Kambi’s shares tumble in early trading as Q4 report reveals revenue and EBITDA declines

Kambi Group has reported a 23% year-on-year (YoY) decrease in Q4 2023 revenue, dropping to €44.3m (£38m) from €57.8m, while EBITDA and operating profit also slumped for the supplier.

Management noted that Q4 revenue was bolstered by a €12.6m termination payment from PENN Entertainment as the operator shifted away from Kambi onto its own in-house tech stack.

When excluding the termination fee, revenue still fell by 2% YoY for the final quarter, with the supplier pointing to tough comparatives as the reason for this decline, namely, the World Cup in Qatar in 2022.

The trading update has sent the firm’s share price sliding by almost 20%, at the time of writing, to SEK102.9 (£7.86). Over the past 12 months, Kambi’s stock has fallen by more than 46%.

Kambi also pointed to “lower-than-anticipated” revenue from its Shape Games subsidiary, the front-tech tech specialist it acquired in 2022, as a reason for the flat revenue performance when excluding PENN.

Kambi confirmed that during the reporting period, a one-time payment of €4.7m was made in respect of the earnout agreement relating to the Shape Games deal.

For the same period, the supplier posted an EBITDA decline of 38% YoY from €27.3m to €17m as operating profit slipped 61.5%, from €18.7m to €7.2m.

However, Kambi pointed to the firm’s full-year 2023 results, which showed revenue up 4% to €173.3m. When excluding the PENN termination fee, revenue jumped 13% for the 12 months, according to the supplier.

The Stockholm-listed firm also highlighted underlying turnover growth of 6% when excluding the impact of PENN’s online sportsbook migration.

Despite this, FY 2023 EBITDA fell 33% to €25.2m and operating profit tumbled 43% to land at €20m for the year.

During the quarter, Kambi entered into two long-term sportsbook agreements with Svenska Spel and LiveScore Group, with the supplier expecting these deals to have a meaningful financial impact in H2 2024. 

Commenting as part of the earnings report, Kambi CEO Kristian Nylén said: “As I look back on the year, I have two overriding takeaways, the first being I’m not satisfied with our financial performance. 

“This performance was impacted by lower-than-anticipated revenue from Shape Games, smaller-than-expected revenue contributions from two of our largest partners and Bally’s more measured approach to marketing its sportsbook thus far. 

“My second reflection is we made good progress in building the foundations that will ultimately lead to a much-improved financial performance in the future, giving me confidence we’re on the right path for the long term.”

As part of the report, management noted that 2024 is set to be a “transitional year” for the supplier. The company said the slow progression of regulation in Brazil, PENN’s online migration and recently renewed partnerships should see revenue landed between €170m and €180m. 

Kambi stated that this guidance was provided on a one-off basis and that it does not intend to provide annual guidance in future years. 

Earlier this year, Nylén announced that he would be stepping down as CEO, with his successor set to be appointed at the firm’s annual general meeting (AGM) scheduled for 21 May 2024. 

Anders Ström, who was appointed as chair in November 2023, added: “Following the announcement regarding our CEO in January 2024, the board of Kambi has initiated the process of seeking a successor. 

“The search is progressing according to plan, with the aim to finalise an appointment prior to the summer period. In the meantime, the company’s progress towards its long-term strategic objectives remains uninterrupted.”

Once a successor is found, Nylén will take up a position on the supplier’s board until the firm’s next AGM in 2025.