Kambi revenues up 25% but warns US could be a slow-burner
Operator cites World Cup and focus on core business as reasons for Q2 revenue rise
Kambi Group has reported a 25% year-on-year increase in revenues to €17.6m (£15.6m) for Q2 2018, buoyed by the World Cup and a margin of 7.8% for the quarter.
The provider also enjoyed operating profits (EBIT) of €2.4m (£2.1m) during the quarter, with a profit margin of 14%. Profits after tax increased to €1.7m (£1.5m) during Q2 2018, from a previous Q2 2017 high of €0.1m (£88,845).
“The past few months have produced very positive results for Kambi, both operationally and commercially, and I look forward to continuing this progress throughout the remainder of the year,” said Kambi CEO Kristian Nylén.
Since the repeal of PASPA by the US Supreme Court in May, Kambi has been one of the more active operators in pursuing sports betting opportunities, concluding supply deals with casino operator Rush Street Interactive and US DFS heavyweight DraftKings during the quarter.
Nylén added: “The decision has the potential to create a significant business opportunity for Kambi. I’m excited about what we can achieve with both customers, and in the US more generally. However, the state-by-state roll out of regulated sports betting will not happen overnight, therefore our US-facing business should be viewed in the mid-to-long-term.
“In parallel, we continue to focus on our core business, which was boosted in June by the early stages of the World Cup.”
Kambi has also been active in Europe, renegotiating its long-term agreement with Kindred Group and signing a new sportsbook supplier deal with Swedish horseracing monopoly operator ATG.
Regulus Partners analyst Paul Leyland hailed the “real strategic progress” made by Kambi during the quarter but raised some concerns over its future, adding: “The big question is whether Kambi’s potentially flagship new clients can hit the ground running (likely ATG, longer-term for DraftKings), although either becoming a number-two client (overtaking 888) will be challenging given their geographical restrictions, in our view.
“Equally, over time, as clients become stronger in betting, it is likely they will want something more flexible and controllable than a turnkey – whether Kambi can build in this flexibility in time is also a key question.”
Kambi’s share price dipped 6% in early trading.