Kambi strategic direction on track after strong H1 trading

Kambi Group is in a ‘fantastic position’ for further growth, in the words of CEO Kristian Nylén, as revenue in both the second quarter and first half of the year as a whole recorded an uptick.

The B2B betting solutions group reported Q2 revenue growth of 24% year-on-year from €34.7m to €42.9m to its Stockholm Nasdaq inventors. Meanwhile, total revenue at the close of H1 rounded off at €86.9m (H1 2022: €71.5m), an increase of 18%.

Q2 revenue growth was attributed by the group to the integration of Shape Games into its operations – having acquired the company in September last year – as well as a trading margin of 9.9%.

A notable development during the quarter saw Kambi fully repay a €7.5m convertible bond previously held by Kindred Group .B2C betting operator Kindred had held the bond ever since the divestment of Kambi from its business in 2014.

In addition to repaying the bond, Kambi also repurchased 381,476 of its own shares for a total of €7.2m, with the firm stating that the two achievements expand its control over its own operations. Q2 also saw the company invest further in its cutting-edge AI pricing division.

Kristian Nylen, Kambi CEO
Kristian Nylén

Group CEO Nylen remarked: “The second quarter of the year was another encouraging period for Kambi as we made significant strategic progress towards executing our long-term growth strategy, including a tier-one partner signing, key partner renewals and the continued development of our AI trading capability.

“During the quarter we delivered strong revenue growth of 24% year-on-year, driven by new customers, the addition of Shape Games and a high operator trading margin,”

However, increased investment appears to have bitten into operating profit (EBIT) and EBITDA. The former dropped by 24% in Q2 to €3.7m (€4.9m) at a margin of 8.6% (14.1%) and in H1 by 32% to €8.2m (€12.2m) at a margin of 9.4% (17.1%). 

Meanwhile, Q2 EBITDA dropped slightly by 4% to €5m (€5.2m) at a margin of 11.7% (15.1%) in the second quarter and by 6% to €10.8m (€12.9m) at a margin of 12.4% (18.1%) for the first six months of the year.

Acknowledging this, Nylen continued: “Operator turnover growth of 4% was not as strong as revenue, impacted by rising foreign exchange headwinds, the dampening effect of a high trading margin and PENN Entertainment’s year-on-year decline in US market share. Excluding the impact of foreign exchange movements, EBITA (acq) increased by €2.8m year-on-year.”

Despite encountering some hurdles relating to operating profit and EBITDA, Kambi remains confident in its business moving forward, largely due to a range of prominent commercial agreements signed during H1.

The group has notably secured extensions to its partnerships with Paf, the pan-European operator based in Finland’s Åland Islands region and one of Kambi’s longest-running clients, as well as LeoVegas and BetPlay.

Perhaps  most significantly, the group has made further inroads in the US where it has onboarded Bally’s Corporation, updating the multi-state operator’s proprietary sports platform.

Nylen stated that the deal would ‘further solidify’ Kambi’s market leadership position among sportsbook supplier’s in the US, where the firm has built up a presence via deals with the likes of Rush Street Interactive. The agreement is a result of the company’s ‘flexible product strategy’, the CEO asserted.

He added: “As one of the world’s leading gaming operators, Bally’s commands strong brand recognition, a large customer database and expansive global footprint that has the potential to open up significant opportunities for Kambi in both the US and beyond.

“Bally’s decision to replace its proprietary sportsbook with Kambi Complete underlines the current pressures facing many in-house sports betting operations. Indeed, demand for our Complete sportsbook service remains high, further evidenced by our sales pipeline and the Q2 renewals of key partners BetPlay, LeoVegas Group and Paf.”

At the close of Q2, Kambi recorded cash flow of €0.1m, the same as in the second quarter of 2022, whilst the figure was slightly less for the full first six months of the year at 3.4m, down 39% from €5.6m the year prior.

However, extensive commercial activity and further consolidation of control over its own business has given the company confidence in its future prospects, as its CEO asserted that the group’s offering is ‘only getting stronger’, citing the success of its AI-powered trading.

He concluded: “Recognising the powerful benefits this unique method of pricing delivers for our partners, we also see an exciting future for this service as a module, powering odds for those outside of the Kambi network. 

“In Q2, we made significant progress in incubating the unit with a view to it operating as a distinct division in the future, similar to Abios and Shape Games. We are confident our AI-driven pricing is uniquely positioned to meet the growing demand for trading services.

“In summary, I am pleased with the strategic progress made in Q2 and believe Kambi is in a fantastic position moving forward. Having repaid the convertible bond held by Kindred during the quarter, we are in complete control over our strategic direction as we continue to execute our ambitious long-term strategy that I am confident will deliver value for both partners and shareholders.”

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