Global Legalization And Digitalization Will Unleash Online Gambling Growth

Key Takeaways

• Diversified growth channels and strategic acquisitions position the company for substantial profitability improvements and outperformance versus industry expectations.
  
• Transformation into a multi-platform ecosystem enables higher user monetization and sustained market share gains amid expanding global online gambling adoption.
  
• Core affiliate revenues face structural headwinds from SEO disruption, margin compression, regulatory uncertainty, rising competition, and integration challenges tied to acquisitive diversification.

Catalysts

Operates as a performance marketing company for the online gambling industry in North America, the United Kingdom, Ireland, rest of Europe, and internationally.

• While analyst consensus expects OddsJam and OpticOdds to drive subscription and enterprise revenue growth, management commentary suggests the actual total addressable market and client diversity are far larger than forecast, implying meaningful outperformance in recurring high-margin revenue and expediting EBITDA growth beyond $100 million ahead of schedule.
  
• Analyst consensus forecasts high-margin uplift from acquisitions due to cost synergies, but management points to a proven track record of lowering deal multiples post-acquisition and rapidly unlocking value, indicating future M&A (including the unique Spotlight.Vegas platform) could catalyze significant step-changes in net margin expansion and earnings per share well above current models.
  
• The accelerated success in non-search audience channels (such as apps, email, and paid media), which management states are growing by orders of magnitude and offer rapid ROI, positions the company to capture a much larger slice of the online gambling and entertainment market as digital consumer preferences evolve, supporting an ongoing surge in both top-line growth and diversification of margin streams.
  
• Gambling.com Group's transformation from a pure affiliate into a multi-platform marketing, data, and ticketing ecosystem, combined with full control of the customer journey in ticketing/booking, uniquely enables the company to extract greater lifetime value per user and increase cross-segment monetization, structurally raising both revenue per user and long-term operating margins.
  
• With regulatory and consumer shifts rapidly expanding the global online gambling market, particularly in underpenetrated regions and younger, digital-first demographics, Gambling.com Group's early leadership in first-party brand authority and sophisticated data platforms primes it for sustained share gains and compounding cash generation as normalization of online gambling accelerates worldwide.

Gambling.com Group Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Gambling.com Group compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Gambling.com Group's revenue will grow by 18.8% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 9.7% today to 29.7% in 3 years time.
• The bullish analysts expect earnings to reach $73.7 million (and earnings per share of $2.01) by about August 2028, up from $14.3 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 10.7x on those 2028 earnings, down from 21.6x today. This future PE is lower than the current PE for the US Media industry at 20.5x.
• Analysts expect the number of shares outstanding to grow by 1.81% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.68%, as per the Simply Wall St company report.

Gambling.com Group Future Earnings Per Share Growth

Risks

• Ongoing changes to Google's search algorithm and the shift toward AI-powered generative search are already negatively impacting traditional SEO-driven revenues, resulting in near-term downward revisions of revenue and EBITDA guidance and potentially signaling permanent margin headwinds for the company's cornerstone affiliate marketing model.
  
• The rising importance of non-SEO digital marketing channels such as apps, e-mail, social, and paid media increases marketing spend and cost of sales, with management explicitly acknowledging this channel mix shift drives lower gross margins, compressing profitability and undermining historical EBITDA margin levels.
  
• There is heightened regulatory risk from state-level fragmentation, delayed U.S. legalization, and persistent legislative scrutiny of online gambling across North America, with management conceding that tax rates, state-by-state rollouts, and legal ambiguity can materially slow growth, restrict addressable markets, and impair long-term revenue scalability.
  
• Escalating competition from major operators vertically integrating their own affiliate networks and increasing investments in direct-to-consumer channels, as well as the risk that operators seize key search positions whenever algorithm changes occur, may erode Gambling.com Group's client base and negotiating leverage, pressuring both top-line growth and net margins over time.
  
• Management's strategy of diversification through M&A, notably the recent acquisition of Spotlight.Vegas, introduces integration and execution risks, with newly acquired businesses still low-margin or breakeven and only offering potential adjusted EBITDA contributions in future periods, increasing the risk that earnings expectations may not be met if synergies are not quickly realized or if macro/market conditions do not improve as anticipated.

Valuation

• The assumed bullish price target for Gambling.com Group is $17.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Gambling.com Group's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $17.0, and the most bearish reporting a price target of just $11.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $247.8 million, earnings will come to $73.7 million, and it would be trading on a PE ratio of 10.7x, assuming you use a discount rate of 7.7%.
• Given the current share price of $8.64, the bullish analyst price target of $17.0 is 49.2% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.