Gambling.com (GAMB) may sound like a place for gambling, but it is actually a company that provides information and reviews on various betting and gambling services through its portfolio of branded websites. These sites guide users in selecting reputable and legal gambling options tailored to their locations and preferences. GAMB earns fees when users click on links from its websites to online gambling operators and make deposits. The company had a strong start to 2024, delivering over 107,000 new depositing customers to its clients in Q1, driving a 10% increase in revenue to $29.2 million.
Despite the strong performance in Q1, changes in Google’s algorithm in May regarding sponsored articles on media sites like USA Today led GAMB to reduce its full-year revenue guidance by $11 million and adjusted Ebitda by $4 million. This caused investors to abandon the stock, which had already fallen 38% since November. However, the algorithm changes could benefit GAMB in the long run by reducing competition in search-engine results and increasing traffic to its own websites. This, combined with the higher margins on direct traffic, could limit the impact on earnings.
Even with the reduced outlook, GAMB still expects sales and Ebitda growth of about 11% and 22% at the midpoint for the rest of the year. The company’s assumptions do not include potential future expansions of iGaming and online sports betting in North America or the increased traffic already seen from the Google switch to its own websites. This suggests that actual results for 2024 could exceed the cautious guidance given by the company. GAMB remains one of the top picks from Forbes Investor, with significant upside potential.
GAMB is expected to maintain solid top-line growth through further gains in market share, expansions of iGaming and online sports betting in new North American markets, and growth in established European markets. The company indicated it is comfortable with the current consensus estimate for 2025 adjusted Ebitda of $54.8 million, which would represent over 30% growth from what is expected in 2024. There is potential for GAMB to reach $100 million in earnings over the next few years, leading to a rebound in its stock. Investors looking for more investment ideas can look into companies like Lakeland Industries (LAKE), which is currently a hot stock.
Overall, while challenges such as the Google algorithm changes have impacted GAMB’s outlook, the company’s strong performance in Q1 and ongoing drivers for growth suggest that it still has significant potential for the future. With the potential for further expansion in North America and European markets, as well as continued gains in market share, GAMB remains a compelling investment opportunity. Investors may want to consider the long-term growth prospects of GAMB and its potential for future earnings growth.
