Kambi reports Q1 growth despite Covid-19 impact

Sports betting services provider Kambi Group has reported a year-on-year rise in revenue and profit for the first quarter, despite its business being impacted by the global novel coronavirus (Covid-19) pandemic.

Revenue during the three months to 31 March 2020 totalled €27.9m (£24.3m/$30.0m), representing an increase of 32.9% on the €21.0m reported for Q1 2019.

Kambi put this growth down to a 27.0% increase in operator turnover and an operator trading margin of 9.3%, aided by a strong performance in the global football market, particularly in the English and Spanish leagues before the virus saw all major competitions suspended.

The provider also saw considerable turnover growth on basketball and American football betting. Turnover for this year's Super Bowl was the largest for any single event in Kambi's history.

This growth came despite a slow down towards the end of the quarter due to Covid-19 leading to the cancellation or postponement of almost all sports events. According to Kambi, in the final weeks of the period and early Q2, it was running at approximately 25-30% of previous levels in Q1.

“The sports calendar has been stripped bare across the world, with major leagues and events being cancelled or postponed, quite rightly, until safety can be guaranteed,” Kambi chief executive Kristian Nylén said.

“While I have no doubt that sports will return, the current situation has understandably led to a reduction in our revenues, although our teams have done a wonderful job to stem the flow and ensure our partners have a good product to sell.”

In terms of geographical performance in Q1, Europe was responsible for 61.0% of all revenue, compared to 77.0% in the same period last year. Kambi said this was due to its growing presence in the Americas, with revenue from this region jumping from 20.0% to 37.0%, while the remaining 2.0% came from activities in other areas around the world.

Kambi noted a number of key developments in the US market during the quarter, including launching in Illinois, Michigan and Mississippi. The provider is already active in Indiana, Iowa, New Hampshire, New Jersey, New York, Pennsylvania and West Virginia.

Looking at operating expenses for the quarter, Kambi spent a total of €21.1m, up 14.7% from €18.4m last year. Staff costs were the main outgoing for Kambi, with rising 25.3% to €10.4m.

Data supplier expenses climbed 35.0% to €2.7m, while amortisation costs were also up 31.8% to €2.9m. However, other operating costs were reduced by 13.6% from €5.9m to €5.1m.

Kambi noted that operating expenses will likely decline between 20% and 25% in the second quarter as the result of a cost-saving programme it announced earlier this month to help mitigate the impact of the Covid-19.

Should the current situation regarding cost-saving and the lack of sports events continue for the remainder of the calendar year, Kambi said that full year costs would fall between 5% and 10% year on year. However, once the sports calendar resumes and restrictions are lifted, outgoings for the business will return to normal levels, including any associated costs.

Despite the rise in spending in Q1, revenue growth during the period meant that Kambi was able to post a 161.5% year-on-year increase in operating profit to €6.8m.

Profit before tax stood at €6.1m, up 144.0% on last year, and after paying €1.3m in income tax, profit for the period amounted to €4.8m, up 140.0% from €2.0m in Q1 of 2019.

“We owe it to our all our employees, partners and investors to ensure we are in the strongest position possible to pick up where we left off when sports do resume, and we enter what promises to be a prolonged period of busy sporting action,” Nylén said.

“I’m confident the cost-saving measures we’ve introduced in recent weeks, our strong balance sheet, and the flexibility we have retained to be back running at 100% capacity almost immediately, will ensure we are able to do so, alongside our fantastic partners.

“So even though our momentum has been slowed by the unfortunate events of recent months, the decisions we have taken see us well placed to move through the gears as soon as the virus is under control and major sports return.

“There are positive signs some leagues and tours may resume before or during the summer, albeit behind closed doors, and when they do, we’ll be ready.”