Kambi Group (KAMBI) Q2 2016 earnings summary

Executive summary

• Q2 operator turnover rose 46% YoY, supporting 28% revenue growth; Euro 2016 contributed 11% of turnover and was successful operationally and financially.

• Three operators—LeoVegas, Rank Group, and Mr Green—were integrated ahead of Euro 2016; R. Franco was signed after quarter-end.

Financial highlights

• Q2 2016 revenue was EUR 13.7m, up 28% YoY; H1 revenue was EUR 26.9m, up 30%.

• Q2 operating profit was EUR 2.0m at a 14% margin, vs EUR 0.8m; H1 operating profit was EUR 3.9m at a 15% margin, vs EUR 1.6m.

• Q2 profit after tax was EUR 1.8m, up from EUR 0.5m YoY; operating expenses were EUR 11.7m.

• Cash flow excluding working-capital movements was EUR 0.1m in Q2 and EUR 1.5m in H1, vs EUR 1.2m in H1 2015.

Outlook and guidance

• Long-term operator margin expected closer to 7%; management said Q2's 6.2% was not expected to represent the future average.

• Q3 began decently, supported by favorable late Euro 2016 match results and tournament-long bets settled after Portugal's win.

• ARJEL contract expected to become operational in Q4; R. Franco plans to add sports betting across its retail network.

• A larger Bucharest office was on track to open later in 2016 as part of planned expansion.