Kambi hit by “most challenging” quarter as Q3 revenue slumps 12%
Sports betting supplier sees operating profit and EBITDA drop by double digits as share price tumbles 15%
Kambi Group has reported a 12% year-on-year (YoY) slump in its Q3 2022 revenue which fell to €36.7m (£31.8m).
Releasing its financial report for the period, the Malta-based provider confirmed an EBITDA drop of 47% in Q3 to €10.7m, with operating profit (EBIT) falling by 74% to just €3.9m.
Kambi’s operating margin slumped from 35.4% in Q3 2021 to just 10.6% in Q3 2022, with profits after tax falling 78% YoY to €2.6m.
In Q3, the Kambi Operator Turnover Index was 640, up 12% YoY, rising to 20% when excluding the impact of its Q3 2021 exit as DraftKings’ sportsbook supplier which was further boosted by a strong US dollar.
Kambi CEO Kristian Nylén summed up the Q3 climate for the business in his remarks concerning the results.
“The third quarter is always the most challenging for the sports betting industry given the quiet sporting calendar and this year was no exception,” Nylén said.
“It was also a quarter marked by growing global economic uncertainty and higher cost of living, trends which show little sign of subsiding any time soon.”
Nylén continued: “Our future is looking promising, operating from a strong position as we enter an economic recession which, while it will no doubt present challenges, may prove positive for B2B businesses such as Kambi in the long term.
“When also taking into consideration the recent start of the US basketball season and a World Cup still to come, we look forward to ending 2022 on a high before embarking on an exciting 2023.”
Following improvements to the Kambi Bet Builder product, the firm saw take-up during the first three weeks of the NFL season increase YoY, with pre-game Bet Builder bets rising from 18% of total bets to 26%.
The percentage of players placing at least one Bet Builder bet rose from 38% to 45% during Q3 while the total number of NFL Bet Builder bets placed during September jumped by more than two-thirds on last year.
Discussing the Bet Bulider product, Nylén drew on the “great strides” that Kambi had made in executing its modularisation strategy, a strategy that will see Bet Builder become the first standalone module put out to the market by the firm.
“Unlike our key competitors, Kambi’s Bet Builder was created as part of the core sportsbook, thereby benefitting from our expertise in areas such as competitive pricing, unique user experience and risk management, creating a compelling product for operators to integrate,” he remarked.
Kambi concluded four new US-based partner agreements during the period, signing deals with the ilani, Mohegan, Oaklawn Racing Casino Resort and Ondiss operators.
The firm also acquired front-end technology supplier Shape Games in September, a deal worth a potential €78.1m and one that Kambi said would “significantly strengthen” its product offering.
For his part, Nylén continued the positive commentary surrounding Shape Games, labelling it a “landmark” deal for the business for many reasons.
“Crucially, it gives us the fully-fledged, native front-end capability at a time when the front-end experience is a more vital part of the sports betting value chain than ever before,” he explained.
“Having worked closely with Shape Games on various projects in recent years, I have seen first-hand the strength of their technology and the level of expertise they possess, and I am pleased to welcome such a profitable and rapidly growing business to the Kambi Group.
“The acquisition will not only complement our turnkey solution, but it also aligns with our modularisation strategy with the front-end module set to be sold as a standalone service outside of the existing network, thereby increasing our total addressable market,” Nylén concluded.
Post Q3, Kambi agreed a $27.5m deal with PENN Entertainment over the early termination of its sportsbook technology supply deal, as PENN looks to move to its own in-house proprietary technology.
In addition, the return of the NFL season saw operator turnover rise in September, increasing by approximately 25% from the previous month.
The supplier also concluded a technology supply deal with Great Canadian Entertainment to provide sportsbook technology to 10 of its resorts located across Ontario.
Kambi’s share price dropped by almost 15% in early trading on the Nasdaq Nordic stock exchange to SEK148.55 (£11.76).