New launches help Kambi profits double in “strong” Q3

Revenue for the three months to 30 September reached €41.6m (£35.1m/$48.3m), up from €28.1m in the corresponding period last year.

Kambi said this increase was the result of its expanding operator network, having averaged approximately one partner launch per week during Q3. These included launches with Penn National Gaming’s Barstool sportsbook app across the US states of Arizona, Colorado, New Jersey, Tennessee and Virginia.

Other US online launches in Q3 included Kindred’s debut in Iowa and Parx’s entry into the Michigan market, as well as two retail partner launches with an on-property book at Penn National Gaming’s new Hollywood Casino York property in Pennsylvania and Churchill Downs’ sportsbook in partnership with the Tonto Apache Tribe’s Mazatzal Casino in Arizona.

In Europe, Kambi and the Belgian National Lottery (BNL) began the roll-out of the new retail Scooore sportsbook across the country, having previously launched the online sportsbook earlier this year.

Other major highlights during the quarter included Kambi’s acquisition of esports data and technology provider Abios in a deal worth up to SEK270m, while shortly after the end of Q3, Kambi supported partner BetEnt with its launch in the newly regulated Dutch online market.

Also after the quarter, Kambi supported Rush Street Interactive with its online and retail launches in the state of Connecticut, marking the 16th US state in which Kambi has launched. In addition, Kambi launched online and in retail with Racing & Wagering Western Australia (RWWA) via the operator’s TABtouch-branded sportsbook.

However, despite ongoing expansion in the US, Europe was Kambi’s main region for revenue in Q3, generating 55% of total revenue for the quarter, ahead of the Americas on 43% and other markets on 2%. This was the first quarter that the Americas were not the main source of income since Q3 of last year.

“I’m pleased to report another excellent quarter for Kambi, with strong financial results against tough 2020 comparables, which is a testament to our robust business model and the hard work of our staff across the world,” Kambi’s chief executive Kristian Nylén said.

“Kambi Q3 revenue was up 48% year-on-year, operating margin was once again strong at 35% and we continue to be highly cash generative.”

Looking at expenses for Q3, costs were 25.1% higher at €26.9m, though Kambi noted that the comparable period last year saw it spend less as a result of cost-saving initiatives related to the novel coronavirus (Covid-19) pandemic.

After including €260,000 in finance costs, this left a pre-tax profit of €14.4m, up 125.0% year-on-year, while earnings before interest, tax, depreciation and amortisation (EBITDA) was also 85.5% higher at €20.4m.

Kambi paid €2.6m in tax, leaving a net profit of €11.9m, an increase of 133.3% on last year.

In terms of its year-to-date performance, revenue for the nine months through to the end of September was €127.5m, up 80.1% on the same point last year and more than the revenue total for all of 2020.

Pre-tax profit was 448.9% ahead of last year at €49.4m, while EBITDA hiked by 187.3% to €65.8m and net profit 492.7% to €40.3m.

“In summary, we’ve performed well, and the future looks bright. We currently have a sales pipeline as strong and varied as I’ve known it,” Nylén said. 

“As the global trend of regulation continues, we are in a great position to capitalise on future opportunities as and when they arise, and we have announced the implementation of a share buyback scheme.”

Nylén also referenced Penn National Gaming’s acquisition of Canada-based theScore and the combined business’s plans to develop its own sportsbook. Previously, Penn National had been using Kambi’s platform to power its Barstool sportsbook.

“It’s incredibly difficult, as well as costly, to build, maintain, and continue to develop a first-class sportsbook, as we’ve seen with unsuccessful efforts of others in the past,” Nylén said. 

“In the meantime, we’ll continue to support their growth with our fantastic platform and service we have built over many years, which remains very much of interest to our growing list of prospective partners.”