The acquisition of OddsJam will add more revenue streams and expand Gambling.com’s footprint in online gambling.
Gambling.com (NASDAQ:GAMB) stock soared 19% on Thursday, fueled by the acquisition of Odds Holdings on Thursday morning.
The gambling media company, which owns more than 50 websites in 15 countries covering sports betting, iGaming, crypto gambling and fantasy sports, is acquiring Odds Holdings for $80 million upfront. Odds Holdings shareholders will receive up to an additional $80 million based on Odds Holdings’ performance through 2026.
The purchase brings OddsJam to the Gambling.com portfolio. OddsJam, which is part of Odds Holdings, provides real-time odds data to help users make data-driven bets. It allows bettors to compare real-time odds from over 100 sportsbooks. It also features a betting tool to identify profitable betting opportunities, a parlay builder for creating custom parlay bets, and a fantasy optimizer for daily fantasy sports.
Gambling.com believes that OddsJam is the industry’s most advanced platform, delivering odds data to bettors with the lowest lag time. The platform can process over one million requests per second, on average, across nearly 300 sportsbooks.
Acquisition to provide 20% earnings boost
The acquisition is seen as a strategic fit for Gambling.com. It will expand the company’s footprint in online gambling and generate additional revenue streams, including recurring subscription based revenue.
The acquisition is anticipated to be immediately accretive to earnings when it closes on January 1. Gambling.com expects Odds Holdings to increase adjusted EBITDA by 20% in 2025.
“The accretive acquisition of Odds Holdings will immediately provide Gambling.com Group with additional, recurring revenue streams which are independent of our market-leading online gambling affiliate business, consistent with our strategy to expand our footprint in the online gambling industry,” Gambling.com Group co-founder and CEO Charles Gillespie said. “Odds Holdings gives Gambling.com Group a suite of new enterprise products while OddsJam in particular brings a passionate and energetic new consumer audience to the Group.”
This is the latest in a series of acquisitions the company has made, including RotoWire, BonusFinder, and Freebets.com. Gambling.com’s high free cash flow and solid financials have the company in good shape to make strategic acquisitions.
In the latest quarter, Gambling.com generated $32.1 million in revenue, a 37% increase year-over-year. It was also profitable, with net income of $8.5 million, or 24 cents per share, an 85% jump from Q3 2023. It also raised its profit margin to 26%, from 21%.
Its adjusted EBITDA was $12.6 million in the quarter, a 108% year-over-year increase, and its adjusted EBITDA margin spiked to 39%, from 26%. Further, the company’s cash flow from operations rose to $14.9 million, from -$715,000 a year ago, while its free cash flow surged to $14.2 million, an 802% increase from Q3 2023.
Gambling.com will bring the Odds Holdings team onboard, including OddsJam founders Ankit Goyal and Alex Monahan and CEO Matt Restivo.
“By leveraging Gambling.com Group’s expertise, innovation and resources we will be optimally positioned to scale our technology and data-driven insights to reach an even larger audience of online bettors, including beyond the North American market,” OddsJam founders Ankit Goyal and Alex Monahan said.
Analysts see upside potential
Investors embraced the deal, as the stock jumped 19% on Thursday to close at $15.77. However, it settled back down a bit on Friday, dropping about 6% to around $14.70 as of Friday morning. Year-to-date, Gambling.com stock is up about 59%.
Gambling.com stock got several price target upgrades after the deal was announced, including a $6 boost by BTIG to $19 per share. Stifel increased the target by $3 to $17 per share, while Jefferies bumped it up $2 to $20 per share. If it hits $20 per share, that would represent 36% increase over the current price.
The consensus among analysts calls for a 12-month price target of $16 per share, but that may not yet reflect these latest upgrades.
It’s impressive that Gambling.com is already profitable, and it has excellent financials to further invest in its growth. It has also been very strategic in its acquisitions thus far. At a fairly reasonable valuation, trading at 20 times earnings, and expected growth, Gambling.com looks like a solid option in the gambling stock space.
