Publishing its Q4 2018 trading statement, Stockholm-listed sports betting technology provider Kambi Group Plc has reported that 2018 was “the most successful year in its history” following the group’s expansion into further regulated markets supported with solid growth across its commercial pipeline.
Kambi reported that its trading period ending in December 2018 was that of a ‘record’, with its year-on-year operator turnover growth amounting to 42 per cent.
However, while the group experienced growth across its revenue channel, Kambi’s performance has declined against a tough Q4 2017 comparative period which featured an ‘exceptional margin of 26.3 per cent’, driven by favourable sporting results recorded during 2017 year-end closing.
Featured against an ‘exceptional trading period’, Kambi’s EBITDA for Q4 2018 was down to €6.5m (2017: €7.2m), however its yearly figure had considerably improved, reported as €22.5m for 2018 (2017 = €16m).
Kambi Chief Executive Kristian Nylén commented on the performance decline with an optimism: “Bearing in mind the comparative period in 2017 delivered Kambi’s highest ever operator trading margin, our Q4 2018 performance is particularly pleasing and highlights the positive momentum we have built within the business,” he said.
In 2018, Kambi has placed particular emphasis upon growing its retail offering across the US, pursuing licences in a number of states. The group launched three on-property Sportsbook launches across two states in the latter quarter of 2018, including the the launch of the DraftKings Sportsbook at Resorts Casino in New Jersey and the concurrent launch of two Sportsbooks in Pennsylvania.
The group was awarded its full licence from the Mississippi Gaming Commission, in addition to a temporary permit from the Pennsylvania Gaming Control Board.
Nylén continued: “With the US market high on Kambi’s priority list, our ability to demonstrate our high-quality on-property Sportsbook and prompt time-to-market leaves us well-placed moving forward, particularly considering the emphasis US operators and state regulators place on the retail channel.
“When also factoring in the early success we have had online in New Jersey, I’m not surprised Kambi is now seen as the leading multi-channel sports betting supplier in this burgeoning market.”
The shift of focus towards growing its US offering, which has consequently incurred costs of licensing and marketing, has meant a considerable growth in operational expenses for the group. This comes alongside its share of the loss from operations in relation to its investment in Virtus totalling €75k at 31 December 2018, which the group believes to be in line with forecasts.
“Operating expenses are a combination of activity-related costs and fixed costs; the main expenses are salaries, office costs, live information feeds, consultant costs and amortisation.
“The operating expenses for the fourth quarter of 2018 were €17.5m (2017: €14m) and €63.5m (2017: €54.4m) for the year to December 2018.
“Staff costs have increased from Q4 2017 due to an increase in headcount from the expansion of staff in trading and product development, allowing us to continually improve and expand our technical expertise and Sportsbook product.”
In light of its increased operational costs, Kambi has managed to improve its net cash holdings to €31.1m (2017: €26.9m), which ultimately puts the group in good stead for further expansion in the coming year.
Nylén concluded: “Reflecting on the year as a whole, 2018 will be remembered as one of achievement and one in which Kambi reached new heights. And although much hard work remains in front of us, the strong foundations we have put in place leave me confident Kambi can remain on this upward trajectory throughout 2019.”