Shares of sports betting technology supplier Kambi closed near a 52-week high after the company reported a “fantastic business period” which included high margins from the World Cup.
Kambi’s outperformance on the World Cup led to a revised adjusted EBITA forecast range of €23 million to €27 million, up from the previous range of €20 million to €25 million.
“The World Cup has underlined the edge we have with our AI trading system, we are accelerating the transition of sports to technology with five sports already complete and more to come over the following months,” CEO Werner Becher said on Wednesday morning’s conference call. “While there is still work to do, Q2 built on the solid momentum established in Q1.
“We’ve turned the corner and returned to growth. Our focus is now on sustaining this positive momentum through the second half of the year and beyond.”
Kambi’s stock rose 7.9% on Wednesday to close at 175.40 Swedish krona, not far from the 52-week closing high of 176.40 Swedish krona it hit in early June.
High margins on turnkey product
Kambi processed more than 100 million bets during the World Cup, with handle of more than €1 billion and a margin of 18% through its turnkey platform supply business.
That high margin likely limited the turnover, CFO David Kenyon noted. Cost of sales also rose as revenue and new customers grew along with higher costs associated with World Cup data, though operating expenses fell.
When adding in Odds Feed+ results, Kambi took more than 100 million bets totaling more than €100 billion in handle. Average handle per game rose 20%.
Overall, the strong quarter led to EBITDA doubling to €7.6 million compared to last year.
The tournament’s momentum carried into the third quarter through the final on July 19 as well.
Kambi: World Cup still about acquisition
Becher noted that this World Cup was likely a one-off and that the tournament remains a key time to acquire new customers.
New customers accounted for 24% of all bets placed during the tournament. That could lead to better metrics in the following quarters, though the high margin could put a damper on that.
AI trading leads the way
The “near limitless” offering from Kambi’s AI trading led to more than 1 million unique parlays placed on the final alone, Becher said.
“A number almost inconceivable a few years ago and certainly impossible to deliver through manual trading,” Becher said of the total bet count. “Our AI trading system priced and traded all 104 games pretty much alive, delivering a product of high quality without the need to increase the number of human traders as we noted other companies had.”
Live parlays through Kambi’s Bet Builders product accounted for 22% of all live betting. That share was just 3% during the 2022 World Cup.
“With our offering now automated, others still reliant on manual trading will need to scale back down now to a lighter offering with all the domestic leagues, the Premier League, as an example, starting soon again,” Becher said. “We will not have this need to scale anything down. The World Cup further demonstrated the changing nature of sports betting, particularly with an expansive Bet Builder.”
More parlays means who wins matters less
The growth of live Bet Builders parlays was “largely enabled” by user experience improvements made by Kambi between the two tournaments.
“This high-quality product means players are increasingly engaged by higher-margin products, meaning financial performance is now less reliant on who wins the match than previously,” Becher said.
AI trading now handles soccer, baseball, basketball, ice hockey and tennis. Testing is about to start on football while Kambi also works on adding table tennis, esports and volleyball.
Partners should use some of margin for promos
Sportsbooks winning big typically means bettors will pull back on spending, but that can be offset through generosities, Becher said.
“If they wish, they can give back a bit of this high margin to their partners and be more aggressive on bonusing, on incentives, on engagements to take more market share,” Becher explained.
“In general, the World Cup was fantastic for our business, not only because we delivered a strong margin, but also because it underlined the fact we’ve built a leading product and a highly efficient automated product that performed flawlessly during the busiest sports betting event in the world, positioning us strongly for the future.”
Books returning to third party suppliers?
Becher noted that the larger industry turning its focus on profitability could bring top-tier operators back into Kambi’s customer pipeline.
“I think in general that many, even of the biggest Tier 0, Tier 1 operators, they moved away from pricing, trading all 60, 70 sports in-house,” Becher said. “That’s our attack angle also for Odds Feed+, right? Thirty percent of the global betting turnover are outsourced to B2B suppliers like us. Seventy percent of betting turnover still happens in in-house sportsbooks.”
“That’s where we think with our new Odds Feed+ product, we have a premium leading Odds Feed product better than what anyone can offer out there. That’s actually what we want to achieve with the Odds Feed+ product, to offer our AI-traded odds with much higher user experience to the big Tier 0, Tier 1 operators.”
Brands using World Cup odds packages through Odds Feed+ customers included Hard Rock Bet, Rei do Pitaco in Brazil and LeoVegas.
Kambi monitoring prediction markets
Becher noted that the estimated 30% of U.S. sports betting volume handled by prediction markets during the World Cup came mostly from California and Texas, where he said 30% of the country’s population lives.
Kambi is not jumping into predictions before a likely Supreme Court ruling, though, because of its licenses in more than 70 jurisdictions, he added.
“As I said before, we are in a wait and see position,” Becher said. “I would say even more than that. We, of course, in the background, evaluating options, partnerships, developing it in-house, on our own as well. We are prepared for this being eventually legal in the future in the U.S.”
