Third Quarter 2021 Financial Highlights
Third Quarter 2021 Business Highlights
"Our financial performance in the third quarter remained strong as we grew revenue by 37% compared to the prior year and, despite the third quarter being the seasonally slowest quarter of the year, delivered an Adjusted EBITDA margin of 34%," said
1 | Adjusted figures represent non-IFRS information. See "Non-IFRS Financial Measures" and the tables at the end of this release for an explanation of the adjustments and reconciliations to the comparable IFRS numbers. |
2 | Adjusted figures represent non-IFRS information. See "Non-IFRS Financial Measures" and the tables at the end of this release for an explanation of the adjustments and reconciliations to the comparable IFRS numbers. |
Third Quarter 2021 vs. Third Quarter 2020 Financial Highlights
THREE MONTHS ENDED | CHANGE | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands USD, except for | ||||||||||||||||
CONSOLIDATED STATEMENTS OF | ||||||||||||||||
Revenue | $ | 10,123 | $ | 7,406 | $ | 2,717 | 37 | % | ||||||||
Operating expenses | (7,722) | $ | (3,931) | $ | (3,791) | 96 | % | |||||||||
Operating profit | 2,401 | 3,475 | (1,074) | (31) | % | |||||||||||
Income before tax | 2,694 | 2,609 | 85 | 3 | % | |||||||||||
Net income for the period attributable to the | $ | 4,675 | $ | 2,303 | $ | 2,372 | 103 | % | ||||||||
Net income per share attributable to ordinary | 0.14 | 0.08 | 0.06 | 75 | % | |||||||||||
Net income per share attributable to ordinary | 0.13 | 0.08 | 0.05 | 63 | % | |||||||||||
n/m = not meaningful |
THREE MONTHS ENDED | CHANGE | ||||||||||||||||
2021 | 2020 | $ | % | ||||||||||||||
(in thousands USD, unaudited) | |||||||||||||||||
NON-IFRS FINANCIAL MEASURES | |||||||||||||||||
Adjusted EBITDA | $ | 3,464 | $ | 4,027 | $ | (563) | (14) | % | |||||||||
Adjusted EBITDA Margin | 34 | % | 54 | % | n/m | n/m | |||||||||||
Free Cash Flow | 754 | 3,917 | (3,163) | (81) | % | ||||||||||||
n/m = not meaningful |
THREE MONTHS ENDED | CHANGE | |||||||||||||||
2021 | 2020 | Amount | % | |||||||||||||
(in thousands, unaudited) | ||||||||||||||||
OTHER SUPPLEMENTAL DATA | ||||||||||||||||
New Depositing Customers (1) | 27 | 28 | (1) | (4) | % | |||||||||||
(1) | We define New Depositing Customers, or NDCs, as unique referral of a player from our system to one of our customers that satisfied an agreed metric (typically making a deposit above a minimum threshold) with the customer, thereby triggering the right to a commission for us. |
AS OF | AS OF | CHANGE | ||||||
2021 | 2020 | $ | % | |||||
(Unaudited) | ||||||||
(in thousands, USD) | ||||||||
CONSOLIDATED STATEMENTS OF FINANCIAL | ||||||||
Cash and cash equivalents | n/m | |||||||
Working capital (2) | 55,064 | 10,059 | 45,005 | n/m | ||||
Total assets | 91,648 | 45,383 | 46,265 | n/m | ||||
Total borrowings | 5,919 | 5,960 | (41) | n/m | ||||
Total liabilities | 11,373 | 11,171 | 202 | n/m | ||||
Total equity | 80,275 | 34,212 | 46,063 | n/m |
(2) | Working capital is defined as total current assets minus total current liabilities. | |||
n/m = not meaningful |
Revenue
Total revenue in the third quarter increased 37% to
Our revenue disaggregated by market is as follows:
THREE MONTHS ENDED | CHANGE | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands USD, unaudited) | ||||||||||||||||
$ | 4,483 | $ | 4,311 | $ | 172 | 4 | % | |||||||||
Other | 2,718 | 1,162 | 1,556 | 134 | % | |||||||||||
2,270 | 1,081 | 1,189 | 110 | % | ||||||||||||
Rest of the world | 652 | 852 | (200) | (23) | % | |||||||||||
Total revenues | $ | 10,123 | $ | 7,406 | $ | 2,717 | 37 | % |
Revenue increases were primarily driven by organic growth in our Other Europe and North American markets.
Our revenue disaggregated by monetization is as follows:
THREE MONTHS ENDED | CHANGE | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands USD, unaudited) | ||||||||||||||||
Hybrid commission | $ | 2,808 | $ | 3,847 | $ | (1,039) | (27) | % | ||||||||
Revenue share commission | 829 | 794 | 35 | 4 | % | |||||||||||
CPA commission | 5,455 | 2,535 | 2,920 | 115 | % | |||||||||||
Other revenue | 1,031 | 230 | 801 | 348 | % | |||||||||||
Total revenues | $ | 10,123 | $ | 7,406 | $ | 2,717 | 37 | % |
Revenue increases were driven primarily by additional CPA commission and Other revenue. The increase in Other revenue was driven primarily by bonuses related to achieving certain operator NDC performance targets.
Our revenue disaggregated by product type from which it is derived is as follows:
THREE MONTHS ENDED | CHANGE | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands USD, unaudited) | ||||||||||||||||
Casino | $ | 7,965 | $ | 6,354 | $ | 1,611 | 25 | % | ||||||||
Sports | 2,076 | 858 | 1,218 | 142 | % | |||||||||||
Other | 82 | 194 | (112) | (58) | % | |||||||||||
Total revenues | $ | 10,123 | $ | 7,406 | $ | 2,717 | 37 | % |
Revenue increases were driven by growth in revenue from casino and sports products.
Operating Expenses
THREE MONTHS ENDED | CHANGE | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands USD, unaudited) | ||||||||||||||||
Sales and marketing expenses | $ | 3,587 | $ | 1,790 | $ | 1,797 | 100 | % | ||||||||
Technology expenses | 1,123 | 663 | 460 | 69 | % | |||||||||||
General and administrative expenses | 2,978 | 1,402 | 1,576 | 112 | % | |||||||||||
Allowance for credit losses and write offs | 34 | 76 | (42) | (55) | % | |||||||||||
Total operating expenses | $ | 7,722 | $ | 3,931 | $ | 3,791 | 96 | % |
n/m = not meaningful |
Total operating expenses increased by
Sales and Marketing expenses totaled
Technology expenses totaled
General and Administrative expenses totaled
Earnings
Adjusted EBITDA decreased by 14% to
Operating profit in the third quarter decreased 31% to
Net income in the third quarter totaled
Free Cash-flow
Total cash generated from operations of
Balance Sheet
Cash balances as of
Total assets as of
Total equity as of
The increases in working capital, total assets, and total equity were driven primarily by the net proceeds received from the IPO and operating profit and net income generated by the Company.
2021 – 2023 Financial Targets
Total Revenue Growth | > Average 40% | |
Adjusted EBITDA Margin3 | > Average 40% | |
Leverage4 | < Net Debt to Adjusted EBITDA 2.5x5 |
2021 Outlook
Conference Call Details
Date/Time: | ||
Webcast: | ||
877-407-0890 | ||
International Dial In: | +1-201-389-0918 |
To access the call, please dial in approximately ten minutes before the start of the call. An accompanying slide presentation will be available in PDF format within the "News & Events" section of the Company's website.
An archived webcast of the conference call will also be available in the News & Events section of the Company's website at gambling.com/corporate/investors/news-events.
For further information, please contact:
Media:
Investors:
About
3 | Adjusted figures represent non-IFRS information. See "Non-IFRS Financial Measures" and the tables at the end of this release for an explanation of the adjustments and reconciliations to the comparable IFRS numbers. | |||||
4 | Leverage is defined as Net Debt as a proportion of Adjusted EBITDA. | |||||
5 | Net Debt is defined as Borrowings less Cash and Cash Equivalents. |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) | ||||||||||||||||
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Revenue | 10,123 | 7,406 | 32,032 | 17,713 | ||||||||||||
Sales and marketing expenses | (3,587) | (1,790) | (9,435) | (5,661) | ||||||||||||
Technology expenses | (1,123) | (663) | (2,757) | (1,705) | ||||||||||||
General and administrative expenses | (2,978) | (1,402) | (9,137) | (3,347) | ||||||||||||
Allowance for credit losses and write offs | (34) | (76) | 66 | (239) | ||||||||||||
Operating profit | 2,401 | 3,475 | 10,769 | 6,761 | ||||||||||||
(Losses) gains on financial liability at fair value through | — | (411) | — | 1,810 | ||||||||||||
Finance income | 884 | 13 | 1,436 | 328 | ||||||||||||
Finance expense | (591) | (468) | (1,352) | (1,636) | ||||||||||||
Income before tax | 2,694 | 2,609 | 10,853 | 7,263 | ||||||||||||
Income tax credit (charge) | 1,981 | (306) | 733 | (653) | ||||||||||||
Net income for the period attributable to the | 4,675 | 2,303 | 11,586 | 6,610 | ||||||||||||
Other comprehensive income | ||||||||||||||||
Exchange differences on translating foreign currencies | (1,785) | 784 | (2,987) | 750 | ||||||||||||
Total comprehensive income for the period | 2,890 | 3,087 | 8,599 | 7,360 | ||||||||||||
Net income per share attributable to ordinary | 0.14 | 0.08 | 0.39 | 0.24 | ||||||||||||
Net income per share attributable to ordinary | 0.13 | 0.08 | 0.34 | 0.22 |
Condensed Consolidated Statements of Financial Position (Unaudited) | ||||||||
|
| |||||||
ASSETS | ||||||||
Non-current assets | ||||||||
Property and equipment | 535 | 515 | ||||||
Intangible assets | 23,073 | 23,560 | ||||||
Right-of-use assets | 1,564 | 1,799 | ||||||
Deferred tax asset | 7,323 | 5,778 | ||||||
Total non-current assets | 32,495 | 31,652 | ||||||
Current assets | ||||||||
Trade and other receivables | 5,993 | 5,506 | ||||||
Cash and cash equivalents | 53,160 | 8,225 | ||||||
Total current assets | 59,153 | 13,731 | ||||||
Total assets | 91,648 | 45,383 | ||||||
EQUITY AND LIABILITIES | ||||||||
Equity | ||||||||
Share capital | — | 64 | ||||||
Capital reserve | 55,895 | 19,979 | ||||||
Share options and warrants reserve | 1,908 | 296 | ||||||
Foreign exchange translation reserve | (457) | 2,530 | ||||||
Retained earnings | 22,929 | 11,343 | ||||||
Total equity | 80,275 | 34,212 | ||||||
Non-current liabilities | ||||||||
Borrowings | 5,919 | 5,937 | ||||||
Lease liability | 1,365 | 1,562 | ||||||
Total non-current liabilities | 7,284 | 7,499 | ||||||
Current liabilities | ||||||||
Trade and other payables | 2,995 | 2,428 | ||||||
Borrowings and accrued interest | — | 23 | ||||||
Lease liability | 405 | 413 | ||||||
Income tax payable | 689 | 808 | ||||||
Total current liabilities | 4,089 | 3,672 | ||||||
Total liabilities | 11,373 | 11,171 | ||||||
Total equity and liabilities | 91,648 | 45,383 |
Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||||
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||
2021 | 2020 | 2021 | 2020 | |||||
Cash flow from operating activities | ||||||||
Income before tax | 2,694 | 2,609 | 10,853 | 7,263 | ||||
Finance (income) expenses, net | (293) | 455 | (84) | 1,308 | ||||
Losses (gains) on financial instruments valuation | — | 411 | — | (1,810) | ||||
Adjustments for non-cash items: | ||||||||
Depreciation and amortization | 585 | 552 | 1,801 | 1,603 | ||||
Movements in credit loss allowance | 34 | 76 | (66) | 239 | ||||
Other write offs | 87 | — | 87 | — | ||||
Share option charge | 402 | — | 1,466 | — | ||||
Cash flows from operating activities before changes in | 3,509 | 4,103 | 14,057 | 8,603 | ||||
Changes in working capital | ||||||||
Trade and other receivables | 503 | 60 | (741) | (1,081) | ||||
Trade and other payables | (1,903) | 11 | 807 | 51 | ||||
Income tax paid | (728) | (206) | (1,264) | (206) | ||||
Cash flows generated by operating activities | 1,381 | 3,968 | 12,859 | 7,367 | ||||
Cash flows from investing activities | ||||||||
Acquisition of property and equipment | (62) | (51) | (227) | (68) | ||||
Acquisition of intangible assets | (565) | — | (2,359) | — | ||||
Cash flows used in investing activities | (627) | (51) | (2,586) | (68) | ||||
Cash flows from financing activities | ||||||||
Issue of ordinary shares and share warrants | 41,922 | — | 41,922 | 630 | ||||
Equity issue costs | (6,070) | — | (6,070) | (40) | ||||
Repayment of notes and bonds | — | — | — | (3,444) | ||||
Interest paid | (243) | — | (364) | (677) | ||||
Warrants repurchased | — | — | — | (129) | ||||
Principal paid on lease liability | (64) | (76) | (159) | (151) | ||||
Interest paid on lease liability | (47) | (46) | (143) | (145) | ||||
Cash flows generated from (used in) financing activities | 35,498 | (122) | 35,186 | (3,956) | ||||
Net movement in cash and cash equivalents | 36,252 | 3,795 | 45,459 | 3,343 | ||||
Cash and cash equivalents at the beginning of the | 17,168 | 6,958 | 8,225 | 6,992 | ||||
Net foreign exchange differences on cash and cash | (260) | 98 | (524) | 516 | ||||
Cash and cash equivalents at the end of the period | 53,160 | 10,851 | 53,160 | 10,851 |
Supplemental Information
Constant Currency
Changes in our financial results include the impact of changes in foreign currency exchange rates. We provide "constant currency" analysis, as if EUR-USD exchange rate had remained constant period-over-period, to enhance the comparability of our results. When we use the term "constant currency," we adjust for the impact related to the translation of our condensed consolidated financial statements from EUR to USD by translating financial data for the three months
Constant currency metrics should not be considered in isolation or as a substitute for reported results prepared in accordance with IFRS. Refer to "Results of Operations" for Management's discussion of the constant currency impact for these periods. For foreign exchange rates used, refer to "Note 3 Significant Accounting Policies," within the Notes to the Condensed Consolidated Financial Statements.
Rounding
We have made rounding adjustments to some of the figures included in the discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes thereto. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.
Cautionary Note Concerning Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act and the safe harbor provisions of the
Non-IFRS Financial Measures
Management uses several financial measures, both IFRS and non-IFRS financial measures in analyzing and assessing the overall performance of the business and for making operational decisions.
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin
EBITDA is a non-IFRS financial measure defined as earnings excluding net finance costs, income tax charge, depreciation, and amortization. Adjusted EBITDA is a non-IFRS financial measure defined as EBITDA adjusted to exclude the effect of non-recurring items, significant non-cash items, share-based payment expense and other items that our board of directors believes do not reflect the underlying performance of the business. Adjusted EBITDA Margin is a non-IFRS measure defined as Adjusted EBITDA as a percentage of revenue.
We believe EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are useful to our management as a measure of comparative operating performance from period to period as they remove the effect of items not directly resulting from our core operations including effects that are generated by differences in capital structure, depreciation, tax effects and non-recurring events.
While we use EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin as tools to enhance our understanding of certain aspects of our financial performance, we do not believe that EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are substitutes for, or superior to, the information provided by IFRS results. As such, the presentation of EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin is not intended to be considered in isolation or as a substitute for any measure prepared in accordance with IFRS. The primary limitations associated with the use of EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin as compared to IFRS results are that EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin as we define them may not be comparable to similarly titled measures used by other companies in our industry and that EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin may exclude financial information that some investors may consider important in evaluating our performance.
Below is a reconciliation to EBITDA and Adjusted EBITDA from net income for the period attributable to the equity holders as presented in the Condensed Consolidated Statements of Comprehensive Income and for the period specified:
THREE MONTHS | CHANGE | NINE MONTHS | CHANGE | |||||||||||||
2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||
(in thousands USD, | (in thousands USD, | |||||||||||||||
Net income for the period | 2,372 | 103% | 4,976 | 75% | ||||||||||||
Add Back: | ||||||||||||||||
Net finance (income) costs (1) | (293) | 866 | (1,159) | (134)% | (84) | (502) | 418 | (83)% | ||||||||
Income tax (credit) charge | (1,981) | 306 | (2,287) | (747)% | (733) | 653 | (1,386) | (212)% | ||||||||
Depreciation expense | 42 | 31 | 11 | 35% | 124 | 90 | 34 | 38% | ||||||||
Amortization expense | 543 | 521 | 22 | 4% | 1,677 | 1,513 | 164 | 11% | ||||||||
EBITDA | (1,041) | (26)% | 4,206 | 50% | ||||||||||||
Share-based payments | 402 | — | 402 | 100% | 1,466 | — | 1,466 | 100% | ||||||||
Non-recurring accounting and legal | 76 | — | 76 | 100% | 974 | — | 974 | 100% | ||||||||
Non-recurring employees' bonuses | — | — | — | 0% | 1,097 | — | 1,097 | 100% | ||||||||
Non-recurring related to lease termination | — | — | — | 0% | — | 155 | (155) | (100)% | ||||||||
Adjusted EBITDA | (14)% | 89% |
(1) | Net finance (income) costs is comprised of gains or losses on financial liability at fair value through profit or loss, finance income, and finance expense. | ||||
n/m = not meaningful |
Below is the Adjusted EBITDA Margin calculation for the period specified:
THREE MONTHS ENDED | CHANGE | NINE MONTHS ENDED | CHANGE | |||||||||||||
2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||
(in thousands USD, | (in thousands USD, | |||||||||||||||
Revenue | 2,717 | 37% | 14,319 | 81% | ||||||||||||
Adjusted EBITDA | 3,464 | 4,027 | (563) | (14)% | 16,107 | 8,519 | 7,588 | 89% | ||||||||
Adjusted EBITDA Margin | 34% | 54% | n/m | n/m | 50% | 48% | n/m | n/m |
n/m = not meaningful |
Free Cash Flow
Free Cash Flow is a non-IFRS financial measure defined as cash flow from operating activities less capital expenditures, or CAPEX.
We believe Free Cash Flow is useful to our management as a measure of financial performance as it measures our ability to generate additional cash from our operations. While we use Free Cash Flow as a tool to enhance our understanding of certain aspects of our financial performance, we do not believe that Free Cash Flow is a substitute for, or superior to, the information provided by IFRS metrics. As such, the presentation of Free Cash Flow is not intended to be considered in isolation or as a substitute for any measure prepared in accordance with IFRS.
The primary limitation associated with the use of Free Cash Flow as compared to IFRS metrics is that Free Cash Flow does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other obligations or payments made for business acquisitions. Free Cash Flow as we define it also may not be comparable to similarly titled measures used by other companies in the online gambling affiliate industry.
Below is a reconciliation to Free Cash Flow from cash flows generated by operating activities as presented in the Condensed Consolidated Statement of Cash Flows for the period specified:
THREE MONTHS ENDED | CHANGE | NINE MONTHS ENDED | CHANGE | |||||||||||||
2021 | 2020 | $ | % | 2021 | 2020 | $ | % | |||||||||
(in thousands USD, | (in thousands USD, | |||||||||||||||
Cash flows generated by operating | (2,587) | (65)% | 5,492 | 75% | ||||||||||||
Capital Expenditures | (627) | (51) | (576) | n/m | (2,586) | (68) | (2,518) | n/m | ||||||||
Free Cash Flow | (3,163) | (81)% | 41% |
n/m = not meaningful |
Earnings Per Share
Below is a reconciliation of basic and diluted earnings per share as presented in the Condensed Consolidated Statement of Income for the period specified:
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||
2021 | 2020 | 2021 | 2020 | |||||
(in thousands USD, except for share and per share data, unaudited) | ||||||||
Net income for the period attributable | 4,675 | 2,303 | 11,586 | 6,610 | ||||
Weighted-average number of ordinary shares, basic | 32,364,114 | 27,570,812 | 29,830,319 | 27,486,143 | ||||
Net income per share attributable to | 0.14 | 0.08 | 0.39 | 0.24 | ||||
Net income for the period attributable | 4,675 | 2,303 | 11,586 | 6,610 | ||||
Weighted-average number of ordinary shares, diluted | 36,184,575 | 30,666,166 | 33,640,305 | 30,725,252 | ||||
Net income per share attributable to | 0.13 | 0.08 | 0.34 | 0.22 |
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