Sports betting services provider Kambi Group has reported a revenue increase for the second quarter of the year, driven by new customers, an operator trading margin of 9.9%, and the addition of Shape Games. Total revenue for the period amounted to $47.3 million, up by 24% from the same period last year. Meanwhile, revenue for the first half of the year amounted to $95.8 million.
“The second quarter of the year was another encouraging period for Kambi as we made significant strategic progress towards executing our long-term growth strategy, including a tier-one partner signing, key partner renewals, and the continued development of our AI trading capability,” said Kambi CEO Kristian Nylén.
However, operating profit for Q2 was down to $4.07 million, and $9.02 million for the first half of the year, a 33% yearly decline from $13.4 million in 2022. The company also saw EBITA down to $5.5 million in Q2, down 4% year-on-year, partly due to recurring additional operating expenses of $3.1 million relating to Shape Games.
Last September, Shape Games was acquired for an initial €38.5 million ($38.4 million). The front-end technology specialist contributed revenue of €3.2 million ($3.5 million) in the quarter, according to the company. BetWarrior, featuring a Shape Games front end in Mendoza, Argentina, was one of five partner launches for the company during Q2.
According to the quarterly report, the operator trading margin, which is gross gaming revenue as a percentage of operator turnover, reached 9.9% in Q2. This figure, driven by favorable football and basketball results, was up from 8.6% in the corresponding period in 2022 and up from 8.2% in Q1 of 2023.
As per the company, it was the highest such margin for at least five years. Conversely, the provider added that such a margin actually dampens operator revenue growth, which was a modest 4% in the quarter.
Operator turnover growth was also impacted by rising foreign exchange headwinds and Penn Entertainment’s year-on-year decline in US market share. Excluding the impact of foreign exchange movements, EBITA increased by €2.8 million ($3.08 million) year-on-year.
In October, Penn announced it would migrate its sportsbooks from Kambi to its own proprietary technology. However, Kambi will receive $15 million in transition fees from Penn, split over five quarters, as part of the migration. Chief financial officer David Kenyon confirmed that the first of these payments would occur in Q3.
Among highlights for the quarter, in May the company entered into an exclusive global sportsbook partnership agreement with Bally’s Corporation, replacing the global operator’s proprietary sports betting technology.
“From a commercial perspective, we were delighted to welcome Bally’s Corporation to the Kambi network in Q2. As we further solidify our market leadership position, this partner win is a major milestone for the business and comes on the back of our flexible product strategy,” said Kambi’s CEO.
“As one of the world’s leading gaming operators, Bally’s commands strong brand recognition, a large customer database, and an expansive global footprint that has the potential to open up significant opportunities for Kambi in both the US and beyond.”
Furthermore, the firm announced contract extensions with BetPlay, LeoVegas, and Paf, which the business said is evidence that demand for its complete sportsbook remains high.
Kambi is aiming for a turnover of €330 to €500 million ($363.3 to $550.5 million) by 2027, approximately two to three times the total revenue posted in 2022. The company is also targeting earnings above €150 million ($165.1 million) in 2027.
