Kambi Group (KAMBI) Q3 2017 earnings summary

Executive summary

• Q3 operator turnover grew 16% YoY despite tough comparatives; revenue was level with Q3 2016, while operating profit and profit after tax declined YoY.

• A new Bulgarian customer, two long-term renewals, and sportsbook launches across several markets supported continued commercial expansion.

• A strategic review reaffirmed the scalable, platform-led sportsbook model and its focus on developing the core product and operator tools.

Financial highlights

• Q3 revenue was EUR 14.8m, level with Q3 2016; operating costs were EUR 13.7m, slightly below Q2 on seasonal staff-cost effects.

• Operating profit was EUR 1.1m versus EUR 3.1m in Q3 2016; profit after tax was EUR 0.8m versus EUR 2.7m.

• Q3 operating expenses included EUR 1.7m of capitalized development costs; amortization of previously capitalized costs was also EUR 1.7m.

Outlook and guidance

• Q4 operating expenses forecast to rise 3%-5% QoQ as investment continues in sportsbook development.

• 2017 operating expenses were expected to grow 16% YoY; management indicated a similar level of growth as a working assumption for 2018.

• 888 contract-renewal impact expected to be just over half of Q3's level in Q4, lower again in Q1, then absent from YoY comparisons; the Q3 effect reflected prior-contract revenue-share tiers.

• Bulgarian National Lottery sportsbook launch targeted for mid-Q4; the prospective customer pipeline was described as very solid.