Greetings, welcome to Gambling.com Group's Fourth Quarter 2022 Earnings Results Call. This time all participants are in a listen-only mode. Question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. At this time, I'll turn the call over Peter McGough, Vice President of Investor Relations, Peter, you may now begin.

Good morning, everyone, and welcome to Gambling.com Group's fourth quarter and full year 2022 results call. I am Peter McGough, Vice President of Investor Relations, joined by Charles Gillespie, Chief Executive Officer and Co-Founder; 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 will be available on website after the conclusion of this call. You may also contact Investor Relations support by emailing investors@gdcgroup.com. I would like to remind you that the information contained in this conference call, including any financial and related guidance to be provided consist 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 assures 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, Peter, and welcome everyone. This morning we reported fourth quarter and full year 2022 results. As a reminder, the two most important quarters of the year by far for us are Q4 and Q1. With today's market update, we are giving full details on Q4 and significant color on Q1. I am very pleased to report that we delivered an all-time record revenue performance in Q4 and that we expect another record performance in Q1. These results have enabled us to exceed full year 2022 revenue expectations and set us up for another record revenue and adjusted EBITDA year in 2023. I will now turn to a review of the business highlights from the fourth quarter. For those with the slide deck, I'm on Slide 4. Fourth quarter revenue rose to 107% to $21.3 million, reflecting a more than 300% increase in North American revenue and continued strength in the UK and Ireland with revenue growth of 54%. We generated $6.9 million of adjusted EBITDA and $6.2 million of operating cash flow. We continued to deliver both extremely high growth and high profitability in the quarter, which makes us unique among many companies, particularly those within online sports betting, media and high gaming in the United States. We delivered over 82,000 new depositing customers for our online gambling operator clients, an increase of 193% over Q4 2021. The terrific growth in NDCs continues to be driven by an increase in the footprint of our portfolio of assets, our improving ability to monetize our audience through proprietary technology and our entry into new markets. Now on Slide 5. For full year 2022, revenue increased 81%. On a constant currency basis, the figure is even more impressive at over 100%. I am delighted with this overall result, but most impressed…

Thank you, Charles, and welcome, everyone. As Charles discussed, we saw a strong finish to the year with record fourth quarter. Revenue of $21.3 million increased 107% compared to the prior year. The increase in revenue was driven by strong growth in NDCs in North America as well as in the U.K. and Ireland, and a slight sequential currency tailwind. New deposit paying customers in the quarter grew 193% to more than 82,000 compared to 28,000 in Q4 last year and 68,000 in the 2022 third quarter. The increase was again led by strong growth in North America and the UK and Ireland. As a reminder, we began recognizing cost of sales during the first quarter, as a result of our new media partnerships and the subscription business at RotoWire. In the fourth quarter, this amounted to $0.6 million. Total operating expenses were $21 million an increase of $11.4 million inclusive of $4.3 million of fair value business in contingent consideration related to the BonusFinder acquisition. Adjusted for the fair value movements, adjusted operating expenses were $16.7 million. On a constant currency basis, adjusted operating expenses increased by $8.1 million. The increase was driven primarily by additional headcount across marketing, products, sales and technology functions, public company expenses as well as increase amortization related to our Q1 acquisitions. During the full year 2022, we incurred total amortization of approximately $4.7 million related to the Q1 acquisitions. We continue to prudently invest and hire to build out our growing organization during the quarter. However, our pace of recruitment has moderated significantly and we ended the year and moved into 2023, as we’re nearing the staffing levels necessary to support our near and longer term growth objectives. We continue to expect our profitability and free cash flow will organically support our investment…

Thank you, Elias. Before we wrap up for questions, I'd like to provide some additional perspective on the market today and going forward. The business is well-positioned for continued growth in 2023, starting with what we expect to be yet another all time record quarter in Q1. The 2023 legislative season has kicked-off in January and sports betting legislation is being actively considered in Texas, North Carolina, Georgia, Kentucky, Missouri Vermont, and Minnesota. We also believe that iGaming could be up for a vote in the legislatures of Illinois and Iowa. I want to highlight again that our current guidance does not assume any additional sports betting or iGaming markets coming online. Our long-term outlook for broad-based expansion of regulated online gambling in North America remains unchanged. We continue to expect states to regulate online sports betting where retail sports betting exists and states that have online sports betting to move towards regulated iGaming. And we continue to believe that we will grow our market share in the states we are already active in as we further refine and optimize our websites. Furthermore, in states with single operator monopolies, we have noted increased desire to revisit the licensing regime and create a competitive market with multiple operators. This is undoubtedly the best way for these states to increase their online gaming tax revenue. This would also expand our TAM in these states such as Delaware, which are technically regulated but not addressable in their current form. The acquisition of Casinos.com domain name is the capstone to our portfolio of websites. We are very optimistic about the potential for this new project, particularly as it relates to customer acquisition for iGaming operators. As many of you know, the iGaming market in Europe is significantly larger than the sports betting market, and we expect the same will be true for North America as more jurisdictions come online. In our view, the long-term strategic value of this domain could surpass Gambling.com. We will have an update soon on the formal launch of the new website, which is expected this summer. In closing, our 2022 results validated our ongoing commitment to our bespoke technology stack and our strategy of launching best-in-class affiliate sites on big branded domain names. These two factors combined with our world class expertise and SEO have translated into strong customer acquisition for our operator partners, which in turn drove industry-leading organic and total growth. Our low risk, high ROI value proposition will continue to grow in value for U.S. online gambling operators, as they increasingly focus on generating EBITDA positive results while fighting harder for each incremental new customer. I will end once again by thinking the absolutely brilliant team at Gambling.com group for their exemplary efforts in delivering yet another record quarter as well as record full year results. With that, we'd be happy to open up the line for questions.

[Operator Instructions] And our first question is from the line of Jeff Stantial with Stifel. Please proceed with your question.

Maybe I'll start off here with one on full year guidance. Elias, can you just expand a bit more on some of the assumptions that drive the low versus the high end of guidance?

Yes, if you look at this year, there have been two main growth drivers. One is taking market share in the U.S. The second one is the strong growth that we've seen in the UK and Ireland. We definitely expect to see growth in the U.S. and wider North America to persist and be the main growth driver. So the big delta, I would say in the range, will be to what extent we can maintain that as a substantial growth in our UK and Ireland casino business.

Great. That's helpful. Thanks. And switching gears a bit, you know, a key talking point this earning cycle for most of the U.S. operators has been ongoing improvements in product, you know, parlays more efficient modeling, et cetera, given the U.S. skews heavier to CPA competition versus RevShare. Charles, just curious if you have any thoughts on how you see, sort of structurally higher hold rates ultimately impacting demand really, if at all, for affiliate traffic?

Well, I think to the extent that those hold rates go up, the player value goes up and the ROI goes up. So, they all things equal, they'd be able to spend more money on players than they otherwise would. You mentioned revenue share. We continue to look at revenue share in a very kind of neutral or agnostic way. It can make a lot of sense. It can also be not optimal. But having said that, we've signed lots of revenue share deals in the U.S. and are starting to send more traffic to our partners on that basis, it's not like you shouldn't think of it as a major shift. It's more with, some of the kind of Tier 2, Tier 3 operators that are really fighting hard to move up in the world. But it's certainly a part of our revenue model at this stage in the United States.

That's great. Thanks. If I could just squeeze in one more quick one, about a month and a half since you announced the partnership with Gannett. Now that you've had the opportunity to really dig in here, Charles, just curious to get your initial thoughts on the opportunity, anything particularly surprising so far as you, as you go through the early integration efforts?

I think it's way too early to give any more kind of specific color than we already have. But I will say that Gannett's been brilliant partner so far. They've been very helpful and cooperative with, the kind of key initial setup phase for a lot of things. So, we're off to a great collaborative start and, we'll -- we definitely expect to put up some interesting numbers with the partnership in the second half of the year.

Thank you. Our next question is from the line of Barry Jonas with Truist Securities. Please proceed with your question.

Hey, guys. Appreciate your comments on the high end versus low end of guidance, but could you maybe talk more about the most material, absolute components of the organic growth as you bridge 2022 to your expectations for '23?

Yes. So, it's like that we do expect healthy continuous growth from North America. We see fewer state launches although we've had a very healthy Q1 we don't foresee or forecast any further state launches this year, which means that, the growth would come from the bigger base of active markets and us being able to take market share in the coming three quarters. We give some guidance on the relative size of our U.S. and North American business, and we do expect North America to represent a majority of revenue this year. And like I said, the delta in the range will be largely driven by our continuous ability to generate substantial growth in the UK and Ireland.

Got it, got it. And then we have talked in the past about the strong pricing outlook for affiliates scale, that's despite the push by more operators for profitability. I'm curious, if you have seen any changes since we have spoken last in terms of the pricing outlook?

No. I wouldn't say that, there has been any meaningful shift in any direction. It's business as usual.

Great. And then if I could just get one more in there. Just curious on how the M&A environment is right now. A lot of stuff of interest out there for you, and sort of how are bid-ask spreads looking with potential sellers?

We continue to be extremely active on the M&A front. We spent a lot of time examining deals. We spent capital investigating, the feasibility of various things, and we are looking at things of all different shapes and sizes. We also remain as picky as ever. But that doesn't mean we are not doing the work in the background to evaluate everything we can. I think that expectations from sellers have become slightly more rational. But having said that, cost of capital is all gone up pretty significantly, so it's kind of different, that's both a bit of a positive and a negative. But as I've said, we are very actively considering things that we think would create shareholder value.

Our next question is from the line of David Katz with Jefferies. Please proceed with your question.

Hi. Good morning everyone. Thanks for taking my questions. I just wanted to talk about the UK and Ireland growth. Because if we are reading this correctly, right, you are getting this growth into what are somewhat more -- I think unarguably more mature markets in the U.S., but clearly not fully mature. Can you just talk about kind of how you are getting growth into existing markets that way and into more mature markets and what that growth profile can look like longer-term?

Yes, hey, David. So I'd give you the answer that our Co-Founder and COO, Kevin McCrystle, typically gives me, when I ask him similar questions. He says, it's all of it saying this Charles. So it's a little bit better search rankings. It's a little bit better deals. It's a little bit better converting. It's a little bit better machine learning. And that optimizes our yield on these websites by pairing the right operator with the right user at the right time to inch up that conversion rate. It's slightly better content more engagement, wider net, more keywords. It's just bread and butter, day to day in and day out, quality execution. And obviously, we've come a long way recently in the UK and Ireland. Our growth expectations for next year for those markets are not as high as they were last year, but we do continue to expect it to be a great market for us.

And can I just touch on the guidance for a minute please, if I may, and specifically on the EBITDA margin, right? Where -- if I'm just looking at the slides here, I see you finished the year at 31% and we knew that there were some other aspects go lives and integrations, et cetera, but the guidance obviously has a ramp back up in the EBITDA margin. And is that just a function of operating costs scale or is there some other mix issue at play? And where does this normally settle in one day, if you know, I mean, I imagine normal for you is quite a ways away?

Yes, it's a reflection of operating leverage where we expect our revenue to grow significantly faster than the ramp up of OpEx. As you recall, we've invested very heavily in scaling our organization in the past 18 months, and that's slowing down as we continue to invest, but what we have a much larger and well functioning organization as this, so we don't have the same needs to accelerate the ramp up. It's difficult to define a normal. I think with a current setup of the business around the 35%, 36% mark is a reasonable expectation. But it depends a little bit about the mix of revenue, what proportion comes from search driven and what proportion comes from media parts.

Thank you. At this time, I'll turn this floor back to Charles Gillespie for closing comments.

Thanks again to everybody for joining us today. We appreciate your support and interest in Gambling.com Group. 2022 was another record year for the group, and we believe we will deliver more of the same throughout 2023. We look forward to our next update when we will report full March quarter results in May.

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