Gambling.com Group hit by Google search algorithm change
Published 28th February 2020
Gambling.com Group saw a tightening of adjusted earnings during 2019 as it contended with declining takings in the UK and Sweden.
In its financial report for the year to 31 December 2019, the gambling-focussed marketing operator saw total revenues grow by 6% year-on-year to €17.3m.
The UK and Swedish markets declined by 12% in 2019 compared to 2018. In contrast, the group’s other markets grew by 112% year on year and represented over €5m in revenue for 2019.
The final quarter of the year saw a 30% year-on-year decline in revenues to €3.4m, which the group said was due to an exceptionally strong performance in the comparative period, regulatory changes in the UK and Swedish markets leading to low sports margins, and changes to Google search algorithms which negatively affected search performance.
While not giving specific figures, Gambling.com said the US market grew at the fastest rate of any of its markets during the fourth quarter. It is currently authorised to do business in New Jersey, Pennsylvania, West Virginia and Indiana.
Gambling.com reported an operating profit of €2.4m, which was down 46.5% year-on-year. Adjusted EBITDA (excluding non-recurring costs) for the full year totalled €3.6m, a decrease of 39.1% compared to the previous year resulting in an adjusted EBITDA margin of 21%.
Total operating expenses for 2019 amounted to €14.9m, which was up 25.3%. The group significantly scaled its operational resources at the beginning of 2019 as it invested in product and software development and content creation with a heavy focus on products for the regulated US markets, but also further market expansion outside the UK and US markets, and particularly within the sports vertical.
“This has put downward pressure on adjusted EBITDA margins in the short term,” the group said.
It added that it has slowed down the pace of hiring to consolidate the enlarged organisation focusing on optimising management processes and workflows, and the completion of some major technology projects. However, personnel costs of €7.4m were up 94.7% compared to the prior period.
Taking into account interest, taxation and finance, Gambling,com reported a total comprehensive loss of $580,000 in 2019, compared to a profit of €5.4m in 2018.
Charles Gillespie, Gambling.com’s chief executive, said the group has taken steps to adapt after changes to the Google core algorithm in September 2019 negatively affected search traffic
throughout the fourth quarter. He said search traffic has now begun to recover.
He added: “2019 was a year of investments in our foundations, in particular the technology stack to deliver our websites. While these investments are critical to our long-term growth prospects, the short-term impact has been a diversion of resources away from everyday improvements of the group’s websites. The largest of these projects, a new Groupwide Content Management System, will go live at the end of February.
“With our new tools in place and more resources working on our consumer facing products, we are confident we will be able to return our search performance to best in class across the markets where we operate.”