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Gambling.com Group Q1 profits increase despite revenue drop

| By Daniel O'Boyle
Financial income helped the Gambling.com Group's profits increase year-on-year in Q1 2020 even as revenue declined 28% to €3.8m.

Financial income helped the Gambling.com Group's profits increase year-on-year in Q1 2020 even as revenue declined 28.2% to €3.8m.

Gambling.com group chief executive Charles Gillespie noted that while revenue was down year-on-year, it was up 9.6% quarter-on-quarter, with revenue increasing month-on-month for five consecutive months starting with November 2019.

“The first quarter of last year occurred before the major UK regulatory headwinds and was the group’s best ever, making for a challenging comparable period,” he explained. “As a result, revenue decreased by 28.2% year on year. Despite these headline figures, the underlying business is actually in a great place with improved operational capabilities and efficiencies after the launch of our new technology platforms.”

Earned revenue, from search engine optimisation (SEO) or direct navigation, came to €3.6m million, down 22%. Paid revenue came to EUR 0.16 million, a decrease of 75%. During the quarter, the group phased out its buying of pay-per-click (PPC) ads, explaining the large drop in paid revenue.

“PPC will remain paused, at least for the short term, to enable a leaner and more focused organization with time split on fewer initiatives,” Gillespie said.

Of the Group’s €3.8m in revenue, 73% – or €2.7m – came from locally regulated markets.

The Group’s operating expenses, meanwhile, came to €3.3m, down 10.8%, while revenue-related costs fell 53.6% to €265,000. Personnel expenses, on the other hand, grew 21.9% to €2.0m.

As a result, the group’s earnings before interest, tax, depreciation and amortisation (EBITDA) excluding on-recurring costs came to €737,000, down 58%.

Non-recurring costs related to financing and investing came to €13,000, while further non-recurring charges related to restructuring came to €161,000.

Including these costs, the group’s EBITDA totalled €563,000, down 68%.

Depreciation and amortization costs declined 45.9% to €133,000, while other operating expenses came to €796,000. As a result, the Group’s operating profit for the quarter was €430,000, down 71.3% year-on-year.

The business paid a further €430,000 in interest, down 8.2%, but made a €1.5m gain through movements in the fair value of its 2021 bond, after incurring a €27,000 write-down in Q1 2019.

The Group made a further €250,000 in finance income, more than ten times 2019's figure, but €71,000 of financial costs, up 26.8%. This resulted in pre-tax profit jumping 77.0% year-over-year to €1.7m.

After paying €100,000 in tax and receiving a €20,000 deferred tax credit, Gambling.com Group made a profit of €1.6m in Q1 2020, up 80.2%.

Gillespie added that the business’ online casino focus – with the vertical having remained accessible and increased in popularity in some markets – leave it capable of mitigating the effects of the novel coronavirus (Covid-19) pandemic.

“The group has historically been primarily focused on online casino games,” Gillespie said. “Given that revenue from casino and other non-sports games continued to represent over 80% of total revenues in the quarter, I consider ourselves well positioned to weather the pandemic.”

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