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Kambi has reported a 12% revenue drop in Q3, a quarter CEO Kristian Nylén has described as “notoriously weak” for the sports betting industry due to the impacts of seasonality.

Revenue for the Q3 period amounted to €36.7m, marking a significant decrease when compared to the €41.6m generated during the same period of last year.

Nylén largely attributed the result to the quiet sporting calendar in Q3 and highlighted that “seasonality impact” has become even more pronounced since Kambi started operations in the US.

This is because “American football only has one month in September and basketball doesn’t start until mid-October,” said the CEO.

The performance decline comes on the back of an equally weak Q2, in which Kambi reported a 19% annual decrease in revenue.

When compared to Q3 of 2021, EBITDA for Q3 2022 fell by 47% to €10.7m.

Operating profit decreased from €14.7m last year to €3.9m this year, at a margin of 10.6% for the quarter.

Cash flow, excluding working capital and M&A, amounted to €1.8m in Q3, compared to €11.9m in the prior corresponding period.

On a more positive note, operator turnover increased by 12% boosted by new partner signings and market launches.

In Q3, the Stockholm-listed supplier expanded its partner network in the Americas with four clients and completed 10 partner launches, including the relaunch of Kindred’s online sportsbook in the Netherlands and MaximBet’s online sportsbook in the US.

Nylén said: “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.”

Kambi CEO Kristian Nylén: “The third quarter is always the most challenging for the sports betting industry given the quiet sporting calendar and this year was no exception.”

Nevertheless, CFO David Kenyon described Kambi’s financial performance in Q3 as robust.

Kenyon noted that Kambi still felt the loss of DraftKings as a client after the US behemoth migrated onto its proprietary SBTech sports betting software.

“In Q3 2021, approximately 30% of our revenue came from DraftKings. That, of course, disappeared this year.”

However, Kenyon commented: “We continue to be profitable and used our powerful balance sheet to fund the purchase of Shape Games.”

In September, the sportsbook supplier acquired Danish front end specialist Shape Games for €38.5m.

Nylén commented: “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.”

Commenting further on its modularisation strategy, Nylén revealed that Kambi has identified its Bet Builder product as the first standalone product that will go to market, beginning in Q1 2023.

“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,” Nylén said.

In Q4, Kambi expects to benefit from a packed sporting events calendar, which includes the 2022 World Cup.

The supplier also hopes to see a positive financial impact from its recently sealed partnership with Great Canadian Entertainment, a leading on-property gaming and entertainment company owned by an affiliate of Apollo Global Management.

Moreover, Kambi signed an agreement with Penn Entertainment that provides for ongoing rev share payments until Penn completes the migration of its online and retail sportsbooks from Kambi to its own proprietary technology.

Kambi will also receive $27.5m in early termination and transition fees.


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