Kambi Reviewing Long-Term Targets As US Sports Betting Expansion Slows

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Sports betting tech provider Kambi will undertake an in-depth review of its long-term financial targets 14 months after setting those 2027 goals.

The financial goals given at Kambi’s Capital Markets Day in January 2023 had multiple “key growth drivers,” including continued sports betting expansion in the US and entering certain Asian countries. Kambi expected €20 million to €25 million in revenue from California, for example, but no longer expects legal sports betting in the state by 2027.

The company is revisiting its California projection “along with all underlying assumptions that form the basis of its 2027 financial targets,” it said in its first-quarter earnings report.

Despite the long-term review, the market reacted positively to Wednesday‘s report as Kambi’s stock closed up 6.5% to 95 Swedish krona on about 4.5 times its average volume.

Kambi will have ‘new view’ on targets

Kambi will complete the review of its targets, and “we will come out with a new view on this,” CFO David Kenyon said.

The news comes after outgoing CEO Kristian Nylén, who will step down once a successor is picked, said the company was “not very pleased” with revenue from its fourth-quarter report.

Kambi forecasted 2027 revenue at two to three times the $175 million reported in 2022, or between $350 million and $530 million. The company forecast EBITA at $160 million.

Unregulated sports betting markets an option?

An analyst asked why Kambi has not yet launched into unregulated markets. He noted that New Jersey regulators ruled Evolution can take indirect revenues from such markets.

“I can’t really comment on where we are with this,” Nylén said. “But as I have said multiple times, we are always evaluating where we think it’s acceptable for us to operate or to supply our services, and that is an ongoing thing.

“And I – I can’t really say very much more than that, but it’s something we always are evaluating.”

Nylén noted on the fourth quarter call that Kambi may not have pulled out of unregulated markets if the company knew that would not be a requirement for US regulators.

Close to commercializing modular services

Kambi will soon sell its sports odds feeds as a single API integration, including those powered by its AI pricing product Tzeract.

Operators typically need to take odds feeds from multiple suppliers for full coverage of all events, which Kambi said often have “varying degrees of quality.”

Soon, operators can select which sports, events and specific bet offers they would like to offer at any time. There has been “very good” interest for those modular services, Nylén said.

“Kambi’s open platform not only has an increasing ability to provide the level of differentiation and empowerment required by ambitious turnkey partners but can also deliver a comprehensive and single odds feed operators have, until now, been unable to obtain,” the company said in the earnings release.

What if another big sports betting partner leaves?

Another analyst question asked how Kambi would mitigate losing another significant partner. Bloomberg reported in March rumors that Rush Street Interactive, the parent of Kambi-powered BetRivers, pitched itself to DraftKings.

“The only thing we can do, of course, is to try to make sure we have contracts that give us some income protection in the event of M&A and have as long a contract as we possibly can,” Nylén said.

Kambi received a $12.5 million one-time payment for Penn Entertainment‘s early termination of its agreement so Barstool Sportsbook could run on in-house technology. Another $15 million was paid for transition services.