Kambi pushes ahead with strategic vision as €38.5m Shape takeover finalised

A major betting and gaming M&A development took place this morning, as Kambi completed its acquisition of Shape Games to bolster its front end services.

Carried out for a total consideration of €38.5m, the takeover will include a performance-related earnout of up to €39.6m, which could bring the total figure to €78.1m. 

Stockholm-based Kambi undertook the merger after identifying the sportsbook front end as having become ‘a key tool for operators’, particularly for efficiently differentiating a brand, localising an offering and engaging players for acquisition and retention.

Joining Kambi’s wider portfolio of sports betting services, Shape will be integrated technically and commercially with Kambi to provide an ‘enhanced service’ to its new parent company’s partners, but will continue to operate as a standalone business. 

Kristian Nylen, Kambi CEO and Co-Founder, said: “I’ve always been clear on our intention to acquire technology and talent that will complement and enhance our sportsbook proposition, and I have no doubt Shape Games will do just that.”

The two companies have a history of commercial collaboration, such as working on tender processes for turnkey contracts, and so believe that ‘greater commercial success’ can be achieved for both via the combination.

Specifically, Kambi stated that the integration of Shape’s ‘fully native front end technology’ will complement its own sportsbook and front end capabilities, boosting its standing in high-turnover mobile sports betting.

In a Q&A published on Kambi’s website, Nylen noted that Kambi’s current front end capabilities lack ‘the important native element’ needed to meet differentiation, localisation, personalisation and empowerment demands, especially from US operators, requiring improvement.

In his statement, the CEO continued: “Having worked closely with Shape Games and its experienced team over recent years, I have seen first-hand how their technology enables operators to extract the full value of the Kambi sportsbook and provides the level of control operators require to deliver bespoke experiences to their players. 

“While Shape Games will continue to grow and offer services on a standalone basis in line with our plans to offer a suite of modularised products, it is the ability to offer a combination of Kambi’s and Shape Games’ technology to our partners which really excites us and solidifies our position as the clear leader within the sports betting ecosystem.”

Shape CEO, Christian Risom explained – in the Q&A with Nylen – that US market expansion was a key motivating factor behind its decision to integrate with Kambi. 

Highlighting Kambi as a ‘very successful player’ in the stateside betting scene, the CEO described the company as an ‘obvious partner’ and ‘great cultural fit’ for Shape to pursue future success.

“We are very happy to join forces with the leading sportsbook provider of the industry,” Risom remarked in the official statement on the merger. 

“Shape Games and Kambi have been working closely side by side for years now and it is exciting to take this partnership to new levels. Together we will have an unmatched sports betting and casino offering for any market in the world, be it on mobile and web or in retail. 

“Kambi’s modular approach to the market allows us to form a profound and tight-knit integration with their sportsbook all the while pursuing opportunities with other sportsbook partners. From our perspective, this represents the best of both worlds for any customer out there.”

Full year trading in 2021 saw Shape record revenue of €7.6m alongside EBITDA of €2.8m, while the firm has forecast 100% year-on-year growth following ‘several major partner wins’.

In the Q&A, Risom provided further details on what operators can expect from Shape post-merger, asserting that faster delivery times on future implementations and a coordinated service delivery are key targets for partners using the Kambi platform.

For firms that are not using the platform, Shape aims to provide a ‘larger pipeline of innovative features’ and positive synergies, with the CEO describing the acquisition as a ‘win-win situation’ for both Kambi and Shape’s partners.

Lastly, Nylen addressed the merger as part of Kambi’s wider modularisation strategy, maintaining that the development will strengthen the USP of Shape’s offering whilst enhancing the former’s general sportsbook capabilities.

“Our approach to modularisation in general is to continue to build the best end-to-end sportsbook possible but in a way which enables us to offer modules of that service separately,” Nylen concluded.

The merger comes just over a month after the release of Kambi’s H1 and Q2 2022 trading results, which saw revenue fall to €71.5m (H1 2021: €86m) and €34.7m (Q2 2021: €42.8m) respectively. 

However, the group is confident in its future prospects, particularly in North America where it has entered into agreements with BetPARX operator Greenwood Gaming and Entertainment in the US and Mohegan Gaming and Entertainment’s Fallsview Casino in Ontario.

Having further bolstered its sportsbook front end offering with the acquisition of Shape Games, Kambi looks heavily equipped to pursue its transatlantic growth ambitions going into 2023.