Gambling.com Group: Riding High on Margin Power and Recurring Revenue Waves

The online gambling sector has long been a playground for disruptors, but few have mastered the art of scalability like Gambling.com Group (GLBGF). Its Q1 2025 results—marked by a 39% revenue surge to $40.6 million and a 39% adjusted EBITDA margin—highlight a company primed to capitalize on its strategic advantages. Let's dissect how its high-margin business model, recurring revenue engine, and industry tailwinds position it for sustained growth.

The Margin Machine: Why High Profits Matter

Gambling.com's profitability stands out. Its adjusted EBITDA margin expanded to 39% in Q1 2025, up from 35% in 2024, thanks to its focus on high-margin sports data services. This segment, which contributed $9.9 million in revenue (a 405% jump YoY), is the crown jewel of its recent acquisitions of OddsJam and OpticOdds. These platforms deliver real-time odds data and analytics to bookmakers, casinos, and sports betting operators—a service with near-zero incremental costs once systems are in place.

The math is simple: higher margins = more cash to reinvest. With $11.4 million in operating cash flow in Q1 alone, the company has the liquidity to fuel further acquisitions or organic expansion.

Recurring Revenue: The Golden Goose of Stability

Gambling.com's recurring revenue—a mix of subscriptions, SaaS-based data tools, and platform fees—now accounts for 24% of total revenue. Management forecasts this to exceed 20% of full-year 2025 revenue, a critical milestone for investors. Recurring revenue isn't just about predictability; it's a moat against competitors.

Take its Q1 acquisition of Odds Holdings, Inc., which added $14.5 million in projected annualized EBITDA. This deal expands its sports data reach into U.S. markets, where regulatory tailwinds are accelerating. Meanwhile, its platform now serves 138,000 new depositing customers (up 29% YoY), a sign of growing demand for its services.

The message is clear: recurring revenue is the engine, and Gambling.com is turbocharging it.

Industry Tailwinds: Betting on Growth

The global online gambling market is booming, with the U.S. leading the charge as states like Missouri prepare to launch regulated sports betting. Gambling.com's diversified portfolio—spanning 19 markets and 12 verticals—gives it geographic and product resilience. Even in a slowing economy, gambling spending remains sticky; the sector's inflation-resistant nature is a key defensive trait.

Management's conservative guidance (2025 revenue: $170–174 million, EBITDA: $67–69 million) excludes potential upside from U.S. expansion, suggesting room for upside surprises. The $165 million credit facility and $21.5 million in cash also provide a safety net for M&A or market volatility.

Investment Thesis: Buy the Margin, Hold the Recurring

Gambling.com's stock has already surged 60% YTD, but fundamentals justify further gains. At a forward P/E of 20x (vs. sector average of 25x), it's undervalued relative to its margin expansion and recurring revenue trajectory. Key catalysts ahead:

1. U.S. market entry: Missouri's launch and potential approvals in other states could add hundreds of millions in incremental revenue.
2. Acquisition synergy: Odds Holdings' integration and cross-selling opportunities with existing data platforms.
3. Margin upside: If recurring revenue hits 25% of total, EBITDA could surpass $100 million by 2026—management's stated goal.

Historically, a strategy of buying GLBGF on earnings announcement dates and holding for 20 days has delivered an average return of 12.08% from 2020 to 2025, though with notable volatility (25.62%) and a maximum drawdown of -15.87%. While the Sharpe ratio of 0.47 suggests moderate risk-adjusted returns, this data underscores the potential upside of timing entries around earnings releases.

Risks to Consider

• Regulatory hurdles: New U.S. states may delay approvals, impacting revenue forecasts.
• Integration risks: Acquisitions like Odds Holdings require seamless operational alignment.
• Competition: Established players like FanDuel (FDGL) could undercut pricing in data services.

Final Verdict: A Winner's Hand

Gambling.com Group isn't just riding trends—it's reshaping them. Its high-margin sports data dominance, recurring revenue flywheel, and strategic acquisitions form a recipe for sustained growth. For investors seeking a leveraged play on the online gambling boom, GLBGF offers both profitability and scalability. The question isn't whether to bet on it, but how much to stake.

Investment recommendation: Accumulate shares on dips, targeting a price target of $5.50–6.00 by end-2025. Avoid chasing momentum; let the fundamentals drive returns.

Data as of Q1 2025. Past performance does not guarantee future results. Always consult a financial advisor before making investment decisions.