Despite a glass-half-full approach to its earnings call, Kambi stock took a hit Wednesday because of its third quarter results.
The stock dropped 13.8% to Wednesday’s close of 117.4 Swedish krona despite new Kambi CEO Werner Becher spinning the story to a positive with a focus on its new line of modular sports betting products. However, the eventual loss of turnkey platform partners in Kindred and MGM‘s LeoVegas leaves the business with some “difficult near-term headwinds,” he said in the earnings report.
Kambi reported €43 million in revenue, a 2.2% increase from last year, but it did not flow to the bottom line. EBITDA fell 2.8% to €13.5 million on a 31.5% margin compared to 33.1% last year.
Profit after tax showed a steeper decline, falling nearly 30% to €2.5 million.
Whole platform still flagship product
Despite the ongoing focus on modular products, the sports betting platform will remain the main product for Kambi.
“We definitely will not lose focus on our turnkey sportsbook,” Becher said.
That said, Becher noted that Kambi’s customer base will continue to evolve with partners moving away from their one-stop betting platform. The modular products already helped keep one of those partners as Brazilian fantasy sports operator Rei do Pitaco was set to let its contract expire next year.
“One of my observations prior to taking this role was that although Kambi had seen some large operators move away in recent years, it still delivered growth, albeit modest, during this time,” Becher said. “This gives me great confidence that, through the ongoing diversification of our products and partner roster, we will increasingly reduce the potential impact of future partner movement and create a much more stable base for long-term growth.”
Kambi banking on add-on products
Becher said having products that operators can add to their proprietary sportsbooks opens up plenty of potential new partners. Even though the products are new, Becher said there has been interest shown at recent trade shows, including G2E.
Hard Rock Bet was the first to sign up with Kambi for one of the add-on products in Odds Feed+, which will add more pregame and live betting options through Kambi’s AI pricing tool Tzeract. Other standalone products include its bet builder, esports and managed trading.
“With this new model of products, specifically with Odds Feed+, we see a lot of traction on the market and the clear goal is to increase our addressable market,” Becher said. “There are many operators out there, many big operators but also mid-sized operators, who have in-house sportsbooks and have never been a customer of Kambi.
“But with these new products we can address them, we can work together with them, and Hard Rock in the US I think shows there is interest in our product.”
Kambi to buy back shares
The Kambi board will act on the share buyback authorized at the extraordinary general meeting in June for up to €12 million.
The maximum shares bought back are capped at 10%, or 3.1 million. Based on Wednesday’s closing price, the €12 million would cover nearly 1.2 million shares.
