Kambi: Q1 revenue hit by Dutch headwinds and DraftKings migration; wins EGR North America Award

Provider of sports betting services to B2C gaming operators Kambi Group has shared its report for Q1 2022. Revenue for the period amounted to €36.9 million ($39 million), a decrease of 15%; while operating profit (EBIT) for the quarter was €7.3 million ($7.7 million), down from €18.7 million ($19.7 million), at a margin of 19.9%.

The decreases in revenue and net profit are attributed to tough 2021 comparatives, but also to the impact of regulatory headwinds in the Netherlands -some operators were forced to withdraw until a new license is secured-, and the migration of sports betting giant DraftKings to its own proprietary technology.

Profit after tax for the period amounted to €5.4 million ($5.7 million), down from €15.1 million ($16 million) in the prior year’s first quarter. Cash flow from operating and investing activities amounted to €5.5 million ($5.8 million), down from €16.5 million ($17.4 million).

“The first quarter of the year proved to be another busy period at Kambi as we delivered new partner signings, contract extensions, continued market expansion and multiple product and technology advancements,” said Kristian Nylén, Chief Executive Officer.

Kambi released its Q1 ‘22 report this morning and you can listen to CEO Kristian Nylén and CFO David Kenyon discuss performance in this podcast. Topics include quarter highlights, turnover impacts, sales pipeline, growth in Americas and modularisation. https://t.co/hGmH2AmIuH

— Kambi (@KambiSports) April 27, 2022

While operator turnover at constant exchange was down 31% Y-o-Y, this is mostly attributed to DraftKings still using Kambi’s technology the previous quarter. When the sports giant was removed from the comparative period, adjusting for migration, turnover was up 25%, which the executive says proves “the underlying financial performance of the business remains strong.”

Nylén said the company expects regulatory headwinds in the Netherlands “to ease soon,” and explained turnover was driven “by a busy US sporting calendar,” including Super Bowl and March Madness. “I was proud to see Kambi provide its partners with a market-leading offering and platform stability unmatched by some of the most high-profile B2C sportsbooks,” he added.

In terms of key highlights for the period, the company extended its long-term partnership with Kindred Group in February until 2026. “This agreement is very much reflective of what we see in the wider industry, with some top-tier operators adopting a hybrid approach to technology by blending first-class third-party services with proprietary elements,” Kambi said.

The company sees the industry now “broadly divided” into two operator types: those that outsource their sportsbook entirely, and those that outsource to varying degrees. As Kambi continues to develop a more open and modularized sportsbook, it expects to become even more attractive to the former group, while also “significantly widening” its addressable market by making select products and services available to the latter for the first time.

Kambi's stand at ICE London 2022

“I am particularly pleased with the momentum Kambi continues to build across North America,” remarked Kambi’s CEO. During the quarter, the group completed 11 partner launches in the US -including Rush Street Interactive in New York, and Parx Casino in both New Jersey and Pennsylvania- and signed two new partnerships with North America-facing operators NorthStar Gaming and MaximBet, the latter moving away from its predominantly in-house technology strategy.

In terms of geographical performance, most revenue came from the Americas, which contributed 55% to the quarter’s total results. Meanwhile, Europe accounted for 43% and the Rest of World for 2%. Additionally, 93% of all revenue came from regulated markets, up from 87% last year.

“With regulation across North America moving at pace, and states such as California, Texas, and Ohio yet to go live, I have never been more confident in our position to capitalize on the opportunities this vast market presents,” Nylén commented.

In terms of business expansion, the group obtained regulatory approval in Ontario, Canada, and subsequently launched with partners on day one of the market opening, in the second quarter. The company believes this jurisdiction promises to be “one of the largest sports betting markets in North America” and looks forward to additional Canadian partner signings.

“We remain steadfast in our commitment to strengthening our position as the world’s leading sportsbook and continuing to provide exciting sports betting experiences for players,” said Nylén. “To deliver this requires a strong core platform with the crucial flexibility to facilitate localized offerings to satisfy the varying regional demands.”

During the quarter, Kambi also announced the ability to repay a convertible bond held by Kindred, which the business says provides it with “complete freedom to make strategic decisions that will deliver value for all stakeholders.” 

“With Kambi reaching the milestone of 40 partners during the quarter, the scale of the Kambi network has never been greater nor more diverse, and I believe we have only scratched the surface of what’s possible,” concluded the company’s statement for the quarter.

Industry recognition

Also on Wednesday, Kambi announced it was named Sports Betting Supplier of the Year at the EGR North America Awards 2022, held on Tuesday. The company says this achievement caps off a successful month in which it was also recognized at the Global Gaming Awards, where it was named Retail Supplier of the Year and Online Sports Betting Supplier of the Year.

The EGR Awards ceremony was held in New York City, and Kambi says it further cements its “leading position in the North American market.” The group is currently live in 17 US states, having completed more than a dozen partner launches this year thus far. According to a report by Eilers & Krejcik, Kambi currently powers three of the top 10 betting apps in the country.

. @KambiSports took home the Online Sports Betting Supplier of the year award. 👏👏👏#GGA2022 #globalgamingawards pic.twitter.com/OxpX9Dxlcm

— Global Gaming Awards (@GGAwrds) April 25, 2022

“I am delighted that Kambi has been recognised by our industry peers as both the leading multi-channel and North American sports betting supplier,” said Sarah Robertson, Kambi’s SVP Sales. “As we demonstrated during the Super Bowl and March Madness, our flexible product is far ahead of the competition and we are very proud of the success we have delivered for our partners during the judging period.”

“These award wins are a testament to both our partners and our more than 1,000 talented employees who know what it takes to provide world-leading sports betting experiences for players,” concluded the executive.