Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kambi Group PLC (KMBIF, Financial) reported a 16% rise in revenue, excluding nonrecurring items, showcasing strong underlying growth.
- The company signed a long-term contract extension with Rush Street Interactive, securing important revenue streams.
- Kambi Group PLC (KMBIF) launched a new product portfolio and announced partnerships with Hard Rock Digital and Radio TCO, enhancing its modernization strategy.
- A new EUR12 million share buyback program was announced, indicating confidence in the company's financial health.
- The company completed nine partner launches in the quarter, including significant agreements with Virgin Bet and Puff, expanding its market presence.
Negative Points
- Kambi Group PLC (KMBIF) faces challenges with major operators like Kindred and Leo Vegas moving away from its turnkey sportsbook.
- The company anticipates near-term headwinds due to some larger operators transitioning away from its services.
- Despite revenue growth, the company had to adjust its full-year revenue guidance slightly downward.
- The high trading margin seen in Q3 is not expected to continue, potentially impacting future revenue.
- Operational efficiency improvements are necessary, with a focus on reducing costs and increasing productivity.
Q & A Highlights
Q: Can you comment on the reasons for the minor adjustments in your full-year revenue and cost guidance?
A: David Kenyon, CFO: The adjustments are small and involve narrowing the revenue range from the original EUR170-180 million to a more precise figure closer to the center of that range. This is due to various factors like customer marketing spend, churn, new signings, and margin. On the cost side, we've been flat throughout the year and are now confident in our Q4 cost projections, which are at the low end of our initial guidance.
Q: Why is the implied Q4 revenue slightly below Q3, despite Q4 being the industry's biggest quarter?
A: David Kenyon, CFO: The Q4 revenue is impacted by the cessation of EUR1.1 million in pen transition fees from July. Additionally, the high margin seen in Q3 is expected to normalize in Q4, although this will be offset by the seasonal boost from NFL and soccer.
Q: How significant is the potential for cost efficiency improvements at Kambi?
A: Werner Becher, CEO: Operational excellence is a focus, and there is potential for cost savings, particularly through AI and ensuring the right team sizes. We are already implementing some cost-saving measures and will discuss further expectations in Q4.
Q: What is the main edge of Kambi's OSFI Plus product compared to competitors?
A: Werner Becher, CEO: Kambi is a premium sportsbook supplier, and our odds are actively traded based on a large liquidity pool. This provides a sharper and more engaging product for operators, as evidenced by Hard Rock Digital's decision to integrate our OSFI Plus product.
Q: How do you plan to balance the trend of increasing sportsbook margins with competitive pricing?
A: David Kenyon, CFO: We aim for an optimal trading margin that balances player enjoyment and operator profitability. Operators can adjust payback tools according to their needs. The trend is also driven by the increasing importance of bet builders and regional betting behaviors.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
