Kambi Group (KAMBI) Q2 2017 earnings summary

Executive summary

• Operator turnover rose 16% YoY despite a tough comparison with Euro 2016, which contributed 11% of Q2 2016 turnover; operator margin was 6.3%.

• Q2 revenue was EUR 14.1m and operating profit EUR 0.3m; the 888 renewal terms weighed on revenue and EBIT, while investment spending continued.

• A multi-year 888 extension and a new exclusive Colombian deal with Corredor Empresarial strengthened the customer base and growth prospects.

Financial highlights

• Q2 revenue was EUR 14.1m, up from EUR 13.7m in Q2 2016; growth reflected higher operator turnover, partly offset by lower margin and the 888 renewal impact.

• Operating expenses were EUR 13.8m versus EUR 11.7m YoY; staff costs were 47% of OPEX, with live-event data costs also higher.

• Operating profit was EUR 0.3m versus EUR 2.0m YoY; profit after tax was EUR 0.1m versus EUR 1.8m.

• Q2 revenue included a one-off positive EUR 0.3m settlement of a contingent asset.

Outlook and guidance

• The 888 renewal is expected to have a similar financial impact going forward, with Q3 2017 likely to show the largest contract-comparison delta.

• Cost growth was expected to remain high in 2017; IT recruitment would continue at the current rate, while trading recruitment was expected to slow and trading costs approach a plateau.

• Recruitment was expected to slow during summer and pick up in Q4; Q3 staff-cost growth would typically be slower due to summer vacation.

• BetPlay was expected to launch in late Q3 or early Q4.

• Management described the customer pipeline as stronger than ever, citing increased outsourcing interest and expanding regulated markets.