Greetings, and welcome to the Gambling.com Group's First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. At this time, I'd turn the call over to Peter McGough, Vice President of Investor Relations. Thank you. You may begin.

Thank you. Hello, everyone. Welcome to Gambling.com Group's first quarter 2023 earnings results call. I am Peter McGough, Vice President of Investor Relations. I am joined by Charles Gillespie, Chief Executive and Co-Founder; and Elias Mark, Chief Financial Officer. The call is being webcast live through the Investor Relations section of our Web site 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 Web site 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 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 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 Web site. I'll now turn the call over to Charles.

Thank you, Peter, and welcome, everyone. Gambling.com Group is off to a tremendous start in 2023 as this morning we reported another quarter of all-time record results. These record results were driven by continued outstanding execution of the key fundamentals of our business, complemented by the launch of sports betting in Ohio and Massachusetts. With these results, we have again demonstrated that we are leading the way in terms of organic growth among our publicly traded peers. With this great start to the year, we continue to expect that 2023 will be another year of record financial performance, driven by strong organic growth and are resulting in attractive levels of free cash flow. That last point, attractive free cash, highlights a very significant differentiator with Gambling.com Group and most of the other publicly traded companies in the U.S. targeting the high growth online gambling industry. Although we do not currently have clarity on any additional U.S. state launches for sports betting before January 2024, we are today raising our guidance for full year 2023, as Elias will detail later in the call. First quarter revenue rose 36% to 26.7 million, reflecting a more than 30% increase in North American revenue and continued strength in the UK and Ireland with revenue growth of 36%. We generated 10.7 million of adjusted EBITDA and 6.2 million of free cash flow. Our first quarter results benefited from sports betting launches in Ohio, and to a lesser extent, Massachusetts, as well as strong results for iCasino across both North America and in a number of our European markets. We delivered over 88,000 new depositing customers for our online gambling operator clients, an increase of 31% over Q1 2022. Our Q1 2023 NDC growth is even more impressive when you consider that last year's first quarter…

Thank you, Charles, and welcome, everyone. As Charles mentioned, we saw a record quarter of financial results during the first quarter. Revenue increased 36% to 26.7 million compared to the prior year or 40% in constant currency. The increase in revenue was driven by strong growth in NDC in both North America, UK and Ireland and the rest of the world. New depositing customers in the quarter grew 31% to more than 88,000. Also sales during the first quarter from our media partnerships and the subscription business of RotoWire.com amounted to 1 billion. Total operating expenses were 17.5 million, an increase of 3.5 million. Total operating expenses included 0.9 million of fair value movement on contingent consideration related to the BonusFinder acquisition. Adjusted for this fair value movement, adjusted operating expenses were 16.6 million, an increase of 22% in constant currency. The increase was driven primarily by additional headcount across marketing, product sales and technology functions as well as public company expenses. Amortization expenses decreased to 1.4 million [indiscernible] assets from the RotoWire and BonusFinder acquisitions are now fully amortized. For the full year 2023, we expect to incur amortization of approximately 1.6 million. Hiring in the first quarter continued at a more moderate pace and was well below our pace in 2022. Current staffing levels are close to being able to support our near and longer term growth objectives. While we expect to continue to hire selectively, we expect operating leverage from revenue to outflow operating expenses for the full year. We expect to continue to deliver a substantial free cash flow. Net income totaled 6.6 million or $0.17 per diluted share compared to net income of 4.5 million or $0.12 per diluted share in the same period in the prior year. Adjusted for fair value movement in contingent…

Thank you, Elias. Regarding the S-3, I'd just like to quickly note that the Board and the major pre-IPO shareholders are all in alignment regarding the benefits of a potential structured trade to responsibly increase the company's free float, which should help improve liquidity for the benefit of all shareholders. We expect that the outcome of such a transaction would make investing in Gambling.com Group easier for larger institutional investors. Before we wrap up for your questions, I'd like to zoom out, stop talking about a single quarter and give some big picture perspective. We continue to be in a great position to deliver strong organic growth and gain market share in many of our markets as we move through the balance of spring and into summer. The strong momentum for Q1 has carried over into the start of Q2. The 2023 legislative season has kicked off and the first successes are in Kentucky where they have successfully regulated sports betting. Vermont is more or less a done deal with sports betting legislation only waiting the Governor's signature. We believe that North Carolina is also likely to succeed with sports betting legislation in the coming months. In Minnesota, Texas, the legislators continue to debate and there is a chance of a positive outcome. Texas would, of course, be an immense market. But despite early signs of progress, it is still long odds for success this year. As Elias highlighted, we are not yet suggesting any revenue from additional state launches this year. Once we have full clarity on the launch timeline for any new states, we will adjust our guidance. While the unending expansion of regulated online gambling in the U.S. captures most people's attention these days, the combined opportunity of newly regulating markets outside of North America and Europe is equally compelling and thoroughly underappreciated. Likewise, the ability for the world's largest regulated online gambling markets to continue to be drivers of growth for GAMB is remarkable. I was delighted to see exceptional growth in the UK and Ireland continue and actually surpass North America during the quarter, highlighting our ability to still deliver impressive growth in established markets as well as how truly early it remains in North American online gambling. We're looking forward to the launch of Casinos.com in the next few months and expect the site to be a tremendous vehicle to drive revenue growth over the coming years. We believe the domain is as good as it gets and fully expect it to become a dominant brand in the online gambling affiliate world in due course. I will end by once again thanking the brilliant team at Gambling.com Group for their exemplary efforts in delivering yet another record quarter. With that, we'd be happy to open up the line for your questions. Operator?

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions]. Our first question is coming from the line of Ryan Sigdahl with Criag-Hallum. Please proceed with your questions.

Hi, Charles, Elias, nice job guys. Good quarter. Curious, I want to start with the new states that launched; Massachusetts, Ohio. Obviously, a lot of spending, we've heard some pull forward of spend from some of the big operators into those states into Q1, but curious kind of how the quarter was in those states? And then how trends and results have been kind of subsequent to quarter end in April and May so far?

So Ohio was a very important state, lots of operators, meaningful population, good competition, all-in-all came in a very successful state launch. I think the most kind of surprising thing about Q1 for us was Massachusetts, and how our expectations for Massachusetts were certainly not as high as Ohio, but kind of uniquely among all the U.S. state launches so far. Month two in Massachusetts was actually better than month one. And that had something to do with kind of the sporting calendar and some of kind of momentum around the initial launch day. But those are two great states and they will continue to be very good markets for us going forward.

Just to clarify, Charles, April was better than March for Massachusetts.

Yes.

Yes, got you. Curious then kind of as you look to the second half of this year, what you're hearing from your customers and partners, operators, et cetera, on user acquisition, spend and budgets and kind of plans for the rest of this year? How much visibility and if any of that dialogue has changed?

It doesn't tend to meaningfully change quarter-to-quarter or year-to-year or even [indiscernible] even further, the demand for affiliate services remains rather constant. The CPA rates may have been slowed slightly. But the perspective from our clients and the operators in general is they want to buy as much traffic as they possibly can from the affiliates. And those discussions really center around kind of market share within the affiliates. How can they get more exposure? How can they get more NDCs? If they're ranked two or three on our operator list, how can they be ranked number one? And that's partially a commercial discussion. And it's really -- there really is no kind of meaningful trend, either positive or negative in terms of demand for the services. We see this as very reliable content.

Great. I'll turn it over to the others. Nice job, guys, on the performance.

Thank you.

Thank you. Our next question is coming from the line of Jeff Stantial with Stifel. Please proceed with your questions.

Great, thanks. Good morning, Charles, Elias. Thanks for taking our questions. And starting off, Charles, I was hoping you could give us an update on what you're seeing in some of the core markets within other Europe and just some of the initiatives in play that are kind of helping you take share in some of the more mature markets? And then for some of the more regulatory challenged markets, you're talking about Germany, Netherlands, things of those nature, so just what are you seeing there in terms of progress towards normalcy? Thanks.

We've seen some strengths obviously in the UK and Ireland, but in the other markets in Europe, Italy has been good. Netherlands has been good. We're still optimistic that Germany will come out with some regulations, which are more consumer friendly, and we'll see more growth in that market. But what's been driving the business is really just execution. It's not really kind of market level factors so much as it is us just delivering on Web site plans [indiscernible], yield enhancement, the kind of bread and butter of running a business.

Great, that's helpful. And then, Elias, switching gears, can you just talk about how you see margins sort of progressing sequentially through 2023, taking into mind from the puts and takes your operating leverage on the investments called out in the press release, things of that nature? Thanks.

Yes. If you look at our guidance, we're guiding towards margin expansion for the full year. But the vast majority of our costs are fixed. The margin will vary between quarters as a function of seasonality.

Okay. So is it fair to assume your seasonality for margins should basically mirror the seasonality you called out in your prepared remarks on guidance? Or should we think about other -- some of the investments instead of growth initiatives, some other dynamics at play?

I think that's it, Jeff. It's really driven by the sports calendar and, to a lesser extent, somewhat by weather in the northern hemisphere. People in the height of summer, people spend less time on their computers. So whether that's betting on sports, that has more of kind of effect on online casino than it does on sports betting. So that's the other kind of seasonal factor, but it's far less pronounced than the sports calendar dimension.

Great, that's helpful. Thank you both and nice quarter.

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

Hi, guys. I want to ask a bit about media partnerships. It seems like many U.S. operators are maybe trying to get out of some of their deals. And on the affiliate side, you're seeing some partner swaps and even litigation. So can you maybe talk about your media strategy, how you structured deals and how good you feel about them being successful? Thanks.

Yes. Hi, Barry, with pleasure. So I think the first thing to point out is when an operator does a media partnership and when an affiliate does a media partnership, those are two very different beasts. And the affiliate model has been the model, which you'd seen succeed and grow. And yes, there's lots of -- new deals are still being done on that basis whereas the kind of operator tie up with a big media brand, those deals are by and large just not being renewed or cancelled, and you're not really seeing any new ones. And that is a perfect example of the superiority of the affiliate model in a media context. If you are a large media owner, you can make more money by partnering with an affiliate that can help you monetize with all of the operators versus trying to monetize with one single operator. It's kind of obvious in retrospect. But this affiliate media partnership model is simply fundamentally superior certainly from our perspective. So I wouldn't really compare the two. But the way we thought about this is the same way we broadened our M&A. We want to do fewer, bigger deals and we're going to be really picky. It's just easier to concentrate our finite resources on two big media partnerships that would be to focus the same resources on 10 smaller medium-sized partnerships. So we put really a lot of effort into both our McClatchy and Gannett partnerships, and we've got great relationships there. And I think it's just easier to manage when you develop a deeper relationship with your partners.

Got it. And then just for my follow up, apologies if I missed this in the remarks, but how much of the guidance raised is attributable to FX versus just underlying strength? And can you also remind us what the difference is at this point between the high end and the low end?

Yes, so the majority of the change in guidance is on the back of strong trading. We have the FX assumption from 1.075 to 1.085. If you look at the ranges, the difference between the low and the high range will be in our ability to continue to outperform in the UK and Ireland market where we've seen tremendous growth and the quantum of success will rather just be on the success of the ramp up of the Gannett [ph] function.

Understood. Thank you so much, guys.

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

Hi. Good morning, everyone. Thanks for taking my questions. I wanted to just talk about the M&A landscape. We've seen a couple of deals just within the past week that aren't necessarily directly related to Gambling.com. But it does imply some changes in the landscape. And our imaginations can carry us toward further consolidation of things. How do we think about the degree to which that's either positive, negative or neutral for you as we move forward?

I think anytime a company that's in your exact sector, that's also a significant B2B supplier, is acquired at a premium in excess of 100% that can only reflect positively on the companies in the peer group. So we take our hats off to NeoGames on a fantastic transaction. And it will hopefully also just bring some more attention back into the online gambling side of the equity market. This industry was obviously very in favor a couple of years ago, and people then realize, okay, they're not going to -- the whole world shifted to focus on companies which were profitable and [indiscernible], right? It does feel like maybe that's going to swing back the other way again. These companies are now either profitable or on the brink of achieving profitability, at least from the operator side. Obviously, the B2B suppliers have been there for some time. And hopefully, deals like the one that was announced earlier this week will further catalyze the investor perception of the industry. And I think at the end of the day, the cash flow is hard to ignore. These are going to be some very great businesses in the U.S. market, not only in the next couple of years but in the next 20 or 30 years.

All right. And just if I can carry that one step further, right, the degree to which does it does it affect, I assume it would, efforts you might make to acquire more things, does that rising tide lifts all boats or do you still see opportunities for you to acquire here and there to bolster what you have?

Well, we haven't had anyone double the price they were talking about since Monday, thankfully. But look, we were very focused on M&A. We're having a lot of conversations. We're having a lot of good conversations. There's no shortage of things out there to consider. And I'm hopeful that we'll be able to announce something at some point. But we also remain as picky as ever. We feel like we're under absolutely no pressure to do M&A. So we are only going to do the big deals back to kind of fewer, better, bigger transactions. We're going to do the deals, which we think really just makes so much sense that we have kind of very, very high conviction moving forward. And we look forward to updating everybody when one of those comes into focus.

Got it. 100% premiums, good for everyone.

Indeed.

Thank you. There are no further questions at this time. I would now like to turn the floor back over to Charles Gillespie for any closing comments.

Thank you again to everyone for joining us today. We appreciate your support and interest in Gambling.com Group. We've had a strong start to the year and expect more of the same solid performance for 2023. We look forward to updating everyone again when we report our Q2 results in August.

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.