Gambling.com's Subscription Revenue Model and Strategic M&A: A Catalyst for Sustained EBITDA Growth and Shareholder Value

In the rapidly evolving landscape of digital gambling and performance marketing, Gambling.com Group has emerged as a standout player, leveraging a dual strategy of high-margin owned assets and strategic acquisitions to drive EBITDA growth and shareholder value. Despite short-term headwinds from Google's 2024 policy changes, the company's adaptability and focus on subscription-based revenue models position it to outperform industry benchmarks and sustain long-term profitability.

Strategic M&A: Fueling EBITDA Growth

Gambling.com's 2024 financial performance underscores the power of its acquisition-driven strategy. The acquisitions of RotoWire and Freebets.com in 2023 and 2024, respectively, catalyzed a 39% year-over-year increase in Adjusted EBITDA to $14.7 million in Q4 2024. These acquisitions expanded the company's performance marketing capabilities and diversified its revenue streams. For instance, Freebets.com's integration reduced cost of sales by 57% year-over-year, while RotoWire contributed to a 34% surge in advertising and other revenue to $4.7 million.

The full-year 2024 results further validate this strategy: revenue grew 17% to $127.2 million, and Adjusted EBITDA rose 33% to $48.7 million. The company's 2025 outlook, bolstered by the January 2025 acquisition of Odds Holdings, Inc., projects 35-40% year-over-year EBITDA growth. With Odds Holdings expected to add $14.5 million in incremental Adjusted EBITDA, Gambling.com's acquisition pipeline remains a critical driver of margin expansion.

Subscription Models: High-Margin Sustained Growth

Beyond M&A, Gambling.com's shift toward subscription-based revenue has been a game-changer. Its owned and operated websites now operate at 100% gross margins, generating recurring revenue from sports betting, iGaming, and affiliate marketing. This model contrasts sharply with traditional media partnerships, which historically carried lower margins due to referral fees. By prioritizing its own assets, Gambling.com has insulated itself from volatility while capitalizing on digital gaming's growth.

The company's Q2 2024 results exemplify this shift: revenue rose 18% to $30.5 million, with Adjusted EBITDA up 19% to $11.2 million. CEO Charles Gillespie highlighted that recalibrating the company's portfolio to focus on high-margin sites offset revenue declines from Google's policy changes. This pivot not only stabilized margins but also reduced reliance on third-party partners, a strategic advantage in an industry where regulatory and algorithmic risks are ever-present.

Navigating Google's Policy Changes

Google's 2024 crackdown on “scaled content abuse” initially threatened Gambling.com's media partnerships, which rely on keyword-dense content for search visibility. However, the company's agility turned a potential crisis into an opportunity. By accelerating the optimization of its owned sites and adopting a more selective approach to media partners (e.g., partnering with Gannett and McClatchy), Gambling.com mitigated short-term losses and strengthened its long-term position.

Gillespie noted that traffic to owned sites increased, while commission costs to partners decreased. This duality—higher-margin revenue and lower expenses—offset the impact of reduced media partnership contributions. The company's proactive recalibration also positioned it to benefit from Google's evolving search ecosystem, as it aligns with the platform's emphasis on quality content.

Outperforming Industry Benchmarks

The gambling industry's EBITDA growth from 2023 to 2025 has been driven by digital segments like sports betting and iGaming, which grew 24.8% and 28.7% year-over-year in 2024, respectively. Gambling.com's 33% EBITDA growth in 2024 outpaces the 7.3% average for U.S. commercial gaming revenue, highlighting its ability to leverage digital trends.

Moreover, Gambling.com's EBITDA margin of 39.5% (based on full-year 2024 guidance) exceeds the industry's 38.8% average for Las Vegas operators, reflecting the scalability of its subscription model. Traditional operators like Caesars and MGM, which face higher labor costs and regional competition, have struggled to match such margins. In contrast, Gambling.com's focus on digital assets and recurring revenue ensures a more predictable and resilient growth trajectory.

Investment Implications

Gambling.com's strategic M&A and subscription-driven model position it as a compelling long-term investment. The company's ability to adapt to regulatory and algorithmic headwinds—such as Google's policy changes—demonstrates operational agility and management foresight. With a 2025 EBITDA guidance of 35-40% growth and a robust pipeline of acquisitions, Gambling.com is well-positioned to capitalize on the expanding U.S. and global gambling markets.

Investors should monitor the company's Q2 2025 earnings report (scheduled for August 14, 2025) for confirmation of its momentum. In the meantime, the stock's valuation relative to peers and its strong cash flow generation make it an attractive play for those seeking exposure to the high-growth digital gambling sector.

Conclusion
Gambling.com's dual focus on strategic acquisitions and high-margin subscription models has created a durable competitive advantage. By navigating short-term challenges and aligning with the industry's digital transformation, the company is poised to deliver sustained EBITDA growth and long-term shareholder value. For investors, this represents a rare opportunity to back a business that not only adapts to change but thrives in it.