Affiliate giant Gambling.com Group has reported a 249.1% year-on-year increase in comprehensive profit for the first half of 2020, despite revenue growth having slowed due to the novel coronavirus (Covid-19) pandemic.
Total revenue for the six months to 30 June came in at €9.5m (£8.5m/$11.3m), down 2.2% from €9.7m in the corresponding period last year.
Earned revenues – comprising search engine optimisation and direct navigation – amounted to €9.3m in H1, up 6.0% on the previous year and accounting for most of Gambling.com Group’s revenue in the first half.
However, paid revenue, which covers bought traffic, dropped by 78.0% year-on-year to €210,000, with the business putting a halt to these operations during the first quarter, which then remained paused in the second quarter.
Revenue generated from locally regulated markets accounted for 69.0% of the fist half total.
Looking at costs for H1, Gambling.com Group’s operating expenses totalled €6.0m, a reduction of 18.2% from €7.3m in the same period in 2019.
Direct costs related to paid revenue fell 69.3% to €270,000 in the first half due to the fact this area of the business remained paused for a large portion of the period.
Elsewhere, personnel expenses increased 11.7% to €3.8m, but other operating costs were almost halved from €2.6m to €1.4m as a result of temporary reductions in spending on sports content and travelling due to the Covid-19 crisis.
Other spend included €224,000 in non-recurring costs related to restructuring, as well as €65,000 in on-recurring costs related to financing and investing, and €218,000 for depreciation and amortisation.
Despite the slight decline in revenue, the overall drop in operational costs meant that Gambling.com Group was able to post an operating profit of €3.5m for the half, up 47.4% from €3.5m last year.
In terms of other spending, the group recorded €359,000 in finance costs as well as €727,000 in interest on borrowings, but this was more than offset by additional income.
This included €1.8m worth of gains on financial liability at fair value through profit and loss – which last year stood at a loss of €50,000 – as well as €298,000 in finance income, up from €47,000 in 2019.
As a result, Gambling.com Group posted €4.5m in profit before tax, some 258.8% more than last year. After paying €439,000 in tax during the period, this left the group with €4.1m in comprehensive profit, up 249.1% on last year. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) also climbed 4.9% to €4.0m.
Chief executive Charles Gillespie (pictured) said the growth in the first half was helped by a record performance in the second quarter, during which it posted all-time highs for revenue, EBITDA, casino new depositing customers (NDCs) and earned NDCs, despite pausing media buying and virtually no sporting events due to Covid-18.
Revenue in Q2 – the three months to 30 June – amounted to €4.4m, up 28.8% on a year-on-year basis. Earned revenue jumped 37.0%, but paid revenue was down 85% and only comprised of legacy payments due to the lack of activity here.
Operating costs were reduced by 25.8% to €2.6m, which meant the business recorded €3.1m in operating profit for the quarter, up 256.9% year-on-year. After accounting for other costs and income, pre-tax profit totalled €2.8m, up 921.0% from €272,00 last year.
Gambling.com Group paid €359,000 in tax in Q2, which left it with a comprehensive profit of €2.4m, up 891% from €244,000 in Q2 of 2019.
“As expected, we saw a decline in sports revenue in the quarter as a result of Covid-19 postponements and cancellations of most sports events,” Gillespie said. “However, the decline in sports revenue was offset by increased demand for other online gambling products like casino and poker.
“We attribute this increased consumer demand to a variety of factors including the closure of land-based gaming facilities, restriction on movement and substitution demand from sports bettors unable to wager normally. We expect to see increased adoption of online gambling products persist post-pandemic.”
In terms of what the rest of the year holds for the business, Gillespie said that there is reason to be confident, given the group’s performance in the first half, especially in Q2 when the pandemic was at its peak in many countries.
“Although we remain cautious about the general economic implications of the Covid-19 pandemic, online-based business models such as ours have benefited from an accelerated structural shift from offline to online,” he said.
“The group itself continues to benefit from improved operational efficiencies from our new technology platforms. We are now in a position to accelerate product development and optimisation. We look to the future with confidence.”
