NEW YORK - Gambling.com Group experienced a significant 19% decline in its share price, falling to $11.07 during its third-quarter earnings call today. The drop was attributed to a series of financial challenges, including rising sales costs and a dip in European revenue.
The company's sales expenses surged to $2.1 million, up from $600,000 in the same period last year, contributing to an overall increase in operating expenses by 9% to $16.6 million. This uptick was partly due to an expanded workforce, although the company has moderated its hiring pace.
Despite maintaining stable revenue from the UK and Ireland at $6.9 million, Gambling.com faced a setback in other European markets, primarily due to stringent regulatory changes in Germany that led to a 17% decrease in regional revenue.
On a positive note, adjusted Ebitda margins expanded by 26%, buoyed by enhanced media partnership revenues. However, the company's cash reserves decreased to $26.9 million after the strategic acquisition of BonusFinder for $5.4 million.
Earnings for the quarter stood at $5 million or 13 cents per share, exceeding analysts' projections of $4.4 million or 12 cents per share. Quarterly revenue reached $23.5 million, marking a 19% rise from the previous year and surpassing the anticipated $22.2 million.
Looking ahead, Gambling.com has set its fiscal 2023 revenue projection to fall between $100 and $104 million, as it navigates through the evolving market conditions and regulatory environments across its operating regions.
InvestingPro Insights
Real-time data from InvestingPro reveals that Gambling.com's Price-to-Earnings (P/E) ratio stands at 22.1, which is slightly below the sector average of 25.3. This could suggest that the company's stock is undervalued, offering potential for growth. Additionally, the company's Return on Equity (ROE) is at 15.2%, surpassing the industry average of 10.3%, indicating efficient use of shareholders' funds.
InvestingPro Tips highlight the importance of monitoring the company's sales expenses, which have seen a significant increase. Reducing these could help improve the company's bottom line. Another tip is to keep an eye on the company's regulatory environment, especially in European markets, as this has been a significant factor in recent revenue dips.
For more in-depth analysis and additional tips, consider exploring InvestingPro's comprehensive suite of investment tools. There are over 50 more InvestingPro Tips available for Gambling.com, providing a wealth of information for potential investors.
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