B2B sports betting platform Kambi has reported a robust year-on-year revenue growth of 23.6 percent for Q2 2023, reaching €42.9 million. The quarter’s EBITDA also surged by 11 percent compared to Q2 2022, totaling €12.9 million. This success was attributed to a higher operator trading margin of 9.9 percent and Kambi’s acquisition of Shape Games. Despite this growth, Kambi’s operating profit for Q2 2023 declined by nearly 25 percent, amounting to €3.7 million, with a margin of 8.6 percent. The H1 2023 revenue reached €86.9 million, marking a substantial 21.5 percent increase. Notably, the company signed strategic partnerships and made advancements in its AI pricing division during Q2. Kambi remains optimistic about its long-term strategy, despite a temporary market response of nearly 4 percent decrease in share value.
Key Q2 highlights
24 percent YoY revenue growth;
Boosted by 9.9 percent operator trading margin and Shape Games inclusion;
Global sportsbook partnership with Bally’s Corp replacing proprietary sports betting tech;
Advancements in AI pricing division for innovative sports trading;
Contract extensions with important partners: BetPlay, LeoVegas, Paf;
€7.5 million convertible bond paid back to Kindred Group; and
Repurchased 381,476 shares totaling €7.2 million.
Operator turnover
In Q2 2023 reported an upturn of 4 percent from Q2 2022, fueled by new and existing partnerships and launches in US. Penn’s declining market share in various states and adverse foreign exchange movements, primarily USD, SEK, and COP weakening against the Euro, offset growth. Operator turnover, at constant exchange rates, surged by 7 percent. The operator trading margin stood at 9.9 percent due to favorable basketball and soccer results in the Champions League and major European leagues. Kambi expects an approximate 8.5 percent trading margin during the next year, Revenue for Q2 reached €42.9 million, with 94 percent derived from regulated markets.
In Q2 2023, total Gross Gaming Revenue (GGR) surged by 21 percent when compared to the same quarter in 2022. During this period, the Americas constituted 53 percent (previously 54%), Europe accounted for 44 percent and the Rest of the World maintained 3 percent of the overall operator GGR. This distribution highlights Kambi’s robust geographical diversification strategy.
In Q2 2023 GGR grew 21 percent compared to Q2 2022 and the chart above is a geographical analysis. (Source: SiGMA)
Total expenses and net cash position
In Q2 2023, total expenses reached €39.2 million, and €78.7 million for H1 2023. Q2 saw additional recurring costs of €4.0 million, with €2.9 million for Shape Games operating expenses and €1.1 million in amortization of acquired Shape Games intangible assets. Foreign exchange losses of €0.7 million compared with €2.3 million gain for the same quarter year-on-year due to settlements and revaluations.
Excluding forex movements, estimated total expenses for Q3 2023 are €38.5 – €41.5 million and €155.0 – €165.0 million for the full year 2023, including acquired intangible asset amortization of €1.3 million and €5.3 million respectively.
EBITA for Q2 2023 was €5.0 million, with a margin of 11.7 percent Tax expenses for Q2 were €1.0 million including €0.3 million withholding tax. Net cash position at June 30, 2023, was €57.1 million, with cash flow of €0.1 million in Q2 and €3.4 million in H1.
Kambi Q2 2023 operating expenses in millions (Euros) compared to the same period year-on-year. The most significant expense is staff costs at ￡15.4 million. (Source: SiGMA)
Partner agreements
In May, Kambi secured a significant sportsbook partnership with Bally’s Corp, replacing its in-house tech with Kambi’s Complete solution for online and retail betting. The deal aims to expand Kambi’s presence across the US and other markets, demonstrating Kambi’s adaptable product strategy. Additionally, Kambi partnered with WarHorse Gaming for Nebraska’s inaugural sportsbook. Contract extensions were signed with key partners, including BetPlay, Paf, and LeoVegas Group.
Kambi’s Q2 2023 report highlights its strategic growth and continued dominance in the Americas.
Significant milestones
Kambi’s Q2 report reveals the transformation of its AI pricing unit into a standalone division within its product lineup, in alignment with its modular strategy. This AI-driven division will offer cutting-edge trading services to Kambi and its partners, providing operators with modular solutions. Developed independently since 2019, Kambi’s automated AI trading outpaces industry standards, with potential widespread adoption.
The EGR B2B Awards recognized Kambi’s leadership, granting it Innovation in Sports Betting Software and Sports Betting Supplier awards.
Kambi also repaid a €7.5 million convertible bond held by Kindred Group, unimpacting their ongoing partnership renewed until 2026
CEO Statement
CEO Kristian Nylén (pictured above), highlighted key achievements, including securing a significant tier-one partner, renewing partnerships with key players, and advancing the development of their AI trading capabilities.Nylén highlighted the revenue growth of 24 percent year-on-year, primarily attributed to the addition of new customers and the successful integration of Shape Games. Operator turnover growth was reported at 4 percent and lagged behind revenue growth due to foreign exchange fluctuations, the impact of a high trading margin, and a decline in US market share for PENN Entertainment. Adjusted for foreign exchange movements, he added that Kambi experienced an EBITA increase of €2.8 million compared to the previous year.
Nylén added that the major highlight of the quarter was Kambi’s partnership with Bally’s Corporation, a milestone that strengthens Kambi’s market leadership. Kambi’s commitment to innovation is demonstrated by its AI-powered trading, which has proven successful and award-winning. The company envisions expanding the reach of this unique pricing method beyond their network, potentially offering odds to external entities. The progress made in Q2 in incubating this AI division paves the way for its establishment as a distinct sector within Kambi, akin to Abios and Shape Games.
“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.” he concluded.
