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Kambi share price jumps on back of Q4 growth

| By Robert Fletcher
Kambi Group’s share price was up 16.35% this morning (22 February) after the sports betting supplier reported revenue and net profit growth for the fourth quarter of its 2022 financial year.

The group said it was able to finish 2022 with a “flourish” and despite ongoing uncertainty over the global economic outlook, is in a “fantastic” position to pursue its growth goals in 2023 and beyond.

This came after the supplier last month forecast its operating profit would skyrocket to €150.0m (£132.2m/$159.6m) by 2027, with revenue expected to be between €300.0m and €500.0m.

At the time, Kambi said the main reason for this growth would be an expected expansion of its total addressable market, especially in the US. Chief executive Kristian Nylén (pictured) reiterated this in his analysis of Q4 and the 2022 full year, saying the business is ready to build towards these targets.

“The year finished with a flourish with the business delivering across several key areas, providing the perfect springboard into 2023,” Nylén said. “The global economic outlook might be uncertain, but we have a proven, robust business, one which is ready to meet any challenges that lie ahead. 

“With a clear focus on the updated strategy we detailed at our Capital Markets Day, we are ready to build towards the financial targets we’ve set ourselves for the coming years.”

In the hours after the results were made public, Kambi’s share price increased, with the price at time of writing SEK210.10, up 16.35% on the opening price.

Fourth quarter growth

Looking at Q4, revenue was 65.6% higher year-on-year at €57.8m, though Kambi said this included a €12.6m termination fee from Penn Entertainment in relation to the migration agreement reached in October 2022. Without this fee, revenue increased 29.5%.

Kambi said year-on-year revenue growth was primarily down to its launches in a number of new US states in 2022 including New York, Maryland, Kansas and Washington, as well as a strong sporting calendar in the quarter that included the Fifa World Cup and several major US sports events.

In terms of geographical performance, the Americas contributed 58% to the revenue total in Q4, with Europe at 42% and rest of world 3%, which Kambi said evidenced its “healthy” geographical diversification.

Turning to spending, total expenses – comprising operating costs and all amortisation and depreciation expenses – were 8.6% higher at €30.2m. Kambi also reported €157,000 in net finance costs, leaving a pre-tax profit of €18.5m, up 172.1% year-on-year.

Kambi paid €3.4m in income tax, resulting in a net profit of €15.1m for the quarter, a rise of 147.5% from €6.1m in 2021. In addition, earnings before interest, tax, depreciation and amortisation (EBITDA) more than doubled from €13.4m to €27.3m.

Full year results

As to how this impacted the full year, revenue for the 12 months through to 31 December was €166.0m, up 2.22% year-on-year. However, when excluding the €12.6m termination fee from Penn, revenue actually fell 5.5% to €153.5m.

Total expenses increased by 24.5% to €131.2m, while after also including €1.2m in financial costs, Kambi posted a pre-tax profit of €33.6m, down 40.2% year-on-year.

The group paid €71.m in tax, leaving a net profit of €26.5m for the full year, a 42.9% drop from €46.4m in the previous financial year. In addition, EBITDA was 19.6% lower at €63.4m.

“Looking back on the full year, it was one where Kambi was able to make significant strategic progress,” Nylén said. “Whether it was securing partnership extensions with Kindred and Parx, the numerous new partners we signed, the leap forward in our UX capability through the acquisition of Shape Games, the continued modularisation of our service to increase our addressable market or the development of our algorithmic trading capability.

“All these achievements and more saw us enter 2023 in a fantastic position, one which was quickly strengthened by the extended partnership agreement with Rush Street Interactive in January.”

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