Gambling.com Group's Q2 2025 Earnings: A Buy Opportunity Amid Strategic Diversification and Earnings Momentum

Gambling.com Group (GAMB) has long been a standout in the high-growth but volatile online gambling sector. Its Q2 2025 earnings report, however, marks a pivotal moment—a blend of resilient revenue growth, strategic acquisitions, and a forward-looking pivot to AI-resistant digital marketing that positions the company as a compelling buy ahead of its full-year upside.

Revenue Growth: A Dual-Engine Powerhouse

The company's Q2 revenue surged 30% year-over-year to $39.6 million, driven by two distinct but complementary engines: marketing services and sports data services. While marketing services grew modestly by 3% to $29.6 million (despite a tough prior-year comparison tied to North Carolina's online sports betting launch), sports data services quadrupled to $10 million. This latter growth was fueled by acquisitions like OddsJam and OpticOdds, which have transformed Gambling.com Group into a data-centric player.

The significance of recurring revenue cannot be overstated. Subscription and recurring revenue now account for 51% of total Q2 revenue, a testament to the company's ability to lock in clients and users. This sticky revenue model provides a buffer against market volatility and sets a strong foundation for long-term earnings.

Margin Expansion: Navigating Costs with Precision

Despite a slight dip in gross profit margin to 93.2% (from 95.3% in Q2 2024), the company's gross profit grew 27% to $36.9 million. The margin contraction was largely due to diversification efforts and integration costs from recent acquisitions. However, adjusted EBITDA rose 22% to $13.7 million, with a 35% margin, reflecting disciplined cost management.

The CEO's emphasis on an omnichannel marketing strategy—shifting away from traditional SEO to paid media, social, and email marketing—is paying off. This pivot is critical as Google's Core algorithm update continues to erode search-driven traffic. By diversifying traffic sources, Gambling.com Group is insulating itself from algorithmic shocks while tapping into high-intent audiences.

Strategic Acquisitions: Spotlight.Vegas and the Path to Diversification

The acquisition of Spotlight.Vegas, a Las Vegas-based event booking platform, is a masterstroke. For $8 million upfront and up to $22 million in performance-based earn-outs, Gambling.com Group gains access to a platform that generated $30 million in ticket sales in 2024. This move not only diversifies revenue streams but also leverages the company's digital marketing expertise to monetize live events—a sector with untapped potential.

Spotlight.Vegas's integration into Gambling.com Group's ecosystem is expected to yield $8 million in net revenue and $1.4 million in incremental Adjusted EBITDA in 2026. The acquisition also opens doors to new clients, including land-based casinos and entertainment venues, expanding the company's addressable market.

AI-Resistant Marketing: A Competitive Edge

The CEO's remarks on AI-driven search trends are particularly telling. While many industries grapple with AI's disruptive impact, Gambling.com Group is leveraging its industry-leading authority and early adoption of AI tools to capture high-intent traffic. This “AI-resistant” strategy—focusing on user intent and data-driven personalization—positions the company to outperform peers reliant on traditional SEO.

The RotoWire brand refresh, completed ahead of the NFL season, is another example of this approach. Early results show double-digit year-on-year growth, underscoring the power of a modernized product and brand identity.

Financial Fortitude and Full-Year Guidance

Gambling.com Group's balance sheet is a fortress. With $18.7 million in cash and an undrawn $70.5 million credit facility, the company has ample liquidity to fund acquisitions, R&D, or share buybacks. Its revised full-year guidance—$171–175 million in revenue (36% growth) and $62–64 million in Adjusted EBITDA (29% growth)—is conservative given the momentum in sports data and the Spotlight.Vegas acquisition.

Investment Thesis: Buy for the Long Game

The risks are not negligible. The Google algorithm update has pressured margins, and acquisition-related expenses will weigh on short-term profitability. However, these are temporary headwinds in a company with a 30% revenue growth trajectory, a 35% adjusted EBITDA margin, and a clear path to diversification.

For investors, the key takeaway is this: Gambling.com Group is not just surviving in a fragmented industry—it's redefining its value proposition through data, AI, and strategic M&A. At current valuations, the stock offers a compelling entry point for those willing to bet on a company that's building a moat around its digital marketing expertise and recurring revenue streams.

Verdict: Buy GAMB. The company's earnings momentum, strategic clarity, and AI-resistant playbook make it a standout in a sector where most players are chasing the same SEO-driven playbook. With the spotlight now on Vegas—and beyond—Gambling.com Group is poised to deliver outsized returns.