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01/11 16:05
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary shows strong financial performance with 39% revenue growth and 56% EBITDA growth, but the Q&A reveals concerns. The Google algorithm update negatively impacted EBITDA, and management avoided specific guidance for 2026, leading to uncertainties. While new partnerships and market launches are positive, the impact of AI on search revenue and lack of detailed financial metrics for Spotlight.Vegas are concerning. Overall, the mixed signals and lack of clear guidance suggest a neutral stock price movement over the next two weeks.
Second quarter revenue $39.6 million, a 30% increase year-over-year. Growth attributed to record performance in marketing and sports data services, despite seasonal challenges.
Marketing business revenue Grew 3% year-over-year, delivering over 108,000 NDCs. Growth in all regions except North America, which faced tough comparables due to the prior year's sports betting launch in North Carolina.
Sports data services revenue $10 million, quadrupling year-over-year. Growth driven by OpticOdds, which achieved 120% year-over-year growth.
Gross profit $36.9 million, a 27% increase year-over-year. Gross profit margin decreased to 93.2% from 95.3% due to diversification of traffic sources and costs from acquired businesses.
Adjusted EBITDA $13.7 million, a 22% increase year-over-year. Adjusted EBITDA margin was 35%, down from 37% in the prior year, reflecting higher costs in non-SEO marketing channels.
Adjusted net income $13.4 million, a 37% increase year-over-year. Positively impacted by currency translation effects due to a stronger euro versus the U.S. dollar.
Free cash flow $8.2 million, a 36% increase year-over-year. Growth driven by strong cash conversion and adjusted EBITDA growth, partially offset by tax payments.
Total cash $18.7 million as of June 30, with $70.5 million of undrawn credit facility capacity. Reflects strong liquidity and financial flexibility.
Revenue from sports data services: Grew 120% year-on-year, driven by OpticOdds.
New acquisitions: Acquired Spotlight.Vegas, expanding into ticketing services for gambling-adjacent entertainment.
Geographic performance: Marketing business grew in all regions except North America, which faced tough comparables due to prior sports betting launch in North Carolina.
Expansion into Las Vegas market: Spotlight.Vegas acquisition adds over 40 clients, including entertainment venues and casinos.
Revenue growth: Second quarter revenue grew 30% year-over-year to $39.6 million.
Recurring revenue: Subscription revenue accounted for 25% of total revenue, with recurring revenue at 51% of total revenue.
Cost management: Gross profit margin was 93.2%, slightly down from 95.3% year-over-year due to diversification costs.
Diversification strategy: Broadened traffic sources and monetization models, including apps, email, social media, and paid media.
AI integration: Optimizing offerings for inclusion in generative AI tools to maintain dominance in search marketing.
Capital-efficient acquisitions: Demonstrated ability to integrate acquisitions like OddsJam, OpticOdds, and Spotlight.Vegas effectively.
Search Rankings Impact: Currently weaker search rankings following the most recent Google Core algorithm update, which has affected the company's ability to maintain its search-driven revenue. Adapting to these changes is ongoing.
North America Revenue Decline: Revenue in North America declined due to tough comparables with the previous year, including the tailwind from the launch of sports betting in North Carolina.
Las Vegas Market Conditions: Las Vegas hotel occupancy is currently low, which could impact the performance of the recently acquired Spotlight.Vegas platform.
Cost of Sales Increase: Cost of sales increased due to diversification of traffic sources and costs associated with acquired businesses like OddsJam and OpticOdds, which could pressure margins.
Algorithm Dependency: The business remains heavily dependent on adapting to Google's algorithm changes, which poses a recurring risk to search-driven revenue.
Integration Risks: The company is integrating multiple acquisitions, including Spotlight.Vegas, OddsJam, and OpticOdds, which could pose challenges in achieving expected synergies and operational efficiencies.
Full-Year Revenue Guidance: The company adjusted its full-year revenue guidance to a range of $171 million to $175 million, reflecting a midpoint growth of 36% year-over-year. This includes contributions from Spotlight.Vegas and the launch of sports betting in Missouri in December, offset by weaker search rankings due to a Google Core algorithm update.
Full-Year Adjusted EBITDA Guidance: The company provided an adjusted EBITDA guidance range of $62 million to $64 million, representing a midpoint growth of 29% year-over-year. This reflects higher costs of sales in the marketing business, strategic investments in new digital marketing channels, and no adjusted EBITDA contributions from Spotlight.Vegas for this year.
Spotlight.Vegas Projections for 2026: The company expects Spotlight.Vegas to generate net revenue of at least $8 million and incremental adjusted EBITDA of at least $1.4 million in 2026.
Sports Data Services Growth Expectations: The company revised up its long-term growth expectations for its sports data services business, driven by the accelerating growth of OpticOdds (120% year-on-year growth) and the realization of a larger total addressable market (TAM) than initially expected.
Las Vegas Market Recovery Assumptions: The company anticipates a recovery in the Las Vegas market from its current low hotel occupancy levels, based on historical cycles and market expert expectations.
Share Buyback Program: Today, our Board approved a $10 million expansion to a total of $20 million of capacity in our current share repurchase program, none of which has been utilized yet.
The earnings call summary reflects strong financial metrics with optimistic guidance, particularly in sports data services and new digital marketing channels. The Q&A section reveals positive sentiment towards product development, especially in OpticOdds and OddsJam, despite some unclear responses. The company’s cautious capital allocation and strategic investments suggest a focus on sustainable growth. The positive outlook on revenue and EBITDA growth, coupled with the potential benefits from Google updates, supports a positive sentiment. However, some concerns about margins and the U.K. market temper the outlook, resulting in a 'Positive' rating.
The earnings call summary shows strong financial performance with 39% revenue growth and 56% EBITDA growth, but the Q&A reveals concerns. The Google algorithm update negatively impacted EBITDA, and management avoided specific guidance for 2026, leading to uncertainties. While new partnerships and market launches are positive, the impact of AI on search revenue and lack of detailed financial metrics for Spotlight.Vegas are concerning. Overall, the mixed signals and lack of clear guidance suggest a neutral stock price movement over the next two weeks.
The earnings call reveals strong financial performance with significant year-over-year growth in revenue, EBITDA, and net income. The company's strategic acquisitions are driving growth, and there's a positive outlook on market expansion and product offerings. Despite increased operating expenses due to acquisitions, the company maintains a healthy cash position. The Q&A section reflects optimism, with no major concerns from analysts. The lack of a share repurchase program is a minor negative, but overall, the financial health and growth prospects suggest a positive sentiment, likely leading to a stock price increase of 2% to 8%.
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