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Kambi H1 revenue stable despite Q2 decline

| By Daniel O'Boyle
Sports betting supplier Kambi’s revenue for the first half of 2020 ticked slightly upward to €42.7m in the first half of 2020, despite second-quarter revenue declining 31.6% to €14.8m.

Sports betting supplier Kambi’s revenue for the first half of 2020 ticked slightly upward to €42.7m (£38.9m/$49.5m) in the first half of 2020, despite second-quarter revenue declining 31.6% to €14.8m.

Of Kambi’s €14.8m in revenue for the quarter, €11.0m came from regulated markets. Although this represented a decline in raw numbers, it was an increase as a percentage of Kambi’s overall revenue, from 71% to 74%. Kambi's revenue from Europe came to €10.8m, representing a decline from a 77% share of revenue to a 73% share.

The supplier did not reveal its operators’ turnover levels, but said that this declined 33% while operator trading margin came to 8.2%.

Kambi chief executive Kristian Nylén said that not only was he impressed by the fact that revenue did not decline too drastically after the almost complete stoppage of global sports, but also that operator turnover grew-year-on-year in June. June also generated 47% of the quarter's operator turnover, while 33% occured in May and just 20% in April.

“Given the impact the pandemic is having on the sporting calendar, to generate 68% of the revenues of the comparative quarter last year is a great achievement,” Nylén said. “Furthermore, operator turnover accelerated through the period, finishing with year-on-year growth for June, which tells me we are on the right track as a business and well positioned for the second half of 2020 and beyond.”

Nylén added that golf and UFC proved to be especially successful sports for Kambi during the quarter.

Kambi’s operating expenses, however, were greater than revenue, declining only 4.5% to €18.1m. The largest expense was staff costs, which ticked down 0.2% to €8.6m. Amortisation costs, meanwhile, grew 29.8% to €3.0m while data supplier costs rost 5.9% to €2.0m.

Other operating expenses, meanwhile, fell 27.8% to €4.5m.

These costs created an operating loss of €3.4m, compared to a €2.5m profit in the second quarter of 2019.

After a €157,000 net financial loss, Kambi made a pre-tax loss of €3.5m, compared to a €2.4m profit the year prior. After paying €466,000 in taxes, Kambi made a loss of €3.0m, after a €1.6m profit in 2019.

Following currency adjustments, Kambi’s loss for the quarter came to €2.9m, compared to a €921,000 profit in 2019.

For the first half of 2020, however, Kambi’s profit of €42.7m was 0.1% higher than its profit in the first half of 2019.

Operating expenses, however, grew 4.5% to €39.2m. Of these expenses, staff costs grew 12.7% to €19.1m, amortisation costs grew 29.0% to €5.9m, data suppliercosts grew 21.7% to €4.7m and other operating expenses declined 21.4% to €9.5m.

These costs led to an operating profit of €3.5m, down 32.3%. After financial costs of €326,000, Kambi’s profit before items affecting comparability came to €3.2m, down 65.1%.

The business incurred an additional, nonrecurring €590,000 cost in bad debts related to Bulgarian operator National Lottery AD, which had its licence revoked by the Bulgarian State Gambling Commission in March over unpaid taxes as its owner Vasil Bozhkov found himself in legal trouble.

This led to a pre-tax profit of €2.6m, down 47.0% year-on-year. After paying income taxes of €851,000, Kambi’s profit came to €1.7m, down 51.6%.

Kambi made a loss of a further €1m through currency translation adjustments, leaving it with a profit of €722,000 for the half, down 74.3%.

Nylén added that while revenue was obviously below start-of-year expectations, he was proud of how they showed Kambi’s ability to handle adversity.

“Of course, the financial numbers published today aren’t as I would have hoped back when we were planning for 2020, but they do reflect a business able to deliver when faced with both adversity and uncertainty,” Kambi said.

Yesterday (July 23), Kambi and high-profile client US sports betting giant DraftKings, announced that they have reached an agreement to cooperate on DraftKings' planned migration from Kambi's back-end platform services to SBTech's platform, with DraftKings and Kambi agreeing a termination date of 30 September, 2021 for their partnership. DraftKings agreed to merge with SBTech, spelling the end of its Kambi partnership, in December 2019, with the deal closing in April.

Kambi will receive full revenue until the date of termination.

Today (24 July), Unibet operator Kindred Group, from which Kambi was spun off, reported a year-on-year rise in revenue during the first half of the year. Kindred said that this rise was down positive performances across a number of markets, as well as its ongoing focus on product differentiation.

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