SPORTS BETTING

UK – Kambi’s growth slows due to less new market openings and Penn migration

By Phil - 21 February 2024

A slower roll-out of new markets and the impact of Penn Entertainment’s online migration dented Kambi’s growth last year and in the fourth quarter. Kambi’s revenue amounted to €44.3m for the fourth quarter of 2023, down from €57.8m and €173.3m for the period January to December of 2023, up from €166m.

This provided underlying turnover growth of six per cent when excluding the impact from Penn Entertainment’s online migration. Excluding the termination fee recorded in Q4 2022, revenue of €44.3m represented a two per cent decrease for the quarter and full year 2023 revenue of €173.3m was a 13 per cent increase against tough comparatives including the World Cup in Q4 2022 and the Penn online migration. Kambi entered into long-term sportsbook platform agreements with Svenska Spel and LiveScore Group to power their respective brands. These partnerships leverage established customer bases and revenue streams, with meaningful financial impact anticipated from H2 2024.

The group secured two additional European sportsbook partnerships, including a long-term deal with fast-growing Dutch online casino operator 711 and a multi-channel partnership with Bingoal to provide superior sports betting technology in Belgium and the Netherlands.

Kambi gave 2024 full year revenue guidance of €170m to €180m. This full-year guidance is provided strictly on a one-off basis and Kambi does not intend to provide annual guidance for coming years.

“The final quarter of 2023 saw Kambi conclude a year of strong strategic progress, whilst navigating what remains a complex and challenging sports betting landscape. I am pleased with the strategic progress we made throughout 2023, as we continue to build a strong foundation for growth over the coming years. As I look back on the year, I have two overriding takeaways, the first being I’m not satisfied with our financial performance. This performance was impacted by lower than anticipated revenue from Shape Games, smaller than expected revenue contributions from two of our largest partners and Bally’s more measured approach to marketing its sportsbook thus far. My second reflection is we made good progress in building the foundations that will ultimately lead to a much-improved financial performance in the future, giving me confidence we’re on the right path for the long-term.

“These foundations include the numerous partner signings and renewals made last year, headlined by the partnerships with Bally’s Corporation, LiveScore Group and Svenska Spel, which we expect to deliver a meaningful revenue contribution from H2 2024. We also continue to work on our modularisation capability and believe with Abios, Shape Games and now Tzeract, the positive commercial conversations we’re having with regards our strong product portfolio will increasingly bear fruit during the year ahead. On Shape Games, we recently took the decision to integrate it further into the business to make the most of the opportunities we see in combining the strengths of the Kambi and Shape Games UX teams. Meanwhile, another important element to financial performance is tight cost control, so it is pleasing today we can communicate a limited year-on-year cost increase for 2024. These are just some of the actions we have taken to put us in a stronger position moving forward.

“Having said that, it is important to note that challenges do continue to exist, including a slower roll-out of newly regulated sports betting markets. The outlook in certain markets has not been as promising as previously anticipated, particularly in California where 2028 now appears to be a more realistic timeline for regulation. In Brazil, we welcome the long-awaited regulation of the country’s sports betting market, but are also mindful that the transition to a fully licensed framework is unlikely before Q3 2024 and that new operators will face tough competition entering what is already a mature grey market with established sports betting brands.

In November, Kambi Co-founder and member of the Board Anders Ström became Chair of the Board, succeeding Lars Stugemo

Mr Ström said: “Following the announcement regarding our CEO in January 2024, the Board of Kambi has initiated the process of seeking a successor. The search is progressing according to plan, with the aim to finalise an appointment prior to the summer period. In the meantime, the company’s progress towards its long-term strategic objectives remains uninterrupted.”