Kambi Stock Pounded As Outgoing CEO ‘Not Very Pleased’ With Results

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Kambi saw its market cap tumble more than 20% Wednesday after announcing what its CEO called out as disappointing results.

Revenue was down 23% for the quarter with EBITDA down 38%, according to the fourth quarter earnings report. The platform provider to multiple operators including BetRivers faced a tough comparison period in the fourth quarter, as 2022 included Penn‘s $12.5 million early termination fee as well as the World Cup.

“We are not very pleased with the revenue numbers, as I said,” outgoing CEO Kristian Nylén said. “But now I think we are in a very good spot to move forward. And after 2024, I think we will be in a much, much better spot.”

The stock closed at a 52-week low of 100.7 Swedish krona, down 21.4% from Tuesday‘s close.. Volume was more than 1.1 million, more than 14 times its average daily volume of around 80,000.

Kambi expects Bally’s to market more

Nylén called out three issues that affected revenue other than the tough comparison to 2022. That includes directly calling out Bally’s for underwhelming marketing of its Bally Bet app.

“Yes, we expected them to push the product much more,” he said when asked about Bally’s. “They have chosen another strategy. I don’t know if they’re waiting to reach a certain amount of states before pushing sports betting or what is holding them back. But we certainly expect them to become much larger than they are at the moment.”

Bally Bet is in 11 states, with seven of those online.

Shape Games payout settled early

The other two main issues included smaller than expected contributions from two of its biggest customers, as well as a disappointing performance from Shape Games.

Kambi bought the front-end technology provider focused on customer engagement and retention for €38.5 million up front in September 2022. The deal also included a performance-related, all-cash earnout of up to €39.6 million.

Kambi, however, negotiated a full and final settlement of the agreement, and paid out €4.7 million.

Kambi still searching for CEO

Kambi Chairman Anders Ström said the search for Nylén’s replacement is on schedule:

“Following the announcement regarding our CEO in January 2024, the Board of Kambi has initiated the process of seeking a successor. The search is progressing according to plan, with the aim to finalize an appointment prior to the summer period. In the meantime, the company’s progress towards its long-term strategic objectives remains uninterrupted.”

Positives from US market

Kambi called out a few positives from the US market:

Another positive is the extension of its deal with Penn to operate its retail books through the end of the year. The agreement was set to expire in July.

AI pricing needs more products

Tzeract, Kambi’s AI pricing tool, is ready for new customers but needs to diversify its offerings a bit first.

“At the moment, it’s only pretty much soccer,” he said. “I think they – to have a product to really sell to the market, I think they need a little bit more.”

More than 200 million bets were taken on pre-match soccer using Tzeract-powered pricing in 2023. The AI pricing tool accounts for 75% of all pre-match soccer betting.

In-play soccer and tennis pricing will launch this year.

Should Kambi have left unregulated markets?

When asked if there was anything he would have changed from the past, Nylén suggested leaving unregulated markets in order to please US regulators.

“I think, yes, if you take one of the big decisions we took early on was to be fully regulated. And yes, I still believe that that has been a good choice. But yes, we have seen, for instance, one of the big reasons we did it was to be able to get licenses in the US and some competitors got licenses without being regulated too.

“So yes, that is probably one of the biggest decisions that we could look back on. I think we did the right decision at that point. I’m not sure we would do the same again.”