US drive helps Kambi record ‘successful’ Q3

Publishing its Q3 2019 trading update (period ending 30 September), Kambi Group has detailed strong progress on its regulated market agenda combined with the strengthening of its US commercial pipeline.

Despite trading on a ‘quiet sporting calendar’ competing against World Cup 2018 comparatives, Kambi has recorded a 12% increase in Q3 2019 revenues to €23.million, up from €20.5m in Q3 2018, and €65.6m for the period January to September 2019, up from €54.5m in 2018.

Speaking on what has been a ‘successful’ period for the sportsbook platform and software provider, Kambi CEO Kristian Nylén commented: “Multiple customer launches, new product releases and major commercial agreements all contributed to a successful period for Kambi, as we continued to display a high-level of expertise throughout the organisation.”

The sportsbook platform and software provider has, however, noted a drop in operating profit as a result of higher spending related to its US expansion efforts. However, Kambi maintains its group period EBITDA at 7.1 million (Q32018: €6.6m), and trades at year-to-date EBITDA of €19 million (YTD2018: €16m) 

Tough like-for-like comparatives saw Kambi trade with an operating margin of 14.9% against, Q3 2018 highs of  20%, as the technology group records EBIT operating profit of €3.4 million (Q32018: €4.2 million) – with Kambi maintaining €8.6million (YTD2018: €8.5m) for the period January to September 2019 with an operating margin of 13.0%.

Nylén added: “The third quarter is traditionally a challenging one for the sports betting industry, particularly in a year with no major summer football tournament. This, along with our ongoing investments to capitalise on the huge US opportunity, was the reason for the year-on-year decrease in operating result.”

Kambi has attributed September’s European football fixtures as a ‘prominent driver’ behind the group’s operator turnover growth in Q3, which has been boosted by the return of the NFL season in the US. 

The CEO continued: “I was also pleased to see momentum increase throughout the quarter, culminating in September’s operator turnover, which was up significantly year-on-year and surpassed the previous highest monthly total. This encouraging performance was due to the combination of multiple customer launches, enhancements to the Kambi sportsbook, and a busier sporting calendar, which gives me confidence for the rest of the year.

“We signed two new customers during the quarter, the first being Penn National Gaming, the  largest regional gaming operator in North America. With market access to as many as 19 states, Penn National was always a key US target for us. In addition to the land-based establishments Penn National operates, the company has a sports betting philosophy that complements our own, which bodes well for a long and successful relationship.

“We also signed a deal with JACK Entertainment, which covers two retail establishments and an online offering in Ohio. A digital-savvy operator with a strong, local brand, JACK Entertainment is an operator we are excited about working with. Meanwhile, we also secured contract extensions with NagaWorld and DraftKings, the latter of which has already seen us enter a number of additional states as we build upon the partnership’s early success in New Jersey.

“Overall, there were multiple US customer launches in Q3, with online or on-property launches taking place across the states of New York, Iowa, Indiana, Pennsylvania, New Jersey and West Virginia. Among those launches was Unibet, which made its US sports betting debut in New Jersey and then launched retail in Pennsylvania. Once again, this demonstrates our market leading US proposition based on our regulatory expertise and operational capability. 

“In general, Kambi remains well positioned for the future and I look forward to building on our successes in Q4 and beyond, a period which has begun well with an industry award win at the recent G2E exhibition in Las Vegas.”

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