Gambling.com Group Ltd Aktie

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.

Greetings, and welcome to the Gambling.com Group Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Mr. Peter McGough. Please go ahead, Sir.

Thank you, Operator. Hello, everyone, and welcome to Gambling.com's Second Quarter 2025 Results Call. I'm 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 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 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 the 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 afternoon, and thanks for joining our call today. We generated record second-quarter revenue and adjusted EBITDA, with revenue rising 30% and adjusted EBITDA increasing 22% year-over-year. Our marketing business generated all-time highs for second-quarter revenue, and the growth in our sports data business accelerated to where it's highly visible, and high-margin recurring subscription revenue accounted for 25% of total revenue despite the second quarter being the seasonally slowest quarter.

These results provide clear evidence that even while we continue to deliver high growth quarter after quarter, we are also rapidly diversifying our business to include a broader suite of products, which serve a much larger addressable market.

Diversification of traffic sources and revenue models is front of mind for our team. In the past 4 years, as a public company, we have multiplied both our traffic sources and our means to monetize that traffic and our growing audience. The business today is a varied matrix of relationships between traffic sources and businesses with a CRM platform at its center. To achieve this, we have embraced an omnichannel approach to engage high-intent users across the Internet, including with apps, e-mail, social media, YouTube, communities, and paid media.

We've also broadened our ability to monetize our end users and B2B online gambling operator clients with the addition of new business models through the acquisition of RotoWire, OddsJam, and OpticOdds, and we'll continue to do so when we close on Spotlight.Vegas on September 1.

Our focus on diversification also includes diversifying our go-to-market approach within our marketing business, as traditional search is becoming less central to our digital marketing strategy. While the development of these other marketing channels, like apps, e-mail, social media, and paid media, is still relatively early, the contributions are growing rapidly to the point that they are now more evident in our results. We are measuring the growth in these non-search channels in terms of orders of magnitude, not incremental percentages. Generally speaking, these channels have shorter investment cycles while still offering attractive ROI.

Having said all of this, the search marketing channel continues to drive significant revenue and cash flow for both Google and publishers. While we expect the channel's relative proportion to other digital channels to fall, we also expect it to intertwine with next-generation AI tools to remain the primary digital channel for years to come. We are confident that this combined channel will continue to drive strong traffic, revenue, and cash flow for our business over the near and long term.

While AI tools are capable of making recommendations, they base those recommendations off of data from specialist websites such as our own and link back to their sources. AI tools and agents are perfect for outsourcing tasks people want to avoid, such as booking and meeting. But when users evaluate online gambling sites for their next adventure, it is entertainment, not work. For example, users like to demo an online slot machine before depositing and playing for real money. Users also want to retain a sense of agency themselves to control the decisions which have a financial impact on them. I think it is fair to say that the AI-driven changes to search have had a relatively smaller impact on the online gambling industry than other industries, based on our results and what we are reading elsewhere.

Our strategy to develop big brands with industry-leading authority like Gambling.com, Bookings.com, and Casinos.com is fundamental to our dominance of traditional search and likewise, ideally positions us to capture and monetize high-intent traffic wherever it is on the Internet, including from next-generation AI tools. As the search experience continues to evolve, we are doing what we have always done, making sure that we optimize our offerings so that they create the most value for consumers looking for information about online gambling and for operators that will always need new players. The skills and processes we have perfected for SEO are exactly what is required to optimize for inclusion in generative AI. Both are fundamentally premised on the same signals of high authority, trust, and expertise, our key differentiating strength.

Turning to another key component of our diversification. Growth in our sports data services business accelerated in Q2, with OpticOdds leading the way with 120% year-on-year growth. Given the momentum this business is already achieving to date and our realization that the TAM for this business may be bigger than originally expected due to the wide variety of clients interested in the data, we continue to revise up our long-term growth expectations.

Between OddsJam, OpticOdds, and the refreshed RotoWire, our vision to establish a strong sports data services business within GAMB is now a reality. That was the hard part, and we are continuing to scale this business, delivering substantial high-margin recurring subscription revenue growth. Our success with quickly integrating and scaling OddsJam and OpticOdds, which follows the similar success of our Freebets.com acquisition last year, continues to demonstrate our ability to identify, close, and integrate strategic accretive acquisitions in a capital-efficient manner.

In each of our prior transactions, including RotoWire and BonusFinder, our team's execution has successfully lowered the initial purchase multiple. We expect the acquisition of Spotlight.Vegas will continue our run of capital-efficient and successful acquisitions. Spotlight helps consumers access gambling-adjacent entertainment experiences such as live events and local attractions through its online booking platform. Today, the business serves the Las Vegas market with more than 40 clients, including entertainment venues and land-based casinos. Visitors to Las Vegas utilize Spotlight as a one-stop shop for services that include tickets to shows and attractions or for booking a hotel. This strategic acquisition expands our client base to now include land-based operators and gives us yet another lever to monetize our audience.

Having sold over $30 million worth of tickets in 2024, Spotlight is -- already has attractive scale today. As we begin to work with our team, we are confident that for 2026, our digital marketing expertise will enhance margins and improve cash flow. Looking a little further out, we see opportunities to deploy this booking platform on our owned and operated sites, in particular, on Casinos.com to ultimately expand beyond Las Vegas and serve regional casinos and other attractions and hospitality providers.

At this exact moment, Las Vegas hotel occupancy is at a low. The people that know the market best have seen many cycles come and go and expect the city to bounce back from this one as it has always done. For us, this makes the current moment an opportunistic time to make a capital-efficient play on the market with a relatively small upfront investment and substantial long-term upside potential.

With this new platform, the accelerating growth of our sports data services business and our continued industry-leading marketing business, we have transformed the company from an affiliate marketing business into a multi-platform integrated marketing, data and soon-to-be ticketing services business, all while maintaining a strong balance sheet and attractive capital structure through continuously strong cash generation, capital-efficient M&A and well-timed share buybacks.

I'll now turn the call over to Elias to review the second quarter's financial highlights.

Thank you, Charles. Second quarter revenue grew 30% year-over-year to a Q2 record of $39.6 million. Our marketing business grew 3% as we delivered more than 108,000 NDCs to our customers, in line with the year-ago period. Our marketing business grew in all of the regions where we operate, except for North America, where we had tough comparables with the year-ago period, including the tailwind from the launch of sports betting in North Carolina. Our sports data services revenue quadrupled to $10 million. Subscription revenue increased to 25% of total revenue. Inclusive of revenue share arrangements in our marketing business, recurring revenue was 51% of total second-quarter revenue.

Gross profit increased 27% year-over-year to $36.9 million. Cost of sales of $2.7 million compares to cost of sales of $1.4 million in the year-ago period, reflecting costs associated with our successful strategy to diversify traffic sources as well as cost of sales related to the acquired OddsJam and OpticOdds businesses.

Gross profit margin was 93.2% compared to 95.3% in the year-ago period. Operating expenses of $51.3 million included $23.8 million of charges related to the Hod Holding acquisition, of which fair value movements related to the outperformance of OddsJam and OpticOdds of $21.2 million, noncash amortization of acquired intangible assets of $2.2 million, and other acquisition-related costs of $0.4 million.

Adjusted EBITDA increased 22% year-over-year to a second quarter record of $13.7 million, and adjusted EBITDA margin was 35% compared to 37% in the year-ago period. Adjusted net income for the second quarter rose 37% from the year-ago period to $13.4 million. Adjusted net income continued to be positively affected by translation effects relating to the strengthening of the euro versus the U.S. dollar when translating balance sheet items at quarter end. Adjusted diluted net income per share increased 42% from the year-ago period to $0.37.

Free cash flow grew 36% to $8.2 million, reflecting strong cash conversion and adjusted EBITDA growth, partly offset by tax payments of $5.5 million, of which $3.3 million was related to the Ods Holdings acquisition.

As of June 30, we had total cash of $18.7 million and $70.5 million of undrawn capacity on our credit facility. On April 1, we made the final payment of $11.2 million for Freebets.com using cash balances. In total, we have drawn $94.5 million on our $165 million credit facility. Effective April 1, we entered into a swap agreement to effectively convert 75% of U.S. dollar borrowings to euro borrowings, lowering our cost of debt capital by approximately 200 basis points. The swap transaction also aligned our functional currency with our borrowings, eliminating the corresponding ForEx translation effects in our income statement moving forward.

We continue to generate strong free cash flow. Based on the closing price of the shares this afternoon, we expect free cash flow yield to be double digits prior to the effects of any further share repurchases we may make in the second half of the year. Our free cash flow, together with our strong balance sheet and undrawn credit facilities, continues to provide the flexibility to pursue both acquisitions and share buybacks to optimize our capital structure and maximize shareholder value.

Today, our Board approved a $10 million expansion to a total of $20 million of capacity in our current share repurchase program, none of which has been utilized yet. This afternoon, we adjusted our full-year guidance to reflect a revenue range of $171 million to $175 million and an adjusted EBITDA range of $62 million to $64 million. The increase to the full-year revenue range reflects the expected 4 months of contribution from Spotlight.Vegas and the launch of sports betting in Missouri in December, partly offset by currently weaker search rankings following the most recent Google Core algorithm update. Adapting to Google's algorithm changes is business as usual, and we're on the way to recover lost positions.

The midpoint of the revenue guidance of $173 million represents 36% year-over-year growth. The updated full-year adjusted EBITDA guidance range reflects the higher cost of sales in our marketing business as a result of the higher proportion of non-SEO marketing revenue, strategic investments into the new digital marketing channels and monetization models that Charles highlighted, and no adjusted EBITDA contributions from Spotlight.Vegas for this year.

The midpoint of the adjusted EBITDA guidance reflects 29% year-over-year growth. Our guidance assumes an average euro to USD exchange rate of 1.15 for the year.

As Charles highlighted, the acquisition of Spotlight.Vegas provides another strategic lever to engage our high-intent audiences in a capital-efficient manner with limited upfront cash outflow and a pay-for-performance structure that will be accretive to our operating results. For 2026, we expect Spotlight.Vegas to generate net revenue of at least $8 million and incremental adjusted EBITDA of at least $1.4 million.

Operator, we will now turn the call over for questions.

[Operator Instructions] And our first question will come from Jeff Stantial with Stifel.

Maybe let's start off, if we can, on the Spotlight.Vegas transaction. Starting off, Eli, can you just provide us with some of the metrics underlying the earn-out compensation? And then more high-level, Charles, I'm curious, just as you underwrote this transaction, sort of how did you come to understand the similarities and the differences in the user journey for live events versus sort of your legacy online gambling-focused sites? And as a corollary to that, what really gave you the confidence that your tech and experience would translate well over the live event space?

Yes. If I cover the first part of that question, as we manage, the intent here is to be very capital efficient and have a limited upfront payment and pay for performance. Essentially, we have an upfront payment of $8 million, which we expect to settle in cash. And then we have a 2-year earn-out component that is capped at an additional $22 million, so $11 million per year based on incremental EBITDA above a certain threshold for each of 2026 and 2027, and the effective multiple on that earn-out is 6x operating profit.

From my perspective, it was a very attractive acquisition. It's a bit -- I don't think any of our competitors were looking at this, right? It does involve a little bit of original thinking. We're looking for ways to monetize this audience we have and deploy the skills we have. And this is a perfect opportunity to do both. We have this incredible audience of people that want to gamble, that love gambling, whether it's online or land-based. These people visit Las Vegas. And when you look at the Spotlight business, it's -- there's not a million different ways to do digital marketing within the online gambling industry. We wouldn't have gone all the way to do full-blown ticketing outside of gaming. That's a step too far.

But ticketing within gaming, it's gaming adjacent, there's some synergy there. And when we look at this particular business, it's still a relatively young business. There's a lot of things that our team can go in and do immediately to make a difference. It reminds us a lot of the Freebets.com acquisition. Those assets were not operated as well as they could have been, and it was our team that was able to unlock that value. Last but not least, it's always about people, and they've got a great team over there and a very strong leader, Doug, which we very much look forward to working with. And I think us combining our digital marketing skills with the technology platform that they have already, it exists and they don't have to build it is a very clear way to grow that business and do it under our roof.

And then maybe shifting gears and turning over to AI. Charles, some helpful commentary at the beginning of the call. I think we're all sort of grappling with figuring out how this looks and evolves and over the long term impacts your business.

A bit of a 2-parter question here. First, I'm curious if you've done any work or seen anything in terms of sort of click-through rates for a typical high-intent AI search, and how that frames up against legacy search? And then second, how do you think about the potential for market share consolidation for traffic sourced through AI searches, and sort of how you're positioned to be one of those 1, 2, 3 sites that is ultimately searched or sourced by the main AI engines for a typical gambling search? And that's all for us.

Look, when Google or any other search engine puts an AI overview at the top of the search engine results page, obviously, fewer clicks make it through to the stuff below that. That shouldn't surprise anyone. In terms of market share, share of voice is probably a better way to put that in terms of these different AI agents, LLMs. If you have a Google search, you've got -- at least you used to have 10 results. Now it can be less. But it was a longer list than what you would get from an AI tool. On an AI tool, you're going to get 2 or 3 unless you specifically ask it for more.

So you really have to be positioned to the extent there are positions on these generative AI tools, you need to be positioned kind of 1, 2. And the only way you're going to get there is to have industry-leading authority, which, of course, is what we've been trying to build for the past 20 years with Gamming.com, [indiscernible].com, Casinos.com. We have invested in big brands to rise above the fray and be the obvious go-to source for information on this industry. And our early indications show that we've got a very high share of voice on these new tools. And of course, it's growing very rapidly for us. It was -- it didn't exist a few years ago. So the growth rates are basically infinity, but it's going to be a big part of the future of the business.

And our next question comes from Ryan Sigdahl with Craig-Hallum Capital Group.

I want to go to the Google algorithm update. When I look at the guidance, it looks like EBITDA cut by $5 million in the back half of the year, despite some good guys layering in there as well with acquisitions in Missouri and FX and so on. So I'm curious when exactly that happened, what you've seen since that? And then if you're willing to quantify the other components and assumptions within guidance of the Missouri launch, how much that's contributing?

Yes, I'm happy to speak to that and give you some color on guidance for the rest of the year. So the latest Google algorithm update rolled out in the last kind of 30, 45 days within -- squarely within Q3. It is a reminder that this stuff still matters and search rankings are still a fundamental part of digital marketing.

In terms of revenue for the second half of the year, our increase of $1 million at the midpoint for revenue guidance entails a small bit of additional revenue from Spotlight.Vegas, but the main drivers of the change in revenue expectations are an upward revision of sports data services revenue and a downward revision of the traditional search revenue due to the search rankings we've discussed. And that's partly offset by an increase in revenue from all the other non-SEO channels.

In terms of the adjusted EBITDA, the higher proportion of revenue from non-SEO sources drives higher cost of sales, and we don't expect any meaningful contribution to adjusted EBITDA from Spotlight Las Vegas until next year. And we have also decided to accelerate investments into these non-SEO channels, as well as a very exciting, entirely new project, which is outside of anything we do today, which will drive further diversification and growth in 2026 and beyond. Everybody always loves to kind of opine or get our opinion on whether on pricing and operators, and demand, and everything. And that remains as is, okay?

So when you look at these -- when you look at the margins coming down, it's entirely due to mix shift. I really want to stress that it's not margin compression per se. Our ability to monetize and the demand from the clients hasn't changed in any way. The margin profile of any given channel hasn't changed. It's just that the channel mix is changing.

Then just on Spotlight.Vegas. Can you give -- however you want to quantify it, but anything from the past few years, from a financial standpoint, I guess, was it growing? And was it profitable? And just to put the 2026 estimates a little more context around it?

Yes. If you look at 2024, it was growing nicely. It did over $30 million in platform turnover with -- and it was profitable. It's a lower-margin business at this scale. But as it scales, it quite quickly grows net margin revenues. At the moment, and our expectations for 2025 is that it's roughly breakeven, and that has to do with the macro environment in Vegas. We expect together with a little bit of a rebound and seasonal strength, and a little bit more efficient marketing, when we get our hands on that, we're guiding towards EUR 8 million of net revenue and EUR 1.4 million of incremental adjusted EBITDA for 2026.

And moving on to Barry Jonas with Truist Securities.

I appreciate the color you just gave on the EBITDA guidance change for '25. But maybe I wanted to dig in, in another way. I know you haven't guided '26 yet, but can you talk about how kind of '26 looks relative to your view 90 days ago, given all the changes we're seeing now? And maybe if you can't talk quantitatively, maybe just qualitatively.

Yes. Barry, happy to touch on that. So look, I think we get these search rankings back that brings back up the natural search revenue. But I think overall, we are seeing the effects of AI on search, and our expectations for search revenue going forward are not what they were in the past. Having said that, we are making a lot of progress on scaling up all these other channels, stuff that we kind of purposely didn't do in the past to keep all our focus on SEO. But now we've got this kind of extra bandwidth if we're not going all in on SEO, we can deploy some of our best people on scaling up apps, e-mail, paid media, et cetera.

And as you can see in our results today, it's making a difference, and it helped us hit the numbers for Q2. So when I think about next year, it's just going to be less about search, but these other channels will scale meaningfully. And I think on the revenue, it's a different margin profile. So you have to kind of bear that in mind. SER is always kind of the highest margin, but we'll see healthy revenue growth from those other channels, and it won't flow through quite as well to the bottom line as natural search has done for years, but it will still absolutely be profitable.

And when you pair it together with all the different ways we have to monetize the audience, we'll be in the best position of anyone to monetize people interested in online gambling.

And then in the past, you talked a bit about prediction markets in terms of opportunities there. Curious if any updated thoughts there in terms of search, but maybe also from the data or other avenues for revenue there.

Yes. So we've been spending a lot of time looking at prediction markets. It's a fascinating category. I really like it. It's not a big driver of our business yet, but I think it very well could be in a couple of years. I think these lawsuits are going to go to the Supreme Court, and you're going to have another PASA-like decision, which could throw the doors open and really create the next kind of chapter of growth for the whole industry in North America.

But I'd like to kind of speak up for the player, okay? So much that's written about this industry is about the regulators, the operators, the businesses, obviously. At the end of the day, somebody needs to advocate for the player. And that -- maybe that role falls to me because I don't think too many people in the U.S. are doing it. And if you look at the state of sports betting in the United States, [Audio Gap] great. You don't have full access to these products in different states. You've got a ton of states with preposterous tax rates. That gets passed on to the consumer. You've got states with single operator monopolies, like how outrageous is that? That is so anti-consumer. It's kind of shocking that that exists.

So when you look at the traditional gaming regulation model, state-based regulators, state-based legislation, I don't want to say anything bad about these people, and I wouldn't. These are very serious hard-working people doing their best to implement the laws that have been created. But at the end of the day, the consumer ain't getting the best deal. And that's why you still see these offshore sites with meaningful market share. And you're starting to see some state AGs actually complain to the DOJ to maybe do something about it, which would be helpful. But then enter prediction markets, okay? This is a completely new way to regulate this industry. It's actually quite sophisticated. They borrow a lot of really smart technology from financial markets, which is objectively more sophisticated in certain senses than what a lot of the operators and regulators are using today.

So I think it has a -- if it's given a proper chance, I think it could be radically more consumer-friendly and be a dramatically better product for end users. So I'm really excited about it. And I hope these core decisions break in the right way. And I hope for the American sports better that this -- that the legal ambiguity on this category goes away and it becomes a big new thing because as somebody that grew up in the States, I was frustrated that I couldn't bet on sports like, it's -- a lot of progress has been made, but the U.S. is still pretty clearly behind most other OECD developed countries in terms of the availability and competitiveness of these products. So sorry for the rant and very long answer to your simple question, but I think it's a great thing, and it should be given a chance, and we'll be watching them closely and hoping for the best.

And moving on to Clark Lampen with BTIG.

Charles, I guess if we go or focus on the sort of marketing piece of your business, if we strip out, I guess, the impact of algo changes, were you seeing any changes in behavior for sort of your core customers, I guess, whether that's incumbents or sort of challengers in the U.S. from a marketing standpoint, any meaningful changes in their sort of mix allocations to the affiliate channel overall? And then earlier, you sort of talked about, I guess, the margin profile of sort of different channels as we're trying to, I guess, sort of think about maybe digest the interplay of search LLMs and sort of attractions, has the view of, I guess, the structural margin opportunity or long-run EBITDA generation changed in any way?

Yes. No problem. Clark, to pick up on the second one, like long-term margin profile, I think we've been talking for years about 35% to 40%. And I think with the new guidance, we're at 36% this year. So we're still in that range. Obviously, we're more towards the bottom of the range, but that remains our outlook. We think we can dramatically grow revenue and have a very meaningful contribution to adjusted EBITDA with these other channels just within the search marketing business -- sorry, the marketing business.

But I need to bring you back out of that to the sports data services business and everything else we're doing now, ticketing as of September. That's growing like a weed. It's a phenomenal business, incredible product market fit, super high growth. People love it. They can't get enough of it. That is increasingly the future of this business. And you can't -- when we talk about the business overall, you've got to get that part of it, it's airtime as well.

In terms of mix allocation from operators, demand, all that, what has changed in the past kind of year or 2 is we've seen more and more deals, or shall I say, more and more traffic that we're delivering to our operators go over to them on a revenue share basis. So that's like-for-like North American revenue, and it does affect the comparability of the figures if the previous figures were more CPA driven. We are seeing a return on those investments on the rev share is profitable, but that's the only meaningful change, I would say. And that's not a Q1 to Q2 thing. That's just a kind of past 12 months thing.

Our next question comes from Chad Beynon with Macquarie.

This is Aaron on for Chad. Subscriptions are now about 1/4 of the business, as you noted. So you've grown that into a nice chunk of the business. Is there an opportunity to raise pricing? Or how do you think about the next steps to further grow this part of the business?

Among all the stuff we're doing, I think growth in the Sports Data Services business, in particular, OpticOdds, is the most straightforward. It's a product people love and need. We've got some new salespeople on the ground in new markets. There's a couple of product tweaks that need to be made to make it appeal to a broader to more different types of operators, if you will. But fundamentally, it's the best data that's out there, and it's not too terribly difficult to sell. So that's the clearest opportunity, I think, at this stage.

And then with regard to the RotoWire refresh, just interested to hear how that's going. What's changed, and maybe an early read on impact, if you can share that?

Yes. So we did the refresh in the middle of summer before NFL started, obviously. It's both a product and brand refresh. The RotoWire numbers are up double digits year-on-year through the first half, but we won't really see the full power of the new products and brand until we get through the start of NFL. So tune in November for the full report on RotoWire.

Moving on to David Katz with Jefferies.

Charles, just digesting the acquisition. Can you talk a bit more about what the drivers or success factors are for that business you're acquiring, aside from integration risk, where I think you've proven yourselves already? What drives that business long-term? And the overlap versus drivers of the core business, where they're different and similar, would help.

Yes. It's what I like to call digital fundamentals. So conversion rates across the board, following that customer journey, optimizing each step of it. And then, of course, marketing efficiency. They do a lot of -- they do a fair amount of paid media already, and they have decent tracking on it. And when we look at the numbers, they're actually pretty good, but it could be a lot better. I think fundamentally, they just have a small team, so they haven't been able to put the pedal to the floor on all the different opportunities that they have. We'll also be able to, of course, bring cash to invest in media as necessary.

And there's -- as opposed to the affiliate business, where we are not providing the ultimate service, we're handing the user off to another company to do that. We lose control at some point. And it's always been a bit of a frustrating element of that business to us because when we hand the user off, okay, we hope that they do a good job of converting them, but they might not.

With Spotlight, we own the whole thing, A to Z. So it's only our fault if a user doesn't convert. We can't blame it on anyone else. And having full control of that customer journey allows us to lean in a lot harder and deploy our skills across that full customer journey. There's a lot of things we could do to help our operators improve their conversion rates, but it's a delicate conversation to go to them and get them to change their landing page, their products. But when we own the whole thing, it's -- we can just go into it.

Our next question comes from Mike Hickey with the Benchmark Company.

Charles, Elias, Pete, congratulations guys on your Spotlight deal. Just 2 questions from us. I guess first topic on AI search disruption. Just curious, Charles, how you sort of assess the pace of natural search traffic at decay from these shifts to AI-powered search engines. And if you think you have sort of the runway here to recalibrate your business model to offset that, or if there could be, I guess, a more meaningful disruption to your growth profile in the near term? And I have a follow-up.

Yes. I mean Mike, thanks for the question. If you look at these generative AI experiences, they've been around for 2, 3 years. It's not -- this isn't new. It's been having an effect for some time. But we think a lot of that effect is -- we've already seen. People still need Google Search. It's not like it has no utility anymore. Clearly, it's still a useful product, and the AI experiences are using Google Search. What's behind a lot of these AI answers is the Google Search.

So we are very realistic about the future of that channel. We've certainly brought in our expectations meaningfully. But I am also rather encouraged by our early results and the work the team has done to ramp up traffic from other channels. So I think we're going to be absolutely fine. There's just a couple of quarters here where we redeploy resources into other channels.

The second question on cost optimization. You've done obviously a number of very successful deals, now Spotlight joining sort of the portfolio. Do you feel like there's opportunities here to realize cost optimization or operational synergies across the group that could maybe help offset some of the incremental cost pressure on profitability that Surgery here in '25 and maybe '26?

Yes. There's an enormous amount of cost we could take out of this business and make it incredibly profitable, but we don't want to do that because now not the time to do that. We need to invest in these new channels and build out new capabilities. So we're leaning into our team. We're still hiring. Nothing has changed on our end. And we see opportunity, and we think we're very good allocators of capital. So we are in investment mode at this moment.

Moving next to David Bain with Texas Capital Bank.

Just 2 questions. One, just looking at past algorithm changes from Google, how long did it take you to rebalance previously? And if this can lead to share shifts, how this algorithm perhaps changes from different ones in the past?

Yes. Usually, 1, 2, 3 months sort of thing, we should have it back. I'd like to say that it's not -- the positions that we don't have in this particular moment in time have been picked up by operators, not affiliates. There's nothing to read into that. That's business as usual with Google search engine volatility. That does not mean that they're somehow Google now favors them more than affiliates and on some kind of long-term basis. It's just how it's working at the moment.

So yes, we haven't lost -- I think on a relative basis to the peers, we continue to dramatically outcompete them, and our share of voice is, I think, way higher than the next -- than the #2 player in most of these markets. But a couple of operators have taken a few positions we had in a few key places. And the end of the year, I would think we had it.

And then my follow-up was just on OpticOdds. Are there some kind of KPIs that you believe would be helpful for us to understand that growth a little bit better? I mean, is it number of customers from the individual or operator standpoint, depending on which OpticOdds? Or is it -- has there been menu choice changes, pricing changes? Anything would be helpful.

Yes. Happy to give you some color there. So on -- it's 2 different businesses. It's OddsJam and OpticOdds. OddsJam is the consumer-facing business. OpticOdds is the B2B enterprise business. OddsJam clients is roughly flat, but the average revenue per user is up meaningfully as they are upselling. They're selling more to the same user base. And then on the OpticOdds side, they're signing up new clients left and right, and they are also quite meaningfully increasing the average revenue per user or client, shall we say, on that business. So excited.

And on that second one, should we sort of think about larger operators with more needs, or the operator base getting larger from just a number standpoint?

It's a mix. One thing that surprised us about this business is it's not all operators, right? I mean you've got start-ups. You've got professional betters, arbitragers, you've got apps, media companies. There's a lot of people need high-quality odds data. It's not just the operators. But even within the gaming ecosystem and service the operators, there's the platforms. We can do platform deals and then distribute it into all the operators that are on any given platform. So there's -- we've signed a number of different interesting deals, and we're -- I think the future is very bright for that. When you include RotoWire, we work with multiple members of the MAG 7. They come to us for our sports data to power, in part, their various offerings, including AI tools.

And this does conclude our question-and-answer session. I would like to turn the floor back over to Charles Gillespie for closing comments.

Thanks, everybody, for joining. We look forward to updating you on our Q3 results in November.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.