Kambi reports second-quarter 2018 financial results

"Although the World Cup began on 14 June, of even more long-term significance was a legal judgment handed down one month earlier. On 14 May, the US Supreme Court ruled the country's federal ban on sports betting to be unconstitutional, and in doing so handed each state the authority to dictate their own sports betting laws," said Kambi's CEO Kristian Nylén.

The decision has the potential to create a significant business opportunity for Kambi. In previous quarterly reports, the company discussed how Kambi had been preparing for such an outcome, and according to Nylén, their proactive efforts in the US can already be seen in their recent business wins.

Since the ruling, Kambi has signed two prominent operators in the US market. Firstly, in May they signed with Rush Street Gaming, an innovative gaming company with physical casinos in three US states, New York, Pennsylvania and Illinois, and an online presence in New Jersey. In addition, last month they secured a deal with DraftKings, the leading daily fantasy sports operator in the US and a company with a large database of sports fans.

"I'm excited about what we can achieve with both customers, and in the US more generally. However, the state-by-state roll out of regulated sports betting will not happen overnight, therefore our US-facing business should be viewed in the mid-to-long-term," Nylén stated.

In parallel, they continue to focus on their core business, which was boosted in June by the early stages of the World Cup. Revenues in Q2 were up 25% year-on-year, with revenue growth supported by yet another quarter of above average operator trading margin of 7.8%.

Ahead of the World Cup, they launched three new customers into three regulated territories within the space of a week, demonstrating the scalability and capacity of the Kambi platform. They also announced they were in final stage commercial discussions with Swedish horse racing operator ATG, a deal we subsequently closed shortly after the end of Q2.

ATG, one of the most recognisable brands in the Swedish market, will add a Kambi Sportsbook to its trotting and racing products once the market re-regulates at the beginning of 2019. This is a significant customer win for Kambi.

In early July, they finalised a new long-term agreement with Kindred Group, a deal which gives Kambi a secure platform for future growth.

"Overall, the past few months have produced very positive results for Kambi, both operationally and commercially, and I look forward to continuing this progress throughout the remainder of the year," he concluded

The financial summary of Kambi Group's report is as follows: 

• Revenue amounted to €17.6 (14.1) million for the second quarter of 2018, an increase of 25% and €34.0 (28.3) million for first half of 2018, an increase of 20%
• Operating profit (EBIT) for the second quarter of 2018 was €2.4 (0.3) million, with a margin of 14% (2%) and 4.4 (1.6) million, with a margin of 13% (6%) for the first half of 2018
• Profit after Tax amounted to €1.7 (0.1) million for the second quarter of 2018 and 3.2 (1.2) million for the first half of 2018
• Earnings per share for the second quarter of 2018 were €0.055 (0.004) and €0.107 (0.040) for the first half of 2018
• Cash flow from operating and investing activities (excluding working capital) amounted to €1.9 (-0.5) million for the second quarter of 2018 and €2.5 (0.3) million for the first half of 2018

Key highlights:

• Strong financial performance with 25% year-on-year revenue growth
• Signed two US-based customers in DraftKings and Rush Street Gaming after US Supreme Court's decision to fully repeal its federal sports betting ban
• In Europe, signed Stanleybet Romania in Q2 and ATG and Latvijas Loto in Q3
• Finalised long-term contract renewals with Kindred Group and Mr Green