Gambling.com Group Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 14, 2025

Key Takeaways

  • Positive Sentiment: Record Q2 financials: Revenue rose 30% year-over-year to a quarterly high of $39.6 million and adjusted EBITDA increased 22% to $13.7 million, driven by strong marketing and data service growth.
  • Positive Sentiment: Sports data services acceleration: This segment grew 120% year-over-year, with high-margin recurring subscription revenue now 25% of total, prompting the company to raise long-term growth expectations.
  • Positive Sentiment: Strategic Spotlight.LasVegas acquisition: With an $8 million upfront payment and up to $22 million earn-out, the deal is expected to add at least $8 million in 2026 revenue and $1.4 million in adjusted EBITDA.
  • Negative Sentiment: Google algorithm headwinds: Recent core updates have weakened search rankings in Q3, leading to lower SEO-driven revenue and contributing to revised full-year guidance.
  • Neutral Sentiment: Updated full-year guidance: The company now expects revenue of $171–175 million (36% growth at midpoint) and adjusted EBITDA of $62–64 million (29% growth at midpoint), reflecting increased investment in non-SEO channels.
AI Generated. May Contain Errors.
Earnings Conference Call
Gambling.com Group Q2 2025
00:00 / 00:00

There are 12 speakers on the call.

Operator

Greetings, and welcome to the Gambling dot com Group Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to your host, Mr.

Operator

Peter McGough. Please go ahead, sir.

Speaker 1

Thank you, operator. Hello, everyone, and welcome to gambling.com's second quarter twenty twenty five 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 cofounder 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.

Speaker 1

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, 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.

Speaker 1

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.

Speaker 2

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 is high 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.

Speaker 2

Diversification of traffic sources and revenue models is front of mind for our team. In the past four 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, email, social media, YouTube, communities, and paid media. We've also broadened our ability to monetize our end users and b to b online gambling operator clients with the addition of new business models through the acquisition of RotoWire, OddsJam, and OpticAuds, and we'll continue to do so when we close on spotlight.vegas on September 1.

Speaker 2

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, email, 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.

Speaker 2

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 a meeting. But when users evaluate online gambling sites for their next adventure, it is entertainment, not work.

Speaker 2

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.

Speaker 2

The skills and processes we have perfected for SEO are exactly what is required to optimize for inclusion in generative AI. Those 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 q two with leading the way with a 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, OptiGods, and the refreshed RotoWire, our vision to establish a strong sports data services business within GAM is now a reality.

Speaker 2

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 on Sam and Opticogs, 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 LOT of Wire and Bonus Finder, our team's execution has successfully lowered the initial purchase multiple. We expect the acquisition of Spotlight dot 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.

Speaker 2

Today, the business serves the Las Vegas market with more than 40 clients, including entertainment venues and land based casinos. Los Angeles 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 $30,000,000 worth of tickets in 2024, Spotlight is it 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.

Speaker 2

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 had transformed the company from an affiliate marketing business into a multiplatform 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 flow generation, capital efficient M and A and well timed share buybacks.

Speaker 2

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

Speaker 3

a Q2 record of 39,600,000.0 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, 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 CHF 10,000,000. 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.

Speaker 3

Gross profit increased 27 year over year to CHF 36,900,000.0. Cost of sales of EUR 2,700,000.0 compares to cost of sales of 1,400,000.0 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 Ordscan and Optical's businesses. Gross profit margin was 93.2% compared to 95.3% in the year ago period. Operating expenses of EUR 61,300,000.0 included EUR 23,800,000.0 of charges related to the Odds Holding acquisition, of which fair value movements related to the outperformance of Oddsjam and Opticals of $21,200,000 non cash amortization of acquired intangible assets of $2,200,000 and other acquisition related costs of 400,000.0 Adjusted EBITDA increased 22% year over year to a second quarter record of $13,700,000 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 EUR 13,400,000.0.

Speaker 3

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 $8,200,000 reflecting strong cash conversion and adjusted EBITDA growth, partly offset by tax payments of 5,500,000.0 of which $3,300,000 was related to the Odds Holding acquisition. As of June 30, we had total cash of 18,700,000.0 and $70,500,000 of undrawn capacity on our credit facility.

Speaker 3

On April 1, we made the final payment of $11,200,000 for freebets.com using cash balances. In total, we have drawn GBP 94,500,000.0 on our 165,000,000 credit facility. Effective April 1, we entered into swap agreements to effectively convert 75% of U. S. Dollar borrowings to euro borrowings, lowering our cost of debt capital by approximately 200 basis points.

Speaker 3

The swap transaction also aligned our functional currency with our borrowings, eliminating the corresponding forward translation effects in our income statements 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 $10,000,000 expansion to a total of $20,000,000 of capacity in our current share repurchase program, none of which has been utilized yet.

Speaker 3

This afternoon, we adjusted our full year guidance to reflect revenues a revenue range of $171,000,000 to 175,000,000 and an adjusted EBITDA range of 62,000,000 to 64,000,000. The increase to the full year revenue range reflects the expected four months of contribution from Spotlight Las 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 updates. 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 173,000,000 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, I guess, for this year.

Speaker 3

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 dot 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.

Speaker 3

Vegas to generate net revenue of at least $8,000,000 and incremental adjusted EBITDA of at least 1,400,000 Operator, we will now turn the call over for questions.

Operator

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue.

Operator

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. And our first question will come from Jeff Stanchel with Stifel.

Speaker 4

Hey, good afternoon, Charles, Elliot. Thanks for taking our questions. Maybe let's start off, if we can, on on a Spotlight Vegas transaction. Starting off, Elias, can you just provide us with some of the metrics underlying the earn out compensation? And then more high level.

Speaker 4

Charles, I'm I'm curious just as you underwrote this transaction, sort of how did you come to understand the similarities and 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 what really gave you the confidence that your tech and and experience would would translate well over the live event space? Thanks.

Speaker 3

Yeah. If I if I cover the first part of of that question, as as we manage the the intent here is is to be very capital efficient and have a limited upfront payment and and pay for performance. Essentially, we have an upfront payment of 8,000,000, which we expect to settle in cash. And then we have a two year earn out components, that is capped at an additional 22,000,000, so 11,000,000 per year, based on incremental EBITDA, above a certain threshold, for each of 2026 and 2027, and the effective multiple amount earn out is, six x, operating profit.

Speaker 2

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?

Speaker 3

You know, it's it

Speaker 2

it does involve a little bit of, original thinking. You know, 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. You know, we, you know, 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, you know, it's there's not a million different ways to do digital marketing within the online gambling industry.

Speaker 2

You know, we we wouldn't have gone all the way to do full blown ticketing outside of gaming. You know, that doesn't that's a step too far. But ticketing, you know, within gaming, this gaming adjacent, there's some synergy there. And, you know, when we look at this particular business, you know, 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.

Speaker 2

And it reminds us a lot of the freebest.com acquisition. You know, that those assets were not operated at at as well as they could've been, and it was our team that was able to unlock that value. You know, last but not least, it's always about people, and and they've got a great team over there and a and a very strong leader, Doug, which we very much look forward to working with. And and I think, you know, us combining our digital marketing skills with with the technology platform that they have already and exist, and then they don't have to build it, is is a very clear way to to to grow that business and and do it under, our roof.

Speaker 4

That's great. Thank you for all that color. And then maybe shifting gears and and turning over to to AI. You know, Charles, some some helpful commentary at at the beginning of the call. Think we're all sort of grappling with figuring out how this this looks and evolves and and and over the long term impacts your business.

Speaker 4

Bit of a a two parter question here. First, I'm curious if you've done any work or seen anything in in terms of sort of clicks 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 one, two, three sites that is ultimately searched or sourced by the main AI engines for a typical gambling search. And that's all from us. Thanks.

Speaker 2

Yeah. Look. When 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, you know, share of voice is probably a better way to put that, you know, in terms of these different AI agents, LLMs.

Speaker 2

You know, if you have a Google search you've got, you know, at least you used to have 10 results. Now it can be less, but it was a long longer list than what you would get from an AI tool. You know? An AI tool, you're gonna get two or three unless you guys specifically ask it for more. So you really have to be, you know, positioned to the extent that our positions on these, you know, general AI tools, you need to be positioned kinda one, And the only way you're gonna get there is to have industry leading authority, which, of course, is what we've been trying to build for the past twenty years with gammy.com, rookies.com, casinos.com.

Speaker 2

You know, we we we have invested in big brands to rise above the fray and be the the obvious go to source for information on this industry. And, you know, our our early indications show that we've got, you know, a very high share of voice on these on these new tools. And, you know, of course, it's growing very rapidly for us. You know, it was it didn't exist a few years ago, so the growth rates are basically infinity. But it's, you know, it's it's it's it's gonna be a big part of the future of the business.

Speaker 4

That's great. Thank you very much. I'll pass it on.

Operator

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

Speaker 5

Hey, guys. I want to go to the Google algorithm update. When I look at the guidance, looks like EBITDA cut by $5,000,000 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.

Speaker 2

Yeah. I'm happy to speak to that and and give you some color on guidance for the rest of the year. So it the latest Google algorithm update rolled out in the last thirty, forty five days within squarely within q three. You know, it it is a reminder that this stuff still matters, and and, know, search rankings are are still a fundamental part of digital marketing. You know, in terms of revenue for the second half of the year, our increase of a million at the midpoint for revenue guidance entails a small bit of additional revenue from Spotlight at Vegas.

Speaker 2

But the main drivers of the change in revenue expectations are an upward revision of sports beta 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. 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 we do today, which will drive further diversification and growth in 2026 and beyond.

Speaker 2

You know, everybody always loves to kinda opine or get our opinion on whether on pricing and operators and demand and everything, and and, you know, that that remains as is. Okay. You know? So when you look at these when you look at the margins coming down, it's entirely due to mix shifts. You know, I really wanna stress that it's not margin compression per se.

Speaker 2

You know, our ability to monetize and advance in 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.

Speaker 5

That's helpful. Thanks, Charles. Then just on Spotlight. Vegas, can you give however you wanna quantify it, but anything from the past few years from a financial standpoint? I guess, was it growing, and is was it profitable?

Speaker 5

And just to put the 2026 estimates, a little more context around it.

Speaker 3

Yeah. If you if if you look at at, at 2024, it was it was growing nicely. It did, over 30,000,000 in platform turnover, with, and and it was, profitable. It's a lower margin business at this scale, but as it scales, it's it's quite quickly gross net margin revenues. At the moment, and our and our expectations for 2025 is that it's roughly breakeven and that has to do with with the microenvironment in in Vegas.

Speaker 3

We expect to get together with a little bit of a of a a rebound and and seasonal strength and a little bit more efficient marketing when we get our hands on that. We're we're guiding towards 8,000,000 on that revenue and 1,400,000.0 of of incremental adjusted EBITDA for 2026.

Speaker 5

Thanks, Elias. Good luck, guys.

Operator

And moving on to Barry Jonas with Truist Securities.

Speaker 6

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

Speaker 7

Yeah.

Speaker 2

Have hey, Barry. Happy to touch on that. So, look, I think we get these search rankings back. That brings brings back up the the natural search revenue. But I think overall, you know, we are we are seeing the effects of of AI on search, and our expectations for search revenue going forward are not what they were in the past.

Speaker 2

Having said that, we are making a lot of progress on scaling up all these other channels, you know, stuff that we kinda 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 on scaling up apps, email, paid media, etcetera. And as you can see in our results today, you know, we 've it it it's making it it's making a difference, and it and it, you know, help us hit the numbers for q two. So when I think about next year, it's just gonna be less about search.

Speaker 2

But these other channels will scale meaningfully, and, you know, I think, you know, on the revenue side, it's a different margin profile, so you have to kind of bear that in mind. SEO is always kind of the highest margin, but, you know, we'll we'll see healthy revenue growth from from those other channels, and it won't flow through quite as well to the bottom line as as natural search has done for years. But, it'll still absolutely be profitable. And, you know, when you pair it together with all the different ways we have to monetize the audience, we'll be, you know, we'll be in the best position of anyone to monetize people interested in online gambling.

Speaker 3

Got it. That's that's helpful. And then,

Speaker 6

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

Speaker 2

Yeah. So we we've been spending a lot of time looking at prediction markets. It's a fascinating category. I really like it. You know, it's it's not a big driver of our business yet, but I think it very well could be in a couple of years.

Speaker 2

I think these lawsuits are gonna go to the Supreme Court, and you're gonna have another passport like decision, which could throw the doors open and, you know, really create the next kind of chapter of growth for the whole industry in North America. But, you know, I'd like to kind of speak up for the player. Okay? You know, so much that's written about this industry is about the regulators, the operators, the businesses, obviously. You know, at the end of the day, somebody needs to advocate for the player.

Speaker 2

And, you know, that maybe that role falls to me because I don't think too many people in The US are doing it. And if you look at the state of sports betting in The United States, it ain't great. You know? You 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.

Speaker 2

You've got states with single operator monopolies. Like, how outrageous is that? That is so anti consumer. It's kinda shocking that that exists. So when you look at the traditional gaming regulation model, state based regulators, state based legislation, you know, these you know, I don't wanna I don't wanna say anything bad about these people, and I wouldn't.

Speaker 2

You know, these are very serious, hardworking people doing their best to to, you know, implement the laws that have been created. But at the end of the day, the consumer ain't getting the best deal.

Speaker 3

You

Speaker 2

know? And that's why you still see these offshore sites with meaningful market share. And you're and you're starting to see some, you know, state AGs actually complain to the DOJ DOJ to maybe do something about it, which would be helpful. But then, you know, enter prediction markets. Okay?

Speaker 2

This is a completely new way to regulate this industry. It's actually quite sophisticated. You know, they borrow a lot of really smart technology from financial markets, which, you know, you you is objectively more sophisticated in certain senses than what a lot of the operators and regulators are using today. Yeah. So I think it 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.

Speaker 2

I'm 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 that the legal ambiguity on this category goes away and then becomes a big new thing. Because, you know, as as somebody that grew up in The States, I'm just frustrated that I couldn't bet on sports. Like, it's it's, you know, a lot of progress has been made, but, you know, The US is still pretty clearly behind, you know, most other, you know, OECD developed countries in terms of, you know, the availability and competitiveness of these products. So sorry for the rant and very long answer to your simple question, but I think I think it's a great thing, and it should be given a chance.

Speaker 2

And I you know, we'll be watching closely and and hoping for the best.

Speaker 6

Appreciate all the comments. Thank you.

Operator

And moving on to Clark Lampin with BTIG.

Speaker 8

Thanks for taking the questions. Good evening, guys. Charles, I guess if we go or focus on the sort of marketing piece of your business, 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 US 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 and sort of attractions Has the view of, I guess, the structural margin opportunity or long run EBITDA generation changed in any way?

Speaker 8

Thanks a lot.

Speaker 2

Yeah. No problem. Hey, Mark. Hey, Clark. To pick up on the second one, the more, like, long term margin profile, I think, you know, we've been talking for years about 35 to 40%.

Speaker 2

And, you know, 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 our outlook. You know, we we think we can dramatically grow revenue and have a, you know, very meaningful contribution to adjusted EBITDA with these other channels just within the search marketing business. Sorry. The marketing business.

Speaker 2

But, you know, I I need to bring you back out of that to the sports data services business and everything else we're doing now, you know, 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.

Speaker 2

Yeah. That is increasingly the future of this business, And you can't you know, when we talk about the business overall, you've gotta you've gotta give that part of it. It's it's airtime as well. In terms of mix allocation from operators, demand, all that, you know, what has changed in the past kinda year or two is, you know, we've seen more and more deals or, you know, 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, you know, like for like North American revenue.

Speaker 2

It does affect the comparability of the figures if the previous figures were more CPA driven. You know, we're we're we are seeing a return on those investments on the rev share is profitable, but that that's the only meaningful change, I would say. And that's not a q one to q two thing. That's just a kind of past twelve months thing.

Speaker 3

Thank you.

Operator

Our next question comes from Chad Beynon with Macquarie.

Speaker 9

Hey, guys. This is Aaron on for Chad. Thanks for taking the question. Subscriptions are now about a quarter 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?

Speaker 9

Thank you.

Speaker 2

Yeah. Among all the stuff we're doing, I think growth in in the sports data services business, in particular, Optic Odds, is the most straightforward. It's a product people love and need. You know, we've got some new salespeople on the ground and new markets. There's a couple of product tweaks that need to be made to, you know, make it appeal to a broader, you know, to more different types of operators, if you will.

Speaker 2

But but, fundamentally, it's it's, you know, the best data that's that's out there, and, it's it's not too terribly difficult to sell. So that's that's the that's the clearest opportunity, I think, at this stage.

Speaker 9

Okay. That sounds good. And then with regard to the rotavirus refresh, just interested to hear how that's going, you know, what's changed, and maybe an early read on impact if you can share that. Thank you.

Speaker 2

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

Speaker 9

Okay. Got it. Thank you.

Operator

Moving on to David Katz with Jefferies.

Speaker 7

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

Speaker 7

Thank you.

Speaker 2

Yeah. It's what I like to call digital fundamentals. So, you know, conversion rates across the board, following that customer journey, optimizing each step of it, and then, of course, marketing efficiency. You know, they do a lot of you know, 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.

Speaker 2

But it could be a lot better. I think, you know, fundamentally, they just have a small team, so they haven't been able to to put the pedal to the floor on all the different opportunities that they have. You know, we'll also be able to, of course, bring, you know, cash to invest in in media as necessary. You know, and there's you know, as opposed to the affiliate business where, you know, we are not providing the ultimate service, we're handing the user off to to another company to do that. You know, we lose control at some point.

Speaker 2

And, you know, it's always been a bit of a frustrating element of that business to us because when we hand the user off, okay. You know, 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 it's only our fault if a user doesn't convert. We can't blame it on anyone else.

Speaker 2

And having full control of that customer journey allows us to lean in a lot harder and and and and and deploy our skills across that full customer journey. You know, there's a lot of things we could do to help our operators improve their conversion rates, but, you know, it's a it's a delicate conversation to go to them, you know, get them to change their landing page of their products. But when we own the whole whole thing, it's we can

Speaker 3

just go and do it.

Speaker 7

Thank you. Appreciate it.

Operator

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

Speaker 10

Hey, Charles, LASP. Congratulations, guys, on your Spotlight deal. Just two 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 decay from these shifts to AI powered search engines.

Speaker 10

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.

Speaker 2

Yeah. I mean hey, Mike. Good. Thanks for the question. If you look at these generic AI extensions, they've been around for, you know, two, three years.

Speaker 2

It's not this isn't new. It's been having an effect for some time. But, you know, we we think a lot of that effect is we've already seen. You know, people still need Google search. It's not like it has no utility anymore.

Speaker 2

It clearly is still a a useful product and the search AI experiences are using Google search. You know, what's, I mean, behind a lot of these AI answers is the is the Google search. So, you know, we we we are very realistic about the future of that channel. You know, we've we've certainly brought in our expectations meaningfully, But I am also rather encouraged by our early results and and the work the team has done to ramp up traffic from other channels. So, you know, I'm I'm I think we're gonna be absolutely fine.

Speaker 2

There's just a a couple quarters here where we, redeploy resources into other channels.

Speaker 10

Okay. Thanks, Charles. The second question on cost optimization. You 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 on profitability that's servicing here in in '25 and and maybe '26?

Speaker 2

Yeah. There's an enormous amount of cost we could take out of this business and and and make it incredibly profitable, but we don't wanna do that because now is 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.

Speaker 2

Nothing's changed on our end. And and we, you know, we we we see opportunity, and we think we're very good allocators of capital. So we are in investment mode at this moment. Thank you, guys. Good luck.

Operator

Moving next to David Bain with Texas Capital Bank.

Speaker 11

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

Speaker 11

Be helpful.

Speaker 2

Yeah. Usually, you know, one, two, three months sort of thing, we should, you know, 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. You know, that's that's that's business as usual with Google search engine volatility.

Speaker 2

That does not mean that they're somehow Google now favors them more than affiliates and and then some kind of long term basis. It's just how it's working at the moment. So, yeah, we haven't we haven't lost you know, I think, on a relative basis of the peers, we can continue to dramatically outcompete them and, you know, our share of voice is, I think, way higher than the next than the number two player in most of these markets. But, you know, a couple of operators have have taken a a few positions we had in a few key places. But Okay.

Speaker 2

Any any newer, I would think we'd have it done.

Speaker 11

Okay. Okay.

Speaker 2

If not Go ahead. Okay.

Speaker 11

Not right now. Thanks. Not at all. And then my follow-up was just on optic. You know, if are there some kind of KPIs that you believe would be helpful for us to understand that growth a little bit bit better?

Speaker 11

I mean, is it number of customers from the individual or operator standpoint depending on which optic? Or is it you know, has there been menu choice changes, pricing changes? Anything, would be helpful.

Speaker 2

Yeah. Happy to give you, give you some color there. So on you know, it's two different businesses. It's, Ops Jam and Opticod. Ops Jam is the consumer facing business.

Speaker 2

Opticod is the, you know, b to b enterprise business. Ops Jam clients is is roughly flat, but the average revenue per user is up meaningfully as they are upselling. They're they're selling more to the same user base. And then on the OptiGod side, they you know, they're signing up new clients left and right, and and they're also quite meaningfully, increasing the average revenue per user or client, shall we say, on on that business. So

Speaker 3

excited.

Speaker 11

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

Speaker 2

Meaning? The mix. Okay. You know, one one thing that surprised us about this business is it's not all operators. Right?

Speaker 2

I mean, you've got startups. You've got, you know, professional betters, arbitragers. You've got, you know, apps, media companies. You know, there's a lot of a lot of people need high quality odds data. It's not just the operators.

Speaker 2

But even within the gaming ecosystem and service to operators is the platforms. You know, we can do platform deals and then distribute it into all the operators that are on any given platform. So, you know, there's we've we've signed a number of different interesting deals and, you know, we're we're I think the future is very bright for that. You know, when you include RotoWire, you know, we work with multiple members of the Mag seven. You know, they come to us for our sports data to power, you know, in in part their, you know, various offerings, including AI tools.

Speaker 11

Right on. Very helpful. Thank you.

Operator

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

Speaker 2

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

Operator

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

Powered by Quartr