Reporting its Q2 earnings today, Kambi Group CEO Werner Becher said he remains “optimistic” about the provider’s prospects despite it posting an 11.5% year-on-year revenue decline in the period.
After facing what Becher described as a “challenging” market in Q2, Kambi’s revenue hit €40.5 million ($47.5 million), behind Q1’s €41.5 million revenue.
Kambi said this was mainly due to the end of transition fees associated with it ending long-term platform deals with Penn Entertainment and Napoleon.
Penn’s final quarter of transition payments was Q2 2024, after it migrated to its on-house platform in July 2023. Belgium’s Napoleon also ended its agreement with Kambi in late 2023.
Excluding the €4.5 million in transition fees it earned in Q2 last year, group revenue dropped 2%.
The remaining decline was put down to several factors. These included a quieter sporting calendar, deposit limits in the Netherlands, increased gaming-related taxes in several jurisdictions, and new commercial terms for certain renewed contracts. All these, Kambi said, had a negative impact in Q2.
“Last year’s quarter benefited from the uplift of the Euros and Copa América and included the last full quarter of transition fees from Penn Entertainment,” Becher said.
“Meanwhile, challenging dynamics include foreign exchange movements and regulatory and tax headwinds, such as deposit limits in the Netherlands and Colombia’s VAT, continue to affect performance.”
Trading margin up, helped by AI trading capabilities
A number of industry-wide factors mentioned above caused operator turnover to dip 4.5% in Q2, which ultimately impacted Kambi’s revenue.
Again, Kambi said this was largely driven by a quieter sporting calendar, Dutch deposit limits and Kindred’s exit from various markets.
Geographically, Kambi said the recently regulated Brazilian market helped push operator turnover in the Americas up 3.4%. The region accounted for 56.3% of all operator turnover in Q2. Europe’s share fell from 43.8% to 40.1% and rest of world 4.2% to 3.6%.
But trading margin across its operator partners increased from 10.3% to 11.5%. The company said this was helped by increased engagement with higher margin products and Kambi’s ability to trade these products through AI.
Up to 98.1% of all sportsbook turnover came from locally regulated markets, up from 92.4% in 2024.
Kambi remains in the black despite revenue decline
New partner launches with LiveScore, KTO and Svenska Spel had a positive impact on Kambi’s earnings.
And despite the drop in revenue, Kambi was able to make savings on certain costs in Q2. Major outgoings such as staffing and data supplier were both reduced during the quarter.
However, operating profit was still heavily impacted and faced a 74.2% decline in Q2 to €1.6 million. After accounting for finance costs, pre-tax profit reached €1.5 million, down 76.2% year-on-year.
Kambi paid €1.2 million in income tax, resulting in a net profit of €244,000, some 94.8% less than Q2 of 2024. In addition, adjusted EBITDA declined 50.7% to €3.7 million.
Much of the same in H1
Looking at the first six months of the year, H1 revenue dropped 7.9% to €81.9 million. However, when excluding the transition fees, the year-on-year decline was 2.3%.
Some costs were reduced but operating profit still fell 77.4% to €2.4 million. Pre-tax profit was also down 76.6% to €2.5 million. After paying €1.5 million in income tax, Kambi was left with a net profit of €1.0 million, down 87.3%.
In addition, adjusted EBITDA was 45.9% lower year-on-year at €7.2 million.
“While the first half of the year played out broadly as expected, I want to reiterate that I am not satisfied with where we are at today, with my ambition for the business being far greater,” Becher said.
“Looking ahead to the rest of the year, the external environment will continue to pose challenges, but I remain optimistic that we can increasingly deliver value for our partners, expand our partner network, strengthen our product portfolio and position the business for long-term, sustainable growth.”
Newly regulated Brazil market benefited operator turnover during the period. The Americas accounted for 56.3% of all Kambi’s operator turnover in Q2.