Earlier this week, Kambi released its financials for the first quarter of 2025, reporting revenue of €41.5m (£35.4m), down 4% year on year (YoY). Although when excluding €4.4m worth of transition fees received in Q1 2024 from PENN Entertainment and Napoleon Sports & Casino, revenue was up by 7% YoY.
Adjusted EBITDA for the quarter fell 22% YoY to €11.1m, with an adjusted EBITDA margin of 26.7%. Operating profit also took a hit in Q1, plummeting 82% YoY to €800,000, leaving a margin of 2%.
The supplier pointed to regulatory factors negatively impacting Q1 performance, such as the introduction of new deposit limits in the Netherlands and increased gaming taxes in multiple jurisdictions.
On a more positive note, Kambi’s turnover from the Americas increased 7% YoY, thanks in part to a successful launch in newly regulated Brazil.
Commenting on the Q1 performance, Kambi CEO Werner Becher shared how the supplier has “continued to build the foundations for long-term success”, with an aim to advance its mission to “develop a stronger, more resilient Kambi”.
EGR: In your CEO commentary, you said Q1 performance was “below what should be expected of a company of Kambi’s standing”. Can you elaborate on the certain renewed contracts that had a negative impact?
Werner Becher (WB): While Q1 performance was in line with our internal expectations, we hold ourselves to a higher standard because there remains so much potential for us yet to unlock as the home of premium sports betting solutions. That’s why I said the results were below what should be expected of a company of our standing. Having said that, we are making good strategic progress toward reaching the performance level we aspire to, and we’ve got some great opportunities ahead of us.
Looking at our Q1 performance specifically, there were several factors that impacted revenue during the quarter, one of which was the renewal of certain long-term contracts. While I can’t go into specifics for confidentiality reasons, I think it’s understandable that partners who have grown significantly and enjoyed great success with our sportsbook may receive improved pricing for their commitment to staying long-term on the Kambi platform.
EGR: Other negatives flagged were Dutch deposit limits and tax increases in some markets. Is there anything Kambi can do, or is planning to do, to help soften the impact of these changes?
WB: For the most part these regulatory and tax changes impact operators directly, and we work very closely with our partners to actively support them with our industry knowledge and expertise. This could include adjusting our products, optimising our pricing and trading strategies or implementing specific bonus and engagement schemes. Since Kambi operates primarily on a revenue-share model, we grow only when our partners grow. Our role is to provide our partners with the most competitive sportsbook product and service possible. By continuing to deliver premium solutions, we aim to support our partners’ growth, which in turn helps mitigate the broader effects of market changes.
EGR: The report noted some savings had already been realised from the strategy laid out in Q4 2024. Is there the possibility to review the original strategy, and perhaps make further cuts if needed?
WB: As previously communicated, this is an ongoing efficiency programme that is key to enabling us to reach our 2025 profit guidance. We are committed to managing our cost base actively while continuing to invest strategically in the areas that will maintain and enhance our premium product. Take AI, for example. As an AI-first company, we have focused on rolling out our fully automated pricing and trading capabilities, which not only makes us more efficient as a business, but also means a superior product proven to deliver greater pricing accuracy and higher margin. Our overall objective is to ensure long-term quality and innovation for both existing and future operator partners, securing the future revenue streams that underpin our growth.
EGR: You also referred to Kambi’s ability to secure contracts with state- or partially state-owned operators. What is driving this sales pipeline?
WB: Kambi has a proven track record in securing partnerships with state- or partially state-owned operators, including ATG, the Belgian National Lottery, Racing and Wagering Western Australia and Svenska Spel. Most recently, we signed a novation agreement to become the online and retail sportsbook partner of the Ontario Lottery and Gaming Corporation (OLG) through a long-term contract. This segment presents exciting opportunities and aligns with our goal to diversify and strengthen our revenue base, with these types of partnerships typically offering high-quality and sustainable income streams due to their long-term nature. With 98% of Kambi’s turnover derived from locally regulated markets in Q1, I believe our focus in this area gives us an edge when pitching to state-owned operators.
EGR: Could you shed further light on Brazil, particularly since the start of the Serie A season at the end of March?
WB: We were proud to go live on day one in Brazil – a clear reflection of the strength and agility of our teams across delivery, integration and compliance. We are now live with five partners in the market: Turnkey Sportsbook, BetMGM, BetWarrior, KTO and Stake, as well as Odds Feed+ partner Rei do Pitaco. Brazil is a market full of potential but one that will take time to fully mature. However, we are seeing some encouraging signs. Turnover has grown month on month and, with the recent start of Brazil’s top domestic soccer league, we expect this momentum to continue to build. Furthermore, the Brazilian regulator recently widened the scope of permitted esports games and events, which had previously been limited to just a small number. Esports is extremely popular in Brazil, and I know our partners in the market will welcome the opportunity to offer Kambi’s market-leading esports product, powered by Abios.
EGR: On the earnings call, you spoke about taking a cautious approach to prediction markets. If the legal proceedings in the US shake out favourably for the likes of Kalshi, will this open a new revenue stream for Kambi?
WB: Prediction markets have certainly been grabbing headlines recently and we will see how things develop from a legal and regulatory perspective. We continually evaluate new opportunities in the sports betting space, so are, of course, assessing how we may one day be able to support licensed operators offering a prediction product. However, prediction markets are essentially simple yes/no financial contracts on the outcomes of events, which have a very limited offering compared to traditional sportsbooks. Our immediate focus is on continuing to support our sportsbook partners with our portfolio of premium sports betting solutions such as Turnkey Sportsbook and Odds Feed+.
EGR: And similarly, other US-facing operators such as sweepstakes have been making headlines. Is the risk appetite to engage with those platforms not there as a regulated, licensed supplier?
WB: Kambi operates to the highest regulatory and corporate probity standards, and we are currently live in more than 60 regulated markets worldwide. As mentioned, in Q1, 98% of our sportsbook turnover came from locally regulated markets. Sweepstakes is not an area we are exploring. Instead, we see growth potential through our existing regulated channels and markets, where we can continue to serve regulated operators with our premium sports betting solutions, whether that’s our flagship end-to-end sportsbook or market-leading Odds Feed+ product.
EGR: Given Kambi’s guidance hasn’t changed for full-year 2025, can you give any indication on how the start of Q2 is progressing?
WB: We’re only a few weeks into Q2, so it’s early days. That said, as I mentioned during the presentation, we’ve seen a strong trading margin so far, particularly in football though naturally that can fluctuate due to factors such as heavily player-friendly results – it’s simply the nature of sports and sports betting. For a fuller update, you’ll have to wait for our Q2 report on 23 July. But yes, our full-year guidance remains unchanged and Q1 was in line with the expectations we had set internally. However, I’m under no illusions that we must improve, which we expect to happen as headwinds ease and tailwinds grow during the second half of the year. My aspirations are much higher for Kambi than we are currently achieving, and we are working hard to accelerate growth.
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Despite meeting Q1 2025 performance expectations, Werner Becher says the Stockholm-listed supplier should be “under no illusions that we must improve”
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