectively, and we produced $36.3 million in adjusted free cash flow.

Looking ahead to 2026, we expect revenue to be in the range of $170 million to $180 million and adjusted EBITDA to be in a range of $50 million to $80 million -- sorry, $50 million to $58 million. This represents modest top line growth, but a year-on-year decrease in adjusted EBITDA.

Behind these headline numbers are two different businesses. We have a thriving high-growth sports data services business, which will grow revenue in the high teens and see margin expansion. We also have our marketing business where it is no secret that revenue from SEO has been under pressure.

Given the dramatic changes to the media and digital landscape, as a result of the rise of artificial intelligence, we are actively reinventing our marketing business to build a more intimate relationship with our end users. This will involve scaling our CRM platform, offering more interactive and gamified content and expanding our engaged social media audience.

Even while we are reinventing the marketing business this year, it will continue to generate significant cash flow. Despite recent challenges and perceptions, this is still a very valuable, very profitable business and even considering margin compression from our traffic diversification strategy. We are encouraged by the return to year-over-year growth in the fourth quarter despite the pressures that continue to impact SEO revenue. The market expectations for the future of this business are plainly not accurate.

Non-SEO revenue continues to scale ahead of expectations as evidenced by our cost of sales growth for the fourth quarter. Q4 is the first quarter where more than half of our revenue came from sources not dependent on SEO. As we continue to diversify our increased focus on e-mail, social media, paid and partnership channels will contribute more revenue as we move through 2026.

We also continue to make progress in scaling our CRM activities to engage and cross-sell our customer base. The final and perhaps most interesting piece of our transformation strategy for the marketing business, is the new product we expect to launch this spring.

While I would love to share more details about this project today, we are not going to share any further information for competitive reasons until the launch.

Our annual themes for the past several years have all been AI related and our team is early adopters and fully embracing the power of these new tools available to them including 24/7 Agentic workflows. While the advances in artificial intelligence over the last several years have been incredible, the acceleration in tools like Claude code since January has been breathtaking. We continue to prioritize leveraging AI tools to increase our execution velocity across all teams and functions within the group.

Turning to our exciting sports data services business. Enterprise Data Solutions will continue to be the fastest-growing part as we further grow our customer base, rapidly expand our product offering and ramp up the offering in new geographies around the world.

As a rising challenger in the sports data services space, we are highly valued by our diversified group of customers, growing quickly, and our team is executing at a higher velocity than our peers in terms of product creation, innovation and delivery. Given our pace of execution, I expect us to continue to take meaningful market share.

With the rapid evolution of prediction markets, the potential customer base for our sports and odds data services is expanding quickly. We have established ourselves as early as one of the most interesting sources of data on prediction market exchanges and have already made great inroads to selling our odds data to both retail and institutional clients who are trading on these exchanges as well as helping service the exchanges themselves with both data and marketing.

There has been some concern that regulated sportsbooks are losing market share to prediction markets and that has resulted in a negative sentiment, which seems to have been applied more broadly.

To be clear, Gambling.com Group is a net beneficiary of the emergence of this new category as it is expanding our TAM, both on data and marketing. While marketing revenue from prediction markets is still small, we have an obvious opportunity to scale up in this category and help consumers navigate all of their new options.

We see a great opportunity to expand our data and trading solutions business by servicing more exchanges, liquidity providers, financial institutions and funds of all styles as prediction markets continue to evolve beyond sports, and more players look to be involved.

OpticOdds is our brand for enterprise data solutions, and it already has great penetration with U.S. operators. We remain less well known outside the U.S. but are working rapidly to adapt our services to the needs of operators across the many attractive markets, particularly in Europe, where we operate. In order to better service global operators, we are expanding our coverage deeper and wider to 25 stores and 5,000 leagues and tournaments.

The two main levers for growth, we are focusing on for 2026 are servicing operators in Europe with better coverage within existing products and selling additional new and innovative products to our U.S. clients such as AI-driven pricing and real-time settlement. Beyond Europe and the U.S., there is no shortage of additional growth opportunities to target in due time.

Our solutions are not inhibited by legacy architecture as we already have what we consider to be the state-of-the-art technology for odds data, odds related risk management and bet settlement among other current offerings. We will introduce exciting new platform and product enhancements this year for enterprise customers that will further position OpticOdds as the leading end-to-end data solution for global sportsbook operators.

On the consumer side of our sports data business, OddsJam, we will be adding functionality for our subscribers in both prediction markets and sportsbooks. Over the course of the year, we will introduce product enhancements for consumers active on prediction markets, including real-time recommendations from Pro traders and arbitrage solutions that offer risk-free bets to help better find value across our industry-leading breadth of markets.

For consumers active on sportsbooks, new enhancements will include a simplified sharp money tool and a low-cost introductory plan that helps educate the player and then allows us to upsell them into a higher cost plan. I think this gives you a good sense of the focus we are placing on our Sports Data Services business, to be the key driver of our growth and increasingly the driver of shareholder value for GAMB going forward.

As reported in December, we have fixed the contingent consideration from the acquisition which enabled us to restructure our internal team to be better focused on sports data services. With the earn-out payment amounts fixed, we are now able to better align our teams to leverage the strengths of the talented team at OddsJam and OpticOdds to better support RotoWire, the third pillar of our sports data services business, which continues to have substantial growth opportunities with the right product and marketing optimizations.

With that, let me turn the call over to Elias for his review of the fourth quarter and full year financial details and more details on our guidance for 2026.

Thank you, Charles. Fourth quarter revenue grew 31% year-over-year to a Q4 record of $46.2 million and full year revenues rose 30% to $165 million. Data revenue grew 440% to $11.8 million in the fourth quarter and subscription revenue was 26% of total revenue, inclusive of revenue share arrangements in our marketing business recurring revenue was 47% of total fourth quarter revenue. For the full year 2026, data revenue grew 392% in GAAP terms and 27% on a pro forma basis to $41.1 million.

As previously highlighted, our marketing business has been impacted by low quality search results in the gaming space. Such dynamics still remain volatile as the trend improvements we saw in November have not carried through more recently. As a result, NDCs of 98,000 were down 32% year-over-year. Despite that impact, marketing revenue rose 4% year-on-year as our traffic diversification efforts picked up speed in the quarter, and we generated a majority of revenue from sources other than organic search referrals for the first time.

Gross profit increased 19% year-over-year to $39.3 million. Cost of sales of $6.9 million compares to cost of sales of $2.2 million in the year ago period, primarily reflecting costs associated with our traffic diversification strategy for the marketing business. Gross profit margin was 85% compared to 94% in the year ago period.

Operating expenses adjusted for acquisition and restructuring-related expenses and noncash fair value movements and impairment charges for the quarter grew 32% to $26.9 million. This growth is primarily associated with added headcount from the acquisitions in 2025 and higher marketing costs associated with diversification in the marketing business. Headcount outside of the acquired businesses were flat year-over-year.

Noncash fair value movements in the quarter of $18.5 million related to the previously announced early termination of the Odds Holdings earn-out period. As a result, we will not incur any future fair value movements related to Odds Holdings. Noncash impairment charges of $14 million related to changes in future cash flow expectations from websites targeting the Finnish market following recent regulatory changes. Adjusted EBITDA was $15.5 million and the adjusted EBITDA margin was 33% compared to $14.7 million and 42% in the year ago period. The lower margin reflects the higher cost of sales and marketing expenses associated with our diversification strategy.

Adjusted net income of $12.2 million and adjusted net income per share of $0.30 for the fourth quarter were flat compared to the year ago period despite the impact of increased interest expense. Adjusted free cash flow in the fourth quarter was $7.5 million, reflecting adverse working capital movements from timing differences. For the full year, adjusted free cash flow was $36.3 million and that included tax payments of a one-off nature of $5.6 million related to IP transfers.

During the fourth quarter, we drew down $38 million on our credit facility revolver. We paid deferred consideration of $33.6 million related to Odds Holdings, and we've repaid $2.8 million on our term loan. As of December 31, we had total cash of $15.8 million and $123.6 million of borrowings outstanding and $32.5 million of undrawn facilities on our Wells Fargo credit facility. We continue to produce strong free cash flow that will allow us to both delever and continue to invest in our organic growth initiatives.

During the fourth quarter, we repurchased 110,000 shares. In total, for 2025, we repurchased 672,000 shares for a total consideration of $5.6 million. and we continue to have $14.4 million remaining with our share buyback authorization. We continue to invest in product development and diversification strategies that we believe will power growth in coming years. while prioritizing cost control and leveraging AI in our work processes to drive efficiency gains via automation.

This morning, we introduced our 2026 full year guidance for revenue to be in the range of $170 million to $180 million. And adjusted EBITDA to be in a range of $50 million to $58 million. We expect revenue growth to reflect continued strong growth in data services driven by Sports Data Enterprise Services.

Our revenue and EBITDA expectations are negatively affected by continued poor organic search dynamics and regulatory headwinds. In the U.K., where a higher-than-expected increase in gaming duty impact player values and volume. And in Europe, where new regulations in Finland will curtail performance marketing. The adjusted EBITDA margin indicated by this guidance, around 30% for the full year is expected to be lower in the first half of the year and higher in the second half of the year. This reflects the continued investments that we're making to diversify our marketing business. The investments in our Sports Data Services product enhancements and the investments needed for the development and rollout of our new products that we plan to launch and for which we expect only marginal revenue contributions for this year.

Operator, we will now open the floor for questions.

[Operator Instructions] Our first question comes from the line of Ryan Sigdahl with Craig-Hallum Capital Group.

Sticking on kind of the guidance to end Elias, it's U.K. tax increases going to effect in April. Thoughts on the market on what you're seeing. I guess, the thought is what we're hearing as Tier 2, Tier 3 operators kind of the long tail might get squeezed out of the market. That's typically a better opportunity for you guys relative to the big top heavy ones.

So curious, I guess, how you've pivoted your strategy or plan to pivot your strategy, really the nuances within the U.K.? And then kind of last point on that, if you're willing to break out kind of the challenges in rank order within the guidance in your performance marketing from the U.K. versus Finland versus Google and search.

Ryan. We've got Kevin here, the Group COO, who's probably best positioned to give you some color on the U.K. market.

Ryan, nice to finally be on this call. we are starting to see the impact and have seen the impact of the U.K. market changes. It's a mix of a few different things. There will be some brands that leave the market. But overall, there's really -- there's like hundreds of brands in the market. So some leave, it's still a very robust market. We've always done well with the challenger brands, which there will still be enough of the market going forward.

Our strategies in the market will still persist and work really well. We think, if anything, it will be more open opportunity for us if some competitors do decide to exit the market as well. There's potentially some opportunity for pricing to go down a little bit, but these traffic struggles that we've seen a little bit have also impacted the operators, and there are some brands that we expect actually may need to increase pricing, though the macro forces will force it down for some of the top brands in the market as well.

Maybe, Elias, if you can comment on the guidance and kind of rank order of challenges within that. And then I do have a follow-up.

Yes, sure. So if we look at the change in our internal outlook, this is entirely due to two factors affecting the marketing business, as we said. And what has really changed since our November call, if these new regulatory headwinds in the U.K. and Finland.

But we have also -- what we've also seen is that some of the positive trends that we referenced in -- at the end of October and beginning of November has not carried through. So there is continued search volatility. It's hard to pinpoint in exact term the impact of each of these because there is an element of correlation, but what has materially changed in the macro environment since we last reported is the regulatory headwinds in the U.K. and Finland that we already see impact us.

Helpful. Second question...

I can just add that was not changed in our outlook is Sports Data Services where we continue to expect a very healthy high teens growth driven by the acceleration on the enterprise side.

Good segue. That's my second question is on OpticOdds specifically the data services. Curious where you're seeing the most success and where you expect to see the most success in '26 in your guidance, if that's upselling. You mentioned more sports expanding the platform and seemingly upselling your existing customers there? Or is it land and expand with new customers, whether that's prediction markets or other geographies?

And then kind of also on OpticOdds I just curious the company's mindset to guarantee an earn out early based on an EBITDA figure for 2026.

Ryan, Kevin here again. I can take that. This is obviously an exciting area of our business. Growth is -- a lot of our growth will be driven by OpticOdds or enterprise product in the sports data services space. For that, we have around 300 active customers on recurring long-term contracts, and there's about 100 new clients in the pipeline. Importantly, 70% of which are international.

In 2025, revenue per client was up 50%, and we onboarded 29 new clients in Q4 alone. Going forward, there's a focus on both increasing revenue per client and converting that sales pipeline to add more customers. We do have a handful of revenue share deals and these can be materially more lucrative than fixed fees, which is a clear area of focus going forward.

Prediction markets are also important here. They've unleashed a Cambrian explosion of entrepreneurial activity with new faces from traditional tech and finance now entering the space and we are supporting all manner of market participants with high-quality data. The prediction market data in the OpticOdds API comes pre-mapped to existing betting markets.

Beyond optic though, just sticking on prediction markets for a second there, prediction markets are also an opportunity for consumer product innovation on OddsJam.

In terms of the ending the earn-out, we did want to fix the remaining contingent consideration. But beyond that, it really offers a great opportunity to allow better alignment between OddsJam, OpticOdds and the rest of our group, notably RotoWire, which we're already seeing on some good results from.

Our next question comes from the line of Jeffrey Stantial with Stifel.

Maybe starting off on Elias' answer just before on guidance. So it sounds like the main delta is relative to how you laid it out back in November is primarily regulation and then a little bit of the Google search rankings not improving the way that you expected.

I guess maybe we'll stick with Kevin for this one. Can you talk about more sort of the AI sort of headwinds? What have you been seeing in real time over the last few months in terms of LLMs taking share or Google AI summaries taking share? Just sort of how has that evolved over the last few months because it seemed to be sort of left out when talking about potential guidance headwinds or at least revisions relative to the prior?

Yes. I think you need to kind of take two lenses on that. Our referrals from LLM are up substantially quarter-over-quarter, and that's something we expect to see going forward. So that's a positive trend. On a macro lens, it doesn't appear yet that that's eating at Google at the moment. The issues we're seeing are more so with Google itself. And as we noted, that November ranking rebound has not quite persisted.

With Google, there's two core challenges. One is offshore spam. This is particularly in international markets, this channelization issue due to kind of overly burdensome regulations. And two, negative SEO attacks, which is something we haven't really discussed before. These are both unique to online gambling with search they seem to monitor it a bit less than some others, and there's very aggressive competitors.

Spammers continue to win a cat and mouse game with Google and Google has been slow to react to the current wave. Historically, they were very quick to react, Hence, our guidance on short-term recovery. They may have taken their eye off the ball with some of their focus on other endeavors besides search but negative SEOs when competitors use third parties to manufacture signals that degrade sites overall authority and we've been getting those attacks. It's difficult to identify who's sponsoring them. Google is still incentivized to fix this. It's a search quality issue for their end users after all. So we do expect change to come, but it hasn't happened yet.

Jeff, just to add, I think an interesting way to frame this is to look at the second order effects of AI, right? Like everybody looks at Google, and thinks AI LLM, so nobody is using Google search anymore. That's totally not true. You just look at the Google results and the search revenue results, Google Search is working better than it's ever worked.

But with this new AI world, the spammers are able to put out more spam that's higher quality than ever by using AI and Google itself is, of course, very focused on its own AI future and thus not policing the search results in the same -- with the same vigor that they used to from our perspective. So it is AI related but not in the way that people assume.

That's a really interesting point, Charles. Thanks for adding that in for initial color. Kevin, maybe turning more to sort of capital allocation and strategy. It looks like your stock is now trading about on my math 4x your trailing 12-month free cash flow, which to us really seems quite remarkable and grounded more narrative than any sort of reality. I recognize that you can't talk specifics or get too detailed. Charles, I'm just curious like internally, what is the dialogue around sort of strategic optionality if you do see the market continue to dislocate seemingly entirely on narrative?

Yes look, we -- I think the short-term priority is to use our cash to delever somewhat there's plenty of upside to our 2026 guidance if a few things fall in place, so we could find ourselves in a position where we are generating margins, which are closer to the historical margins in which case buyback would be back on the table.

Obviously, at the current level buybacks are incredibly attractive, but we want to delever before we really focus on buybacks. So we have a buyback program in place, and we will I'd love to be in a position this year to use that.

Longer term, I think we need to evaluate all of our options. But plan A at this point is to make the stock work. We're here. We're a listed company in the United States. We do have a great business. We're caught up in a lot of the same narrative challenges as other companies at the moment. But we're still here, and we plan to make it work.

Our next question comes from the line of Barry Jonas with Truist Securities.

Charles, I'm curious to get your thoughts on the Genius-Legends deal and if you see any implications for, I guess, how you think about your strategy?

Barry, look, Legend is one of the great online gambling affiliate businesses. It's a very direct comp to our marketing business. I've known the founder, Nick Kisberg for many years, and I take my hat off to him on a very impressive transaction with Genius, and we wish them all very well going forward. A lot of former Legend staff work at GAMB and vice versa. Gambling affiliate world is quite small.

Their strongest asset is definitely covers.com, which, of course, is a great site. We went up against them to acquire it many years ago. And unfortunately got outbid, but there is vastly more to Legend than just covers.com. They operate a long list of assets in a variety of markets around the world.

The transaction certainly highlights the synergies between sports data and marketing assets. I'm pursuing the same strategy as Mark Locke, but in reverse. We started with marketing, and we see sports data services as extremely interesting. A lot of revenue there. And potential advantages to come at it with fresh technology without having tied ourselves up with very large contractual obligations to leagues with official data agreement.

So we think sports services is obviously our future, and that's the bet we've made. We're just kind of doing it in the opposite order. Otherwise, competition is great, and we look forward to being what Genius will do with Legend.

Sounds great. And then just as a follow-up, Charles, I would love to get your high-level thoughts on the potential for new iGaming legalization from here? And I guess with that, is Maine or Alberta embedded in the guidance to any degree?

Maine is tiny, and they're just going to have a couple of operators. So that's completely immaterial. The non-Ontario Canada is a gray market where a lot of people are already active. So Alberta will be helpful because it will -- it looks like it will be a dynamic market, multiple operators similar to Ontario. So that's positive because you'll have more marketing dollars going into it, but it's not going to make a material difference.

In the states, we've got our eyes on Virginia. They -- it looked like they might legislate this year. Now it's looking like next year. Massachusetts and Illinois have bills alive for iGaming. New York iGaming seems slightly more likely than it did previously.

I understand that some of the union opposition has been addressed, and they're not fighting it as hard. That would obviously be a big one and would be material.

Our next question comes from the line of David Katz with Jefferies.

Charles, you mentioned earlier, the version of that, of a new product for marketing that is not discussable for competitive reasons, which is completely understandable. But maybe just talking around it a little bit on the degree to which you're rolling that out is impacting the EBITDA guidance for this year? And what the variability in that impact, if there is any, might be, but not for it, would EBITDA be up and if we could put any specificity around that. That would be helpful.

Yes. Thanks for not trying to get me to reveal the juicy details, David. Yes, Elias, do you want to quantify a high level what that looks like?

Yes. I mean we have included both CapEx and OpEx related to this new product. It's not of the magnitude that you would have otherwise led to adjusted EBITDA growth, but it's certainly added OpEx and CapEx. That's included with very limited revenue assumptions.

Couple of millions sort of thing.

Understood. And if we think about what its revenue benefit is presumably, there is some revenue for it in the guide for this year. Maybe, again, just talking around it a bit how you see like what you think this product will do for you. Just so we can help think about including that in your multiple, which I think my colleagues address pretty well before?

Yes. It's going to produce not a lot of revenue this year, call it $1 million, just round numbers to keep it simple. The story is really going to be about 2027 and 2028. It is incredibly strategic for us. It solves a couple of key objectives for us. It built -- helps us build that much closer relationship with our end users. It leverages the power of our marketing business. it's clever. And I think everyone's going to like it, and that's part of the reason why we're keeping the cards close to the vest at this point.

But yes, it will really start to make a difference in '27 and '28. This year is getting it live, laying the groundwork, putting the rails in place and then the real benefits will come next year. But it's something that we can use our marketing business to grow, and we can -- and it will also have substantial benefits that flow back into the marketing business. It's going to take the marketing business, it's going to completely change the narrative on the marketing business.

Our next question comes from the line of Mike Hickey with StoneX Group.

Just a couple of questions. Charles, you mentioned that there was a path to upside, I guess there's always a path to upside but it seem exciting versus your '26 guide. So what are the catalysts, I guess, that are most identifiable to you to drive upside to numbers in '26?

Definitely SEO improving whenever we have kind of a challenging SEO environment, we make forecast end up being too pessimistic. And when SEO is flying, we end up being too optimistic. But Sports Data Services definitely has a real potential to outperform non-SEO also has real potential to outperform. A lot of the stuff we're doing, including the new product I just talked about with David, these are new initiatives, right?

So when we forecast this stuff, we got to be conservative, right? We're not going to just put a forecast on the table, which is too aggressive for something which is fundamentally relatively new inside the business. But our non-SEO initiatives are obviously succeeding. That's been driven more revenue in Q4 than SEO for the first time. There's certainly potential for that outperform.

You've got CRM, which is scaling up paid media, which is scaling up. We've got quite a few levers which could result in outperformance. But we are also very conscious of putting out numbers that we can hit even if none of those things outperform.

Do you feel like in this environment, you did a couple of extra layers of conservatism on your '26 guide. I know it's second half weighted, but just given the volatility, the challenges in the search algo, do you feel like you sort of kitchen sink this a bit.

That's the idea, Mike. We want to be pretty conservative.

Yes. All right. Last question, obviously, a lot to digest in '26, a lot of change in the industry and in your company. Charles, Kevin, when you look longer term, the best you can, thinking sort of '27, '28. Can you just sort of give us the vision that you see the growth opportunity? And also how M&A could eventually fit back into the picture as you look to sort of develop and grow your data business, which has been a real exception and shining star here.

Yes. If you look at '27 and '28, marketing is going to return to growth. That narrative is going to change. It's going to become a more interesting business just in terms of the pure numbers and the story as a result of all of the different things we're doing to the marketing business the clear path for growth for Sports Data Services, obviously also means that that's going to continue to grow faster than marketing. So that's 26% of group revenue in Q4. That will keep ticking higher. But we do expect to grow revenue in the marketing business as well. So it's not going to -- Sports Data Services isn't going to it's not going to be 50% of group revenue anytime soon. But when you look at '27, '28 in we see these businesses thriving being AI-enabled and highly efficient.

And it's one thing to make a business AI proof that something else to make it a major beneficiary of AI, right? And if you look at our Sport Data Services business, it's not SaaS. It's fundamentally a data, which is not easy to get your hands on. Our customers could use Claude code and try to create similar software to get their hands on that data. But the reality is, is we spend an enormous amount of money on compute just to aggregate that data. And some of that data only comes because of GAMB's very long relationship with major operators in the industry.

So it's not economical or logical for any of our clients to try to do that themselves. So it's a perfectly defensible business in a world that's AI first and data quality, unique data sets in the world of AI are where the value is going to accrue.

If you also look a little bit longer term, AI, using AI internally and kind of all the things we do will help us execute at a higher velocity generally and will mean that over the kind of long-term we don't expect significant cost increase overall across the business. And so those costs can stay stable as revenue continues to grow, which will, in the long run, improve margins.

Our next question comes from the line of Chad Beynon with Macquarie.

We just returned from a very well-attended annual iGaming conference, and it seems like prediction market certainly overtook the preponderance of conversations and sessions. And I know there were a few there that actually believe predictions could be bigger than sports betting in a few years. Not sure if that's hyperbole or if there's really data supporting that.

But given the difficult legal situation and definition going on? How are you guys thinking about just investing time, money more into predictions if some of these views end up being true in a few years?

Chad, the more people I talked to in the industry and the smartest people I talked to you in the industry are the most comfortable with the future of prediction markets from a legal perspective. It does feel like that that's not going away. I mean, I think it will ultimately go to the Supreme Court. But I think the case from the CFTC that this is well within their mandate is going to survive.

I think the end user interest and the public interest in this is also the genie's out of the bottle. It's very clear that there is demand for this and people like the product.

So I think it's here to stay. When this category first came out, I was like, "Oh, this is betting exchanges from the U.K. ", and that fairs an okay business, but it's not -- it didn't kind of fulfill its ultimate promise that everyone in the industry thought it would. You could also apply the metaphor for poker, right? It's poker boomed until the sharks ate all the fish. So -- are those -- what lessons can we learn from that? And are they applicable here to prediction markets? And my first gut instinct was they are applicable. But as we've gotten deeper into this, and I've seen so many start-ups and entrepreneurs and people thinking critically about it. And it really is where the energy is at the moment. It feels like in the industry.

So I think I don't think those lessons from poker and European betting exchanges are directly applicable. And I it's a distinctly American products, Americans grow up, trading stocks, thinking about the stock market, buying and selling. That is not the same outside the U.S. So there's some specifically American characteristics to it, which I think will give it a bright future.

And then just thinking about maybe the SEO part of the business or maybe even including the non-SEO. CPAs versus rev share, I know there was discussions in prior quarters that this mix could change, and that could impact the near-term financials how did this change in '25? And then as we think about '26, do you think there should be any adjustment in terms of those proportions for the marketing business?

Chad. Yes, we did see our percentage of rev share go up on the marketing business. Overall -- for the overall group, rev share was around 25% of revenue, which is up from historical levels, a lot of historical base is from online casinos, which you can do rev share, but it's not necessarily more lucrative than CPA. Revenue share does tend to work better for sports betting. And as we do more in sports betting revenue share makes sense, we are increasingly putting more users through revenue share deals. They do take longer to play out, though, to get the full lifetime value. You're not going to see in month 1, a CPA is much more valuable. And in month 6, the CPA is probably still more valuable. So it takes a little longer to see that play out.

In the U.S. market, we have been moving more to revenue share. That's done okay, but we see pockets overall, where it's worked really well. And we have really complex machine learning that optimizes our ad tech to kind of figure out the right deal for the right market to push to users. And we don't necessarily have a strategic view that we'd rather move to revenue share, though, obviously, that's great. We do want to maximize the value per user. And so that's how we think about it.

Our next question comes from the line of Clark Lampen with BTIG.

I think I have a couple for Elias here. I guess, in light of the shift in strategic priorities, which you guys have talked about already in the importance of the subscription and OddsJam businesses on a go-forward basis, I wanted to see if it's possible for you guys to help us think about how much of the 2026 EBITDA that you're forecasting at this stage is a function of those businesses?

I think our sense is that, that revenue stream has a 40% to 50% margin profile, curious if that's accurate, I guess, for question one.

And then question two, when we think about, I guess, sort of compounding this or feeding into the decision to sort of shift focus and priorities right now, the delta between the SEO and non-SEO businesses?

I know you mentioned that this is going to be a drag in the first half of the year. Is it possible to give us a sense for how different as a result of traffic acquisition costs, the margin profile of those operations are.

Yes. So it's -- we don't break out segments to EBITDA. But the way we think about it internally is about contribution margin. If we look at our sports data, this has a higher contribution margin on a run rate basis. The contribution margins are well over 50%, and they are expanding as revenue scales faster than costs in contrast, the contribution from our marketing business, still high, but it's sub 50%, and it has been declining as a result of our strategy of channel diversification.

But it's as Charles said, before it continues to, and it will continue to produce very healthy cash flows even with a little bit of margin contraction.

Clark, Kevin here. SEO has very high margins. So almost any other channel is going to have slightly lower margins than that. We've been investing heavily into non-SEO channels. We've seen e-mail, social LLM referrals, all up between 50% and 500% in Q4 versus Q3, just to give a little perspective on that. But there's a mix of margin across channels. And additionally, there is some upfront investment, specifically around content and product and at times, access to various communities.

But we do see that margin improving on honestly over time, specifically related to the CRM activity. The CRM really ties together all the channels. creates a new growth flywheel from consistent customer engagement, and that is pretty much all margin CRM. So as we kind of engage more users get them into our funnel, over time, that's an opportunity to improve margins.

And that's also, Clark, just to finish that thought. That's also why we are guiding towards a slightly lower margin in H1 than we are in H2. It takes a little bit of time to scale and as we scale the incremental margins from these new channels improved.

Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Gillespie for any final comments.

Thanks, everybody, for joining us today. We look forward to another year of growth, and we look forward to updating everyone on our Q1 results in May.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Greetings. Welcome to Gambling.com Group Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to Peter McGough, Vice President, Investor Relations. Thank you. You may begin.

Hello, everyone, and welcome to Gambling.com Group's Third Quarter 2025 Results Call.

I am Peter McGough, Senior VP of Investor Relations and Capital Markets, and I'm joined by Charles Gillespie, Gambling.com Group's Co-Founder and Chief Executive Officer; and Elias Mark, Chief Financial Officer. This call is being webcast live through the Investor Relations section of our website at gambling.com/corporate/investors and a downloadable version of the presentation is available there as well. A webcast replay will be available on the website after the conclusion of this call. You may also contact Investor Relations support by e-mailing [email protected].

I would like to remind you that the information contained in this conference call, including any financial and related guidance to be provided, consists of forward-looking statements as defined by securities laws. These statements are based on information currently available to us and involve risks and uncertainties that could affect actual future results, performance and business prospects and opportunities to differ materially from those expressed in or implied by these statements. Some factors that could cause such differences are discussed in the Risk Factors section of Gambling.com Group's filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date the statements are made, and the company assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws.

During the call, there will also be a discussion of non-IFRS financial measures. A description of these non-IFRS financial measures is included in the press release issued earlier this morning, and reconciliations of these non-IFRS financial measures to their most directly comparable IFRS measures are included in the appendix to the presentation and press release, both of which are available in the Investors tab of our website.

I'll now turn the call over to Charles.

Thank you, Pete. Good morning, and thank you for joining our third quarter 2025 conference call.

We generated record third quarter revenue and adjusted EBITDA with revenue rising 21% and adjusted EBITDA growing 3% year-over-year. Our sports data services business grew over 300% year-on-year in the third quarter. The marketing business was flat year-on-year as a result -- as revenue was held back by less favorable search rankings as previously discussed, that persisted for the entire third quarter. As has been the case since July, Google search algorithms continue to generously favor low-quality spam content in the gaming space, in particular, outside the U.S. However, since late October, the search marketing dynamics have started to improve for us. Our sports data services business continues to outperform our expectations with another quarter of strong growth driven by enterprise sales. Sustained strong growth in sports data services is increasingly the future of GAMB given our attractive offering and the multibillion-dollar TAM in front of us.

I will, therefore, start today's call by laying out the opportunity that we see within sports data services, our fastest-growing segment. Through a combination of acquisitions and great execution, we have created a fast-growing sports data services business out of nothing, which delights both enterprise and consumer clients and is already responsible for 25% of our 2025 revenue. The tight product market fit we have given us confidence that there is a straightforward path for sustainable and highly predictable growth for this business. Sports betting operators are increasingly reviewing the cost side of their businesses, particularly in markets which are not growing like they used to. Our next-generation data platform delivers comprehensive premium data services at a competitive price point, enabling both start-up and scaled operators to take costs out of their businesses while potentially improving their offerings. We expect this business to finish 2025 strong and to continue to grow organically at a healthy pace in 2026 and beyond.

The fastest-growing part of our sports data services business is OpticOdds, our enterprise solution for sportsbook operators. OpticOdds' third quarter revenue doubled year-over-year, reflecting growth in both customers and revenue per customer. OpticOdds began by providing multi-operator Odds data from around the world to the trading teams and sports betting operators to use as an input to their risk management processes, like a bond trader would use a Bloomberg Terminal to understand the bond market. We have expanded the products and now also provide bet settlement services, which is now live with multiple customers. Sportsbook operators can now rely on OpticOdds as an end-to-end solution to power both pricing and bet settlement. Included in our bet settlement services is support for the dynamic pricing of same-game parlays, and we are investigating adding on early cash out functionality.

OpticOdds has also partnered with specialist Odds providers like Rimble and Pro League Network to plug into our OpenOdds marketplace, where our operator clients can easily subscribe to additional third-party data services and get delivery through the OpticOdds feed, creating additional value for our customers and enhancing our partners' distribution. OpticOdds was founded by Americans with an initial focus on American sports. We continue to rapidly expand the Odds data offered on the platform to cater to sports betting operators around the world. And year-to-date, we have added 10 sports, 350 leagues and over 1,000 different betting markets to the OpticOdds offering.

OpticOdds recently announced a deal with Pragmatic Play, a leading international platform provider. OpticOdds will expand Pragmatic Play's offering by enhancing U.S. player prop market coverage. In short, we are offering more Odds data and trading tools to an expanding client base, thanks to enhanced distribution. Another exciting aspect of the OpticOdds business is the clear value we can create for firms trading on prediction markets. This segment of the business is growing rapidly and currently includes a number of Wall Street's most well-known firms as well as the market-making arms of Kalshi and Polymarket themselves.

We expect the prediction market ecosystem to become significantly larger given the national addressable market and some advantages over state-regulated sports betting. Prediction markets are additive as a new category in the U.S., not a substitute for sports betting as we know it, which will no doubt still thrive given its simpler and more accessible product. We believe that our OpticOdds solution is uniquely well positioned to assist market makers and therefore, monetize the growth of prediction markets as they expand options for sophisticated consumers who want to create risk exposure with better payouts and fewer gimmicks.

Given the long runway we have for consistent growth in our sports data services business, we believe that this exciting future will be the core of GAMB. Having said that, we expect our sector-leading marketing business to grow in 2026 and beyond, which will throw off more than enough cash for us to continue to invest in our sports data services offering and retain firepower to deploy capital to create shareholder value.

I'd like to congratulate everyone working on our marketing business for winning the EGR Affiliate of the Year Award for an unprecedented third time in October. We are simply unequaled in our success in the online gambling affiliate industry. Having operated a search marketing business at the highest levels of success for nearly 2 decades, we remain confident that the recent underperformance of the marketing business is overwhelmingly driven by short-term temporary search dynamics, which will be addressed.

Following Elias' review of the third quarter financial details, I will map out how we expect to return to growth in the marketing business.

Thank you, Charles.

Third quarter revenue grew 21% year-over-year to a Q3 record of $39 million. Sports data services revenue quadrupled to $9.2 million in the seasonally slower third quarter. Subscription revenue was 24% of total revenue. Inclusive of revenue share arrangements in our marketing business, recurring revenue was 49% of total third quarter revenue. Our marketing business continues to be impacted by low-quality search results in the gaming space, primarily outside of the U.S. as we have discussed. As a result, marketing revenue was flat and NDCs of 101,000 were down 13% year-over-year.

Gross profit increased 17% to $35.6 million. Cost of sales of $3.4 million compares to cost of sales of $1.7 million in the year-ago period, reflecting costs associated with the acceleration of our traffic sources diversification strategy for the marketing business and cost of sales from the acquired OddsJam and OpticOdds businesses. Gross profit margin was 91.2% compared to 94.7% in the year-ago period.

Operating expenses adjusted for fair value movements and acquisition and restructuring related expenses grew 30% to $25.7 million. This growth is primarily associated with added headcount from this year's acquisitions, higher marketing costs associated with traffic source diversification and increased share-based payment expense. Headcount outside the acquired businesses is flat year-to-date. While keeping a very keen eye on cost control by optimizing our operating teams and adopting AI in our work processes, we continue to invest in product development and diversification strategies that we believe will power growth in coming years.

Adjusted EBITDA grew 3% to $13 million. Adjusted EBITDA margin of 33% compared to 39% in the year-ago period, reflecting the higher cost of sales and marketing expenses associated with our traffic diversification strategy. Adjusted net income and adjusted net income per share for the third quarter fell 16% from the year-ago period to $9.3 million and $0.26, respectively, primarily because of increased interest expense.

Free cash flow was $9.6 million, reflecting strong cash conversion from adjusted EBITDA of 74%. Free cash flow was down from $14.2 million in the year-ago period as a result of timing differences in 2024, where we saw an atypically strong Q3 following an atypically weak Q2. At the end of the quarter, we had total cash of $7.4 million, and we had $70.5 million of undrawn capacity on our credit facility.

During the quarter, we acquired Spotlight.Vegas, which included a payment of $8 million before working capital adjustments. We also made interest and term loan repayments of $3.4 million and $5.6 million, respectively, in the quarter, and we've repurchased approximately 562,000 shares for a total consideration of $4.7 million. Year-to-date, we have acquired 672,000 shares for total consideration of $5.6 million, and we have $14.4 million remaining with our share buyback authorization. We continue to generate strong free cash flow, which, together with our healthy balance sheet and undrawn credit facilities, continues to provide us with the flexibility to optimize our capital structure and shareholder value.

This morning, we revised our full year guidance to revenue of approximately $165 million and adjusted EBITDA of approximately $58 million. The change in guidance reflects the continued headwind of poor search dynamics, which affected all of Q3 and while recently somewhat recovering, persists in Q4. During our Q2 call, we expected Google's anti-spam team to make more progress against bad actors than we have seen to date. When Google addresses these quite objectively and frankly, serious quality problems with the search results, we will immediately see meaningful revenue improvement, which flows straight through to adjusted EBITDA.

Our revised guidance also includes approximately $1 million in higher cost of sales than previously anticipated related to the successful acceleration of our traffic diversification strategy. The midpoint of the revised guidance represents 30% year-over-year growth. The midpoint of the revised adjusted EBITDA guidance reflects 19% year-over-year growth. Our guidance assumes an average euro to USD exchange rate of $1.15 for the year.

I will now turn the call back to Charles for a review of the work we're doing to diversify and expand our marketing business.

Thank you, Elias.

We continue to see tremendous value in our marketing business that far exceeds the value currently being ascribed to it by the public markets. The perception gap is due to the fact that the marketing business has already been transformed from a pure SEO business into a diversified marketing engine, which is less reliant on SEO than ever before. Our push into non-SEO channels has succeeded and is already evident in our year-to-date results. In Q4, we expect to generate more revenue from non-SEO channels than SEO for the first time as a public company. And as these non-SEO channels scale further, the economics become increasingly attractive. I think the best is yet to come as our marketing business is uniquely well positioned to drive growth and an exciting new line of business we plan to launch in Q1, which will further diversify our offerings.

My positive tone today reflects the fact that my senior leaders and I are genuinely excited about both our fast-growing sports data services business and the future of the marketing business. On the marketing side, we are, however, behind where we and our analysts thought we would be this year. And as a result, the share price has come under substantial pressure. This recent price action seems to suggest that the marketing business is dead or dying, a position which is simply unsupported by the facts as we produced $13 million in adjusted EBITDA and nearly $10 million in free cash flow in the quarter despite having one hand tied behind our back from short-term search dynamics.

Furthermore, our business is now more resilient than ever, thanks to 2 years of successful execution against our plan to diversify away from SEO. While the full SEO recovery remains in front of us, we are now past the worst of the short-term challenges and off the low point of the last several months. Even though SEO is a smaller part of our future, there is still substantial upside to the current run rate of the SEO side of our marketing business.

We consider the company's current market valuation simply wrong and have a sizable authorization for share repurchases in effect, which we are using. All in all, our diversification initiatives have already resulted in both a new fast-growing sports data services business and a more resilient marketing business that we expect will grow in 2026 and continue to throw our strong free cash flow for years to come.

Operator, we will open up the floor for questions.

[Operator Instructions] Our first question is from Ryan Sigdahl with Craig-Hallum Capital Group.

I want to stay on Google search, just given the impact to results and kind of the transitory impact of the business right now. I guess what gives you confidence to step out on a ledge with confidence and say you're positioned to grow that business in 2026? Specifically, I know you gave some comments, but I guess, secondly, to that or more specifically, has Google changed their algorithm where you've actually seen rankings start to change? Or have you guys refined internally to make things better? But what exactly has happened in recent weeks that gives you that confidence?

Ryan, so towards the end of October, some of these spammy results started to get thinned out, rankings improved. We saw better rankings. We saw better traffic, and we immediately saw more revenue. So Google search is still working exactly in the way it has frankly always worked. I know we talked a lot about AI headwinds on the Q2 call. I think we maybe over -- put a little too much emphasis on that. The reality of the situation right now is that this is absolutely a business-as-usual search situation. It's not anything to do with AI. It's just rankings at the end of the day. And as we've seen rankings come back, it has immediately translated to revenue as we would have expected it to. So that gives us great confidence that, frankly, it is business as usual with Google.

And we've always managed to get past any sort of ranking challenges in the past, and I don't have any doubt that this time will be different. But it is a little bit -- what is different this time is it's a little bit more dependent on Google than us. We're not -- I'm not responsible for clearing the spam out of the search results. That's obviously the search engine's job. And we think that there is possibly -- Google -- certain Google people have telegraphed that there could be another update coming end of the year in December and a focus of that update could be on dealing with some of these sort of spam results. And therefore, we, in general, expect this to come back around, and we have reason to believe it could meaningfully change in December, if not before December. This has taken longer than it normally takes. Obviously, that's affected our results and guidance today, but there's -- we don't have any reason to believe that anything has fundamentally changed.

Helpful. Data services, big focus, great growth, a lot of opportunity. I appreciate kind of the comments there. On the B2B side, it certainly seems like a lot of momentum in core markets and predictions. I want to actually ask about the B2C side, which historically was the bigger part of that business. But has that continued to grow? Is that an emphasis? And then what are you guys working on specifically on the OddsJam side?

Yes. Revenue year-on-year in the consumer data services, so that includes B2C RotoWire and B2C OddsJam grew marginally. Pro forma growth on a like-for-like basis year-to-date is around 10%. The third quarter was affected by the launch of the refreshed RotoWire products, where we are optimizing for improved customer lifetime value at the expense of short-term revenue, which we have historically seen substantial spikes in revenue from that business at the very beginning of football season due to the way that they used to monetize the apps.

Now we're -- we have subscriber numbers for RotoWire are up 20% -- 21% year-on-year, and that's on a much better -- much higher estimates of subscriber LTV. So we're well positioned with that business to grow from this point forward. And also in October, OddsJam added some new features, which analyze the liquidity across prediction markets and betting exchanges to identify where the sharp money is. And so that their users can kind of position themselves alongside that smart money. And that product has been an immediate hit. It's driving growth in ARPU and new users and is a perfect example of how we keep innovating with that product to drive growth through added features.

I can attest that I've tried your sharp money product, that is fantastic. Good luck, guys.

Our next question is from Jeff Stantial with Stifel.

Maybe hanging on Ryan's second question, but switching more to the enterprise side of the data services business. Charles, could you just give us a little bit more color on progress to date on OpticOdds commercialization? Sort of what inning are you in of having that new sales team attack sort of some of the opportunity in Europe, bring more customers into trial? What's been the conversion rate on those trials? Just any sort of additional metrics or color that can help us think about sort of what point on the J-curve you're at today would be helpful.

Yes. I mean, as I said in the prepared remarks, we've got a tight product market fit with the offering we have today with OpticOdds. I think there's a very clear and long runway to grow the business just with that offering. Now having said that, we've got a great team there. They're very ambitious and very keen to build additional features and expand the capability of the product as we all are. And so I think when you look out over '26, '27, there's a lot of opportunity there beyond just pure data and bet settlement. There's an entire kind of category of services called managed trading services. Some people call that sportsbook operations, but you've got personalization of content, player profiling, active risk management, bet acceptance.

There's a whole kind of suite of problems that need to be solved before you get to being a platform provider. We don't want to do that. That I think operators need to do that themselves. They need that last step where the UI touches the user. I mean that's the critical place where an operator differentiates their offering. But everything kind of behind the scenes, especially around risk management, bet acceptance is very interesting to us. And I think it was Bezos that said, your margin is my opportunity. There's quite a lot of margin out there between Sportradar and Genius and others that are doing very well with this category. And I think we've just got the team, the tools and the platform to be extremely competitive in more than just data and bet settlement. So that's where our heads are at when you look at the next kind of 1 to 2 years.

That's great. And switching gears, Elias, can you just help us think a little bit on -- I know you're not providing formal guidance quite yet, but just on the margin side of things, just how to think about directionality here as we head into 2026, cost of sales starting to tick a little bit higher on some of these adjacencies in the marketing business. I think you touched on it in the prepared remarks that's going to be a bit of an investment mode before you start to realize the benefit of leverage on that. But just can you give for us a sense of sort of puts and takes and how to think about margins maybe relative to your historical guidance as we start to look to 2026?

Yes. I think before we look into '26, and you're right, we're not giving formal guidance here, but a few talking points, I think, would be helpful for everyone. But before we get into that, it's important to kind of highlight what Charles said earlier that we think we are through the worst of the SEO challenges and our non-SEO efforts are really bearing fruit faster than planned. So we have a high degree of confidence that we have bottomed out, and we're on the right path here. So this means that we expect to see kind of mid-teens growth in revenue and around 10% adjusted EBITDA growth or even mid-teens growth quarter-on-quarter from Q3 to Q4. Our updated guidance implies revenue of $46 million for Q4, which will be by far the biggest quarter in the company history, just to illustrate that we think that although we're not where we thought we would be at the beginning of the year, we're in a healthy place and we have bottomed out.

If we turn into 2026, we expect to see overall revenue growth in the low-teens with the sports data services business continue to lead the way. We expect marketing to grow at a rate in the low-teens and for sports data services to grow in the high-teens with B2C in the high-single digits and B2B above 20%. And if we look at our marketing business, our non-SEO marketing business continues to scale. The contribution margin becomes more attractive in the non-SEO channels, and that also carries much fewer fixed costs compared to the traditional SEO business. All in all, we expect to maintain overall adjusted EBITDA margins in the mid-30s as we see on a run rate basis. So in Q3, our EBITDA margin was 33%. Our Q4 guidance looks towards 33%, 34%. I think that's pretty indicative for our expectations for 2026.

Our next question is from Barry Jonas with Truist Securities.

Some of the other data providers have said they're not ready yet to work with prediction markets. Curious to what extent that impacts your opportunity or strategy today?

Barry, it definitely positively impacts us. I mean you're right. I think some of the big names out there are taking an extremely cautious approach to the category, which means if you're a market maker, you literally can't buy data from certain people at the moment. We've got, as I said on the prepared remarks, quite an interesting business developing there. A lot of the market makers, both on Wall Street, traditional kind of Wall Street market makers, which are active on prediction markets and then the prediction market kind of native prediction learning companies, if you will, are -- they're virtually all clients of the data services business, not necessarily marketing. But that data that we have is exactly what traders are looking for to make markets and reduce risk.

Great. And then just as a follow-up question, I wanted to talk more about trends in the affiliate business outside of sort of that transitory Google algo change. The larger U.S. operators have talked about heightened OSB promotions. Is that something you're seeing translate to your wider business? At the same time, I'm curious to get your thoughts on any implications from PENN shutting down ESPN bet.

Yes. So if you look at our -- just to give you a little extra context there. If you look at North America for us, we grew 55% year-on-year in the third quarter, but that was driven mainly by sports data services. While the marketing business was flat globally, it was down a bit in North America, but that was actually driven by Canada. In the U.S. itself, marketing grew year-on-year, and that's thanks to a lot of the non-SEO diversification that we've already done in the marketing business.

I think operator demand is healthy on the sports betting side. We haven't seen any meaningful change in the way we work with our operators. We do continue to send more players on a revenue share basis, which delays revenue recognition and suppresses like-for-like growth rates. But even with that, the U.S.-specific marketing business definitely grew year-on-year.

In regard to PENN and ESPN, I mean, I think we were all watching with bated breath about what was going to happen there. It is -- we certainly had a few kind of ideas about what ESPN could have done if they were not working with PENN. And one option, of course, is to go deeper with an individual operator like they've done with DraftKings, but it's not going to have a major effect on our business. We work with PENN, of course, but not going to meaningfully move the needle. And of course, we also work with DraftKings.

Our next question is from David Katz with Jefferies.

Charles, I wanted to go just a little more strategic with respect to the Odds data business and just talk through what the sort of critical success factors are, the barriers, right? I mean you did mention some others that play in similar spaces that may be larger. How important is scale, bundling as part of offerings? What are the things you really need beyond just your obvious innovation capabilities?

David, thanks for asking a longer-term question. I think -- as I said, I think we've got a clear path with what we've got, but there are these areas, which I think are easy for us to move into. There's a lot of people out there that provide these managed trading services. It's not just Radar and Genius. There's tons of private companies. But a lot of these companies are pretty old. They've been around 20, 25 years. So they don't have state-of-the-art technology. It just wasn't built in the last 2 or 3 years using native cloud services, data science, Python, low latency, everything. It's just -- no matter how smart you were 25 years ago, it's very dusty when you bring that forward to today. So that creates real technology debt for some of these larger incumbents.

And we've talked a lot about the ace team we have with OpticOdds and OddsJam. I mean these guys are hungry and they move very fast. And they start building stuff at the drop of a hat and are extremely effective. So I just -- I think we've got the right people and the right platform to meaningfully go after some of these opportunities. And the other kind of big trend in the space is I think there was this big debate a couple of years ago post pass about official data and some of these -- they were lobbyists to try to get it into the statutes that you had to buy official data. And as far as I understand, I don't think that's succeeded anywhere. And -- but if you have the official data today, it's obviously very -- it's great, and it gives you access to other things, which are bundled along with the official data. But not everybody wants the official data.

And this industry, while it's still a growth industry, it's not growing at the kind of furious clip that it was for the first 30 years, which causes a lot of operators to look at the cost side of their business. How can I -- if I'm not going to grow by 25% this year, I'm going to grow by 10%. Well, how can I take 5% in cost out and boost that EPS growth. And whereas I think everybody just kind of naturally gravitated to the official data for a long period of time, I think there's an increasing willingness from a variety of customers in the space to not start there and actually just look and say, okay, well, what else is out there, what can we do? And of course, that's just one thing that we do, but it is a gateway to get the door open and then sell other things to our operator clients. We have great relationships with them on the data services business. They trust us. They ask us if we can build things for them. There's a lot of back and forth in terms of communications and customer feedback. And I think we have operators as trust to solve more problems for them. So why would we not?

Understood. I see clearly the upstart advantage. But the natural follow-up to that, and it's one that we get about this end of the business all the time is if not for the official data and the scale and the length of tenure, would larger operators just be able to -- why can't they do it themselves, right? I mean that's the question we get all the time. So I'd like to sort of put that one out there, too. Yes.

If you just think about the OpticOdds market data business, we spend upwards of $1 million a year on compute to process that data. So if any individual operator wants to do it themselves, well, it's going to cost them at least that, plus then obviously building all the software, the team and everything else. Well, it doesn't -- we don't charge that much per client per year. So there's just an obvious advantage to buy it from us instead of trying to do it yourself. It's a big complex industry. You can't do everything. David, I think it's very helpful to break the operators down into tiers, okay? Like the Tier 1 guys are always going to kind of try to do everything themselves, absolutely everything themselves. That's their whole stick. If they can't do it all themselves, their equity free kind of doesn't make sense. So we're not going after Tier 1s. I mean we do work with Tier 1s on data services, but we're not trying to overhaul their businesses.

But there's this very long list of Tier 2, Tier 3, Tier 4 operators, which are very happy to give away substantial portions of their business to anyone that can do it better for them. You think about the long list of online casino operators in Europe, which offer sports betting. It's not the core product. It's just a kind of -- it's a tab on the website. And they want to set it and forget it solution. They don't ever want to think about it. They just want to get a little bit of incremental extra revenue through. And cases like that, they're very happy to work with the most efficient provider that they can find. And when I think about all this stuff, it gives us an opportunity to really invest and win on product. We're a marketing company. So historically, we've won by having great marketing, great distribution. But with our data services business, we can actually win on product. We can kind of go Tesla style and say, okay, we're going to make something that's so good and so obviously better than everything else out there that it sells itself. And I just -- I think we have the team to build products like that.

Our next question is from Chad Beynon with Macquarie.

Charles, I wanted to ask about the upcoming U.K. autumn budget and how this could affect the business. You guys are obviously a leader in that market. So from what we've heard, it could hurt some of the smaller players. But anything you can help in terms of how you think this will change the affiliate business in that market and what you've learned in the past when taxes have been adjusted?

Chad, to the extent that the next U.K. budget does raise gaming duty, it does hold back player lifetime values in the market, and that does ultimately affects what we can charge our clients, but that doesn't happen instantly. The perceptions of the player lifetime value take time to evolve and our commercial agreements take time to evolve. But in any event, if they raise gaming duty, it's obviously not helpful. I think our expectations for the U.K. and Ireland segment next year are very feet on the ground. I think we're actually planning -- when we're looking at our budgeting for next year, we're not expecting it to grow. We're certainly not expecting it to fall apart either, but it's not going to be a growth driver next year for us like it has been in the past.

Okay. And then in terms of maybe a medium or longer-term question in terms of how you're thinking about running the company's leverage. You talked about at the outset that you are active in terms of share repurchases and you're unhappy with the stock price. So that's obviously a use of capital. You've made some recent acquisitions in the last couple of quarters. And then more importantly, with OpticOdds and the sports data business, there might be other tuck-in acquisitions. So how are you thinking about running the company's leverage at this point, if maybe this is a time to lever up, create the best product for the future or if you're going to run more conservative with just what you currently have in the tank?

Yes. Elias and I are always aiming to maximize shareholder value by continuously optimizing the capital allocation. We continue to see buybacks as a tactical tool to maximize shareholder value, but not as a means to return a specific amount of capital. At the moment, we've got about $89 million in interest-bearing debt outstanding, and we have about $70 million in undrawn credit facilities available to us. So as we generate cash, debt repayment is one of the options available to us.

OddsJam and OpticOdds are doing really well. They are in a good position to capture most, if not all, of the contingent consideration in respect of 2025. That means that we will owe them $40 million in April '26 and $20 million in April '27. So we do have those payments coming up. At this stage, I don't think we're looking at levering up beyond our existing credit facility. I think we'd like to see a little more rebound in the marketing business, a little more progress on growth in sports data services. And then I think we have some confidence to lean in harder in terms of creating shareholder value through buybacks and other things. But we are -- yes, it's an everyday conversation every year and something we think about a lot.

Our next question is from Mike Hickey with The Benchmark Company.

Just 2 from us. On the predictions market, obviously, we can't stop talking about it, either can investors, either can operators, it's obviously accelerating here. We've got Flutter last night saying they're going to launch in December. DraftKings probably like to be the same. And part of that, Charles, is pretty meaningful investments in UI as we heard last night, and of course, Kalshi and Polymarket are there. So you've got a pretty vibrant ecosystem. So with that context, how are you thinking about the marketing services opportunity in this category? I know your data peer Sportradar is already active. Just curious how you -- if you're active and how you see the opportunity unfolding, especially in '26 for growth?

Mike, thanks for the question. I think the sports data services, as we've covered, is where prediction markets are very exciting. When you think about the marketing side of the business, one unique feature of the prediction markets in contrast to sports, traditionally regulated sports betting is that everybody has to be treated the same. It has to be a totally level playing field. So you can't have personalization. You can't have different bonuses. There's frankly less marketing involved. Now people still need to find these services and sign up, and we can obviously help with that. But I think we're taking a little more of a cautious approach with that, given our partnerships with all of our regulators in the United States. I think broad data services is fairly innocuous. But on the marketing side, there's -- I think there's also an opportunity there, but we're very focused on the data services side.

Charles, on the data services, it sounds like you might be constrained a little bit on M&A, just given your current leverage profile and your stock being down. How are you thinking about investment there? It sounds like you're adding layers, which is exciting. But how do you sort of balance, I guess, internal investment and capital allocation to sort of the organic development of data versus M&A, which I imagine there's probably some nice tuck-in assets out there that could sort of round out your current offering?

Yes, it's a great question. Again, something we are talking about often these days. I think if you come at it from a first principles perspective, you need to figure out what you want to buy. And if it makes true sense for the business, if it literally ticks all the boxes and everybody has very high conviction, then okay, then you need to find a way to pay for it, and hopefully, that will come together. At the current share price, virtually nothing is accretive. It's certainly a headwind in terms of justifying M&A. But that doesn't mean we're not still thinking about things. But obviously, it's front of mind, and we're going to be as focused on capital efficiency as we've ever been. But there's different ways to skin the cat. There's -- every one of these deals is unique and interesting, and there are ways to go out things which preserve our capital efficiency.

With no further questions, I would like to hand the conference back over to management for closing remarks.

Thanks for joining us today. We do expect to finish the year strong here in Q4, subject to our updated guidance, and we look forward to updating everybody on that early next year. Thanks for joining. Bye-bye.

This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.