Sports betting technology provider Kambi Group reported falling profits in the third quarter of 2019 as costs associated with its ongoing US market expansion took their toll.
On Friday, the Stockholm-listed Kambi reported revenue of €23m in the three months ending September 30, up 12% from the same period last year. But operating profit fell nearly one-fifth to €3.4m and after-tax profits fell nearly one-third to €2.3m.
The profit hit came courtesy of a one-fifth rise in expenses, including a 36% rise in staffing costs – Kambi’s global workforce now stands at 834 souls – as well as the compliance price tag that comes with working in regulated gambling markets. Kambi’s share of revenue from regulated markets was up 20 points year-on-year to 73% in Q3.
Kambi chose to focus on the fact that its B2B sports betting clients reported wagering turnover up 23% despite what CEO Kristian Nylén called “a relatively quiet July sporting calendar,” even more so this year given the comparison with July 2018 and the latter stages of the FIFA World Cup.
Kambi’s focus of late has been its rapid US market expansion, and the quarter saw Kambi sign two new US casino clients: Penn National Gaming and JACK Entertainment. Kambi also extended its partnership with DraftKings, which, along with FanDuel, has staked out an early operator lead in many US states that have legalized wagering.
Kambi also helped the Kindred Group’s Unibet brand launch wagering in New Jersey and Pennsylvania. Kambi was originally a division within Unibet before being spun out as a standalone entity in 2014. All told, Kambi launched retail and/or betting operations in six US states in Q3.
Kambi’s new Multi Builder accumulator betting product notched over half a million bets following its August launch. Within three weeks of its launch, half of all in-event combo bets were Multi Builders.
Outside the US, Kambi re-upped its pact with Cambodian casino operator NagaCorp to power sports betting operations at the company’s flagship casino NagaWorld in Phmon Penh. Kambi said NagaCorp would be taking “a more comprehensive live package” in order to keep its sportsbook revenue flowing.
Kambi’s shares closed out Friday’s trading up 7.2% to SEK154.9, although that’s still around one-quarter below its 2019 peak set in February.
