GAMB Q2 2025: Sports Data Revenue Quadruples, Shifting Mix Reshapes Margin Outlook
GAMB’s second quarter marked an inflection as sports data services revenue surged 4x, accelerating business model diversification and diluting legacy search-driven margins. The company’s pivot toward subscription and B2B data is now material, with recurring revenue exceeding half of total sales, even as Google algorithm volatility and AI search shifts force a recalibration of growth and profitability expectations. Near-term margin pressure is apparent, but management is betting on multi-channel scale and new verticals like ticketing to offset structural changes in digital marketing economics.
Summary
- Sports Data Services Now Core: Quadrupling of sports data revenue cements recurring B2B as a foundational growth engine.
- Margin Mix Shift Emerges: Higher non-search channel costs and evolving digital marketing dilute EBITDA margin profile.
- Strategic Diversification Accelerates: Spotlight.Vegas acquisition and rising subscription share signal a deliberate pivot from legacy affiliate roots.
Performance Analysis
GAMB posted record Q2 revenue and adjusted EBITDA, with total revenue up 30 percent year over year and adjusted EBITDA advancing 22 percent. The standout driver was sports data services, which delivered a 4x revenue increase to $10 million, now representing 25 percent of total revenue and a clear shift toward high-margin, highly visible recurring subscription streams. The marketing business, historically the company’s core, grew modestly, with all regions except North America showing expansion as last year’s sports betting launch in North Carolina created a tough comparable.
Gross profit rose 27 percent, but margin compressed from 95.3 percent to 93.2 percent, reflecting higher costs tied to the diversification of traffic sources and integration of acquired businesses. Adjusted EBITDA margin slipped to 35 percent from 37 percent, a function of shifting channel mix rather than underlying margin pressure in any single business. Free cash flow grew 36 percent, demonstrating strong cash conversion, though tax payments related to acquisitions weighed on the bottom line. The company’s balance sheet remains robust, with $18.7 million in cash and significant undrawn credit capacity, supporting continued M&A and share buybacks.
- Sports Data Revenue Inflection: Subscription and B2B data now comprise a quarter of revenue, quadrupling year over year and driving recurring revenue above 50 percent of the total.
- Non-Search Channel Growth: New digital channels like apps, email, and paid media are growing by orders of magnitude, but carry higher cost of sales, impacting blended margins.
- Legacy Search Still Delivers: Search remains a significant cash generator, though its share is falling as AI and algorithm changes reshape the digital landscape.
While topline growth remains robust, the evolving revenue mix and digital marketing headwinds are redefining both the opportunity and the cost structure, with implications for future profitability and capital allocation.
Executive Commentary
"We have transformed the company from an affiliate marketing business into a multi-platform integrated marketing, data, and to-be ticketing services business, all while maintaining a strong balance sheet and attractive capital structure through continuously strong cash generation, capital-efficient M&A, and well-timed share buybacks."
Charles Gillespie, Chief Executive Officer
"The increase to the full year revenue range reflects the expected four months of contribution from Spotlight.Vegas and the launch of sports betting in Missouri in December, partly offset by currently weaker search rankings following the most recent Google core algorithm updates."
Elias, Chief Financial Officer
Strategic Positioning
1. Sports Data Services as Growth Engine
Sports data services, encompassing OpticOdds and OddsJam, now anchor GAMB’s growth strategy, delivering high-margin, recurring subscription revenue and broadening the customer base beyond operators to include startups, arbitrageurs, and even large tech clients. The business’s rapid scale and integration success signal a durable shift from transactional affiliate to platform model, with management raising long-term expectations for this segment’s total addressable market.
2. Omnichannel Marketing and Diversified Monetization
GAMB’s omnichannel approach to user acquisition, spanning apps, email, social, YouTube, and paid media, is gaining traction, with non-search channels now contributing meaningfully to results. While these channels carry shorter investment cycles and attractive ROI, they also introduce higher cost of sales, reshaping the margin profile. The company’s ability to monetize high-intent users across multiple touchpoints is a strategic hedge against ongoing search and AI disruption.
3. Strategic M&A and Capital Allocation Discipline
The acquisition of Spotlight.Vegas exemplifies GAMB’s disciplined, capital-efficient M&A playbook. The deal’s structure emphasizes limited upfront cash, pay-for-performance earnouts, and integration of digital marketing expertise to unlock operational upside. Spotlight expands GAMB’s reach into gaming-adjacent ticketing and entertainment, offering full control of the customer journey and new monetization levers, with plans to scale the platform across owned sites and new geographies.
4. Adapting to AI and Search Algorithm Volatility
Management is proactively recalibrating strategy in response to Google algorithm changes and the rise of AI-powered search. While legacy SEO remains important, GAMB is investing in brand authority and next-gen optimization to remain one of the few sources surfaced by AI agents. Early indications show strong share of voice, but leadership is realistic about reduced future search revenue and is accelerating investment in alternative channels and emerging verticals.
Key Considerations
This quarter’s results underscore the accelerating transition from legacy affiliate marketing toward a diversified, multi-platform business model, with recurring data and subscription revenue, omnichannel marketing, and gaming-adjacent ticketing all playing larger roles. Investors must recalibrate expectations for margin and growth as the company pursues scale and resilience over short-term profitability.
Key Considerations:
- Mix Shift Drives Margin Reset: Higher-cost digital channels and reduced search share are structurally lowering near-term EBITDA margins, even as revenue growth remains strong.
- Recurring Revenue Enhances Visibility: More than half of total revenue is now recurring, improving predictability and supporting premium valuation multiples.
- Spotlight.Vegas as Strategic Wedge: The acquisition brings new B2C and B2B relationships, full customer journey control, and a scalable platform for geographic expansion.
- Capital Structure Flexibility Maintained: Strong free cash flow, undrawn credit, and a doubled $20 million buyback program provide optionality for future M&A and shareholder returns.
Risks
GAMB faces material risks from ongoing Google search algorithm volatility, which can rapidly shift traffic and revenue. The pace of AI-driven search adoption introduces uncertainty around digital marketing economics, while the mix shift to lower-margin channels may weigh on profitability longer than expected. Integration of acquisitions like Spotlight.Vegas, though historically strong, carries execution risk, especially as the company expands beyond its affiliate core.
Forward Outlook
For Q3, GAMB guided to:
- Ongoing revenue growth with incremental contribution from Spotlight.Vegas and Missouri sports betting launch
- Adjusted EBITDA margin reflecting higher investment in non-search channels and no EBITDA from Spotlight.Vegas in 2025
For full-year 2025, management raised revenue guidance to $171 million to $175 million and adjusted EBITDA to $62 million to $64 million:
- Midpoint revenue growth of 36 percent year over year
- Midpoint adjusted EBITDA growth of 29 percent year over year
Management highlighted several factors that will shape the back half:
- AI and algorithmic search changes continue to impact legacy channel revenue
- Non-search channels and sports data services are expected to scale further, offsetting near-term margin pressure
Takeaways
GAMB’s Q2 results confirm a decisive pivot from legacy affiliate marketing to a multi-platform, recurring-revenue model, with sports data and omnichannel marketing at the core. While short-term margin dilution is real, the company is positioning for resilient, diversified growth as digital marketing dynamics evolve.
- Sports Data Now Central: The rapid expansion of B2B and subscription revenue is redefining the company’s growth and risk profile, making GAMB less dependent on volatile search economics.
- Margin Reset Underway: Investors should expect continued margin pressure as the mix shifts, but also recognize the strategic rationale for near-term investment in new channels and verticals.
- Watch for Execution on Integration and Channel Scale: The success of Spotlight.Vegas integration and the pace of non-search channel growth will determine whether GAMB’s new business model delivers on its promise of sustainable, high-quality earnings growth.
Conclusion
GAMB’s Q2 marks a strategic transition point, as recurring sports data revenue and diversified digital channels become primary growth levers. While margin headwinds are likely to persist, the company’s proactive repositioning and strong capital discipline set the stage for a more resilient and scalable business model.
Industry Read-Through
GAMB’s results offer a clear signal to the broader digital marketing and gaming affiliate sector: reliance on legacy search is increasingly risky as AI and algorithm changes reshape the landscape. Operators with diversified, recurring revenue streams and omnichannel user acquisition will be best positioned to withstand volatility and capture new growth. The rapid rise of B2B data and ticketing adjacencies suggests that blending platform economics with affiliate scale may become the new standard for sustainable outperformance in the sector.