US expansion drives financial growth at Kambi in 2019

Sports betting provider Kambi has put year-on-year revenue and profit growth in 2019 primarily down to its expansion into several new markets within the US.

Revenue for the 12 months to 31 December 2019 amounted to €92.3m (£77.7m/$100.8m), up 21.1% from €76.2m in the previous year.

Kambi said much of this growth was driven by its US business, with the provider now active in eight states across the country.

Pennsylvania is Kambi’s most active market, with the provider involved with five online skins and at eight retail properties in the state, via partnerships with Rush Street Interactive, Kindred, Parx and DraftKings.

Kambi also has a significant presence in New Jersey with four online skins and one retail location, while two online skins and three land-based sites are using Kambi technology in Indiana, and one of each in West Virginia.

The provider also has an online presence within New Hampshire, as well as land-based agreements in Iowa, Mississippi and New York.

Europe remains Kambi’s main source of income, but due to ongoing expansion in the US, the gap between the markets is closing. At the end of the fourth quarter, Europe was responsible for 61% of total revenue versus 37% for the US, compared to an 82% and 16% split at the same point in 2018.

In terms of spending for the year, total operating expenses were up 22.2% year-on-year to €77.6m, mainly due to ongoing expansion efforts in the US. Kambi’s main outgoing was staffing costs, up 33.3% from €28.2m to €37.6m for the year.

Data supplier costs were also up 22.5% to €9.8m, while amortisation expenses climbed 24.2% to €8.2m and other operating costs by 6.3% to €22.0m.

However, higher spending did not stop Kambi from posting profit growth for the year, with profit from operations increasing 15.6% year-on-year to €14.7m.

Profit before tax was up 10.6% from €12.3m to €13.6m, and after paying €3.2m in tax, profit after tax increased by 6.1% to €10.4m for 2019. Earnings before interest, tax, depreciation and amortisation (EBITDA) also improved by 29.3% to €29.1m.

“Looking back on 2019, it was another great year for Kambi, as we continued to build out a fantastic sports betting product, expanded into multiple new markets, and signed six new partners, all of which leaves us in a great place for 2020,” Kambi chief executive Kristian Nylén said.

“The evolving nature of the sports betting industry means there will always be challenges to overcome but I know we have built a robust business with the capability and strength to withstand these pressures.”

Kambi’s full-year performance was boosted by a positive fourth quarter, during which revenue up 23.1% year-on-year to €26.7m. Profit after tax for the period was up 39.4% to €4.6m, while EBITDA climbed 55.4% to €10.1m.

“In the previous report, I highlighted the momentum we could see building in operator turnover, and this trend continued in Q4 with each month delivering a greater number than the last,” Nylén said.

“In total, Q4 operator turnover increased by 52% year-on-year and 36% sequentially – considerably higher volumes than Kambi has ever seen. While much of this growth was derived from our US partners, we also saw double-digit turnover growth in markets outside of the US, all of which contributed to strong revenue growth of 23%.”

Nylén added: “We operate in a fast-growing market, one which continues to embrace regulation and will therefore present Kambi and our partners with exciting opportunities for many years to come.

“Be in no doubt Kambi is well positioned both in the US and globally and I look forward to a prosperous 2020.”