Sports betting services provider Kambi Group is out with its Quarter 1 revenues and profits and despite the intense impact of COVID-19, they are reporting a year-on-year uptick in what they took in. Their Q1 growth followed up on a strong Q4 of 2019 in which Kambi reportedly earned $29 million and its profits swelled by $5 million.
Kambi has been on a bit of a partnership roller-coaster the last six months or so, losing one gigantic partner and gaining a couple over that period of time. Whatever the company is doing seems to be working. While the competition has been reporting losses for their Q1, Kambi's rapid expansion in the US market doesn't seem to have affected their bottom line – at least for now.
Kambi Group has attributed its Q1 success to continued US expansion and a ‘strong soccer performance’, particularly in England and Spain.
The Quarter that ended March 31 saw Kambi generate €27.9 million (£24.3 million/$30.0 million), a healthy 33% increase from the same period ending in 2019. Kambi also reported a 27% year-on-year increase in operator turnover even though the period basically ended March 12 when the whole sporting world was essentially shut down because of the coronavirus pandemic.
“It’s worth highlighting the momentum we had built before the pandemic began to make its presence felt on the sporting calendar. Up to and including 12 March, Kambi’s average daily operator turnover in Q1 was up 47% on the respective period in Q1 2019, and on track to eclipse our record operator turnover of the previous quarter, with it ahead 7% on the comparative period in Q4 2019, despite fewer American football fixtures due to the season’s end” said group CEO Kristian Nylén.
Earnings Before Interest and Taxes (or operating profit) increased from $2.8 million last year to $6.8 million, and profit after tax grew by 140.7% from $2.2 million in 2019 to $4.8 million for the first quarter of 2020.
Europe was responsible for 61% of Kambi’s revenue in Q1, down from 77% over the same period last year while America accounted for 37% of their revenues, a jump from 20% from last year at this time.
Reason for increases and reasons for optimism
There is no reason to think that Kambi's momentum won't continue post-COVID. Just days prior to the total sports shutdown, Kambi went live in Illinois and Michigan and during the sporting hiatus, Colorado launched its own sports betting platform with Kambi being a part. That adds to Kambi's presence already in Indiana, Iowa, New Hampshire, New Jersey, New York, Pennsylvania, and West Virginia.
Kristian Nylén said of the new states under the Kambi umbrella: “Furthermore, on 9 and 11 March we processed the first legal bets in the states of Illinois and Michigan respectively. This continued our fantastic performance of getting partners to market quickly with a high quality and compliant sports betting service. To illustrate, Kambi is now active in 10 US states, achieving market firsts on eight occasions. In addition, we recently received our license for the state of Colorado, where we expect to go live soon.”
She went on to say: "… our teams have done a wonderful job to stem the flow and ensure our partners have a good product the sell. I’m confident the cost-saving measures we’ve introduced in recent weeks, our strong balance sheet, and the flexibility we have retained to be back running at 100% capacity almost immediately, will ensure we are able to do so, alongside our fantastic partners."
The elephant in the room
Kambi has been one of the more successful sports betting operators doing business in the US in terms of partnerships and strong presence in most states that currently enjoy a legal sports betting platform. Kambi is everywhere which speaks to its regulatory and operational prowess.
But COVID-19 has thrown a wrench into everything, everywhere and all the time. Kambi, in the final weeks of Q1 and early Q2, reported running at approximately 25-30% of previous levels in Q1. Those numbers could be Kambi’s reality for the next few weeks at least and maybe the next few months.
Nobody is escaping the effects of COVID-19 but some sports betting companies have set themselves up to rebound quicker than others – Kambi appears to be in that group, already performing better than market expectations. While there will continue to be pain in the short term, the company’s previous gains look as though they will keep Kambi from the coronavirus abyss long term