Kambi CEO Kristian Nylén has detailed that, despite a ‘challenging’ Q3 of little sporting action and increasing macroeconomic headwinds, he remains positive of a ‘promising’ end to the year headlined by the FIFA World Cup.
Publishing its Q3 trading report, the sportsbook supplier recorded revenue of $36.8m, down 11.7% on 2021’s $41.7m, whilst operating profit decreased by 73% to $3.9m compared to 2021’s $14.7m with a margin of 10.6%, down from 35.4%.
Those numbers certainly provide cause for concern, especially with major economic struggles looming, though Kambi did note a 12% increase in operator turnover, driven by expanding its portfolio of partnerships, particularly in the Americas.
Kambi Q3: expanding footprint in the Americas
Q3 saw the addition of four new partnerships, with Oaklawn Racing Casino Resort in Arkansas, ilani in Washington state, Mohegan in Ontario and Ondiss in Argentina all becoming Kambi clients, taking the group’s North American reach to 19 states plus Ontario.
Further North American expansion saw 10 partner launches including MaximBet making its Kambi-powered online sportsbook debut in Indiana. Moreover, Rush Street went live in Maryland and Mohegan in Ontario. In Latin America, meanwhile, Kambi supported Olimpo.bet’s launch in Ecuador.
Such activity has led the Americas to contribute towards 53% of total GGR during Q3, compared to 54% last year. This is in contrast to Europe at 43% and the Rest of the World at 4%.
Nylén commented: “The third quarter is always the most challenging for the sports betting industry given the quiet sporting calendar and this year was no exception. It was also a quarter marked by growing global economic uncertainty and higher cost of living, trends which show little sign of subsiding any time soon. Despite this, Kambi proved its resilience once more and I am pleased to report another busy quarter for the business with operator turnover growth of 12%.
“Kambi also saw great commercial momentum during the quarter with the signings of ilani, Mohegan, Oaklawn and Ondiss, and with the recent signing of Great Canadian Entertainment, one of Canada’s largest on-property gaming companies, Kambi’s partner network was significantly strengthened.
“Owned by Apollo Global Management, which holds a number of gaming assets, Great Canadian has the potential to become a major player in the Canadian sportsbook market and its selection of Kambi underlines our position as the partner of choice in the Americas.”
In further plans for North America, Kambi revealed that it is preparing to provide its Bet Builder as a standalone module allowing operators to integrate it into their own sportsbook platforms, rather than as part of a full sportsbook.
Bet Builder recently launched for NBA and had an improving take-up during the opening three weeks of the NFL season, with pre-game bets rising from 18% of total bets to 26%.
As Nylen explained: “We continue to make great strides towards executing our modularisation strategy and can reveal that our award-winning Bet Builder, which recently launched for NBA, the final major US team sport to be added to the product, has been identified as the first standalone module we’ll go to market with. Unlike our key competitors, Kambi’s Bet Builder was created as part of the core sportsbook, thereby benefitting from our expertise in areas such as competitive pricing, unique user experience and risk management, creating a compelling product for operators to integrate.”
Shape Games acquisition
A strategic aim completed by the firm during Q3 was the acquisition of frontend developer Shape Games for $38.6m, which was done to help elevate Kambi’s UX capabilities.
Identified as a ‘fast growing and profitable’ business, it is anticipated to contribute significantly to Kambi’s bottom line and further aid its modularised packages to clients.
On the Shape Games acquisition, Nylen said: “This is a landmark deal for Kambi for many reasons. Crucially, it gives us the fullyfledged, native front-end capability at a time when the front-end experience is a more vital part of the sports betting value chain than ever before.
“The acquisition will not only complement our turnkey solution but it also aligns with our modularisation strategy with the front-end module set to be sold as a standalone service outside of the existing network, thereby increasing our total addressable market.”
Weakened balance sheet but optimistic for the future
Following the acquisition, Kambi was left with a depleted net cash position of $38.2m, down from $77.5m in Q3 of 2021. Moreover, cash flow was impacted by weaker profitability and the timing of tax payments, with cash flow for Q3 at $1.8m compared to $11.9m in Q3 of 2021.
Despite this, senior management remains optimistic about the future, with sports season in full swing, crowned off by the FIFA World Cup held in Qatar during November and December.
Concluding his assessment of Kambi’s performance, Nylen noted: Our future is looking promising, operating from a strong position as we enter an economic recession which, while it will no doubt present challenges, may prove positive for B2B businesses such as Kambi in the long term.
“When also taking into consideration the recent start of the US basketball season and a World Cup still to come, we look forward to ending 2022 on a high before embarking on an exciting 2023.”