Kambi hit by soft Q3 margins as Becher begins reorganisation 

Kambi Group Plc maintains steady trading as new CEO Werner Becher begins the strategic reorganisation of the Stockholm-listed sports betting technology group to improve profitability.

Publishing its Q3 trading update, Kambi achieved corporate revenues of €43m, up 2% on 2023 comparatives of €42m.

Leadership explained that “although Q3 revenue was only up 2% year-on-year, when excluding the Penn Entertainment transition fees and one-off licence revenues in Q3 2023, revenue grew 16%, although boosted by the unusually high operator trading margin of 10.4%.”

On a year-to-date basis, Kambi revenues stand at €132m, up 3% on 2023 results of €129m, reflecting steady growth as growth is maintained by its “underlying business with operator turnover up 14% year-on-year”. 

Q3 trading saw Kambi’s network turnover index grow by 14% year-on-year, to 687m, driven by the performance of new partnerships with LiveScore Group and Svenska Spel.

The increase in wagering volume reflected high betting activity from the 2024 Summer Olympics, UEFA European Championship, and Copa América tournaments, as the client trading margin increased to 10.4% from 8.8% in Q3 2023, supported by “favourable outcomes in Copa América and the start of the NFL season.”

Period trading saw Kambi secure new commercial agreements with US-based Hard Rock Digital for its new modular Odds Feed+ product, alongside a partnership extension with Rush Street Interactive. In Brazil, Kambi also secured sportsbook partnerships with KTO Group and Rei do Pitaco.

Despite income growth, period operating profits were impacted by a softer margin of 8%, as Q3 EBIT declined to €3.6m (Q3 2023: €4.6m), while year-to-date operating profits were maintained at €14.2m (YTD 2023: €12.8m).

For the third quarter of 2024, EBITA was €4.9m, with a margin of 11.4%, compared to €6.0m and a 14.1% margin in the same period in 2023. For YTD trading, EBITA (acq) stands €18.2m at a margin of 13.8%, up from €16.7m and a 13.0% margin in 2023.

Cash flow, excluding working capital and M&A, totalled €5.7m in the third quarter of 2024, slightly down from €6.1m last year. YTD trading saw cash flow reach €19.2m, doubling €9.5m in 

Leadership is preparing for key transitions, as major clients Kindred Group and LeoVegas plan to move away from Kambi’s sportsbook solution.

CEO Becher commented: “Strategically and commercially, we made excellent progress with our modularisation strategy, rolling out our expanded portfolio of premium products and entering several exciting new partnerships.”

“One of my observations prior to taking this role was that although Kambi had seen some large operators move away in recent years, it still delivered growth, albeit modest, during this time. 

“This gives me great confidence that, through the ongoing diversification of our products and partner roster, we will increasingly reduce the potential impact of future partner movement and create a much more stable base for long-term growth.”

Kambi initially projected 2024 revenue between €170m–€180m, but expects it to range from €172.5m–€175.5m, assuming a stable operator trading margin in Q4. 

Total expenses for 2024, excluding foreign exchange impacts and one-off costs, are anticipated to be between €155m–€157m at the lower end of the previously estimated range of €155m–€165m.

Becher concluded: “In short, although we have some difficult near-term headwinds, I see a bright future for Kambi as we become the industry’s home of premium sports betting solutions. 

“We have some exciting opportunities ahead of us, such as the great potential of our new products and the prospect of a regulated Brazilian market around the corner. I am sure once we get through this period of transition, we will have a more diverse, sustainable and faster-growing business.”