Kambi Group announced today (4th July) that it has withdrawn its long-term earnings and revenue targets because of slower progress than expected towards regulatory reform in certain markets.
Kambi announced several targets and forecasts for 2027 in January of last year.
It announced plans at the time to triple FY2022 revenues. The company aims to achieve revenue levels between EUR330m and EUR500m by 2027, which is two-to three times the FY2022 level. Kambi forecasts operating profits to exceed EUR150m.
In February of this year, Kambi launched an investigation into the assumptions that were used in forming these targets. Kambi’s Board concluded that the company had made progress “in areas within its control” as a result.
Changes are forced by slow regulatory progress
The review raised concerns about the slower-than-expected progress in some key markets towards regulatory reform. Kambi stated that this would delay the creation of new revenue streams.
In order to achieve this, the group is looking for new goals that will be developed by its board of directors and CEO Werner Becher.
Becher, a veteran of Sportradar Interwetten and Sportradar was appointed CEO this week. He will assume the role on July 25. Becher replaces Kristian Nylen who was confirmed to have left the company in January.
Kambi’s board of directors will focus now on supporting Becher in the execution of group strategy. It said that new long-term targets would be announced when necessary.
Kambi’s shares dropped by 3.9% when it was first announced. They have recovered slightly since then, trading at 1.2% less than the opening price in Stockholm today of SEK105.80.
Brazil delays hitting Kambi
Kambi didn’t specify which markets are progressing more slowly than expected. However, past remarks suggest that there may be a specific territory in mind.
Kambi’s FY23 results noted that delays in opening the Brazilian market could impact the company’s FY24 performance. Kambi said that it was confident in gaining market shares in Brazil but a slow regulatory pace is affecting long-term plans. The legal betting and gambling industry is finally expected to launch on 1 January 2025.
Kambi’s 2024 is a year of “transition”
Kambi published its Q1 results in May. Kambi said that 2024 will be “transitional year” for its business as they move to a modular product offer split into sportsbook technology, front-end development, trading, and esports.
According to the group, revenue for 2024 could fall below EUR173.3m.
Also on this subject, Kambi stated that revenues from the recent signing of partners will most likely manifest themselves towards the end the year. It added that this is on top of organic growth by existing partners.
Kambi’s success is dependent on its ability to operate in markets that are regulated. In Q1, for example, 95% of sportsbook revenues came from local regulated markets.
Kambi struggles with regulations in other places.
Kambi is clearly affected by delays in Brazil, but there are also other markets that it hopes to enter due to a lack of regulation.
Former CEO Nylen, speaking after Kambi released its FY23 Results, highlighted California as a market. Although Kambi plans to enter the state in California at some stage, regulations are still some time off.
Nylen stated at that time, “The outlook for certain markets is not as positive as anticipated. This is especially true in California, where the timeline of 2028 appears more realistic.” According to recent reports, efforts are being made to develop a legal framework for sports betting in California. This will be put on the ballot of 2026.
