DraftKings migration hits Kambi revenue and net profit in Q1

Sports betting supplier Kambi Group reported a year-on-year decline in revenue and net profit for the first quarter of its 2022 financial year.

Revenue for the three months to 31 March 2022 amounted to €36.9m (£31.2m/$39.2m), a decrease of 14.6% from €43.2m in the corresponding period in the previous year.

Kambi said this decline was primarily due to tough comparatives in the 2021 financial year, as well as the impact of new regulations in The Netherlands, which forced some operators to withdraw until they secure a new licence in the country.

Operator turnover at constant exchange was down 31.0% year-on-year. However, this was mostly due to the fact that DraftKings still used Kambi technology during Q1 of 2020. When DraftKings was removed from the comparative period, this turnover was up by 25.5%.

In terms of geographical performance, revenue from the Americas contributed 55% to the total figure for the quarter, while Europe accounted for 43% and the Rest of World 2%. Kambi also noted that 93% of all revenue came from regulated markets, up from 87% last year.

Meanwhile, total operating expenses were 20.4% higher at €29.5m, which, coupled with the revenue decline, left a reduced operating profit of €7.3m, down 61.0% year-on-year.

Finance costs also increased 93.2% to €286,000. As a result, pre-tax profit for the quarter fell 61.6% to €7.1m, while after paying €1.6m in income tax, Kambi was left with a net profit of €5.4m, down 64.2% year-on-year.

Earnings before interest, tax, depreciation and amortisation (EBITDA), meanwhile, were 41.5% lower at €13.8m.

Looking at other developments during the quarter, Kambi secured its entrance into the Canadian market by partnering with NorthStar Gaming. This will initially focus on sports betting in Ontario, which opened its legal online gambling market on 4 April.

In February, Kambi announced an extension to its long-term partnership with Kindred Group through to 2026, while it also signed a sportsbook agreement with sports betting operator Carousel Group’s MaximBet brand. MaximBet is already live in Colorado and also plans to launch in Indiana, Iowa, New Jersey, Ohio and Pennsylvania.

Kambi powered a total of 11 launches across the US in the quarter, including Rush Street Interactive in New York in January, Affinity Interactive in Iowa, and Parx Casino in both New Jersey and Pennsylvania.

“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,” Kambi chief executive Kristian Nylén said.

“Operator turnover was up 25% when adjusting for the migration of DraftKings which proves the underlying financial performance of the business remains strong. This growth comes despite being up against tough Q1 2021 comparatives and the temporary impact of regulatory headwinds in the Netherlands, which we expect to ease soon.

“In short, the future looks bright for Kambi with high interest in the sportsbook and services we offer today, as well as those we are developing for tomorrow. 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.”

Author: Raymond Fleming