Kambi drops 2027 targets amid slow pace of regulation – Finance

In January last year, Kambi presented several forecasts and goals it aims to achieve by 2027.

At the time, the company outlined plans to triple revenue in fiscal 2022, which includes achieving revenue that is two to three times larger than in fiscal 2022, placing it at between €330 million (£279.3 million/$356.3 million) and €500 million in 2027. Kambi also forecast operating profit to exceed €150 million.

In February of this year, Kambi began reviewing the assumptions behind those goals. Based on that review, Kambi’s board concluded that the company had made progress in “areas within its control.”

Slow regulatory progress forces change

However, the review also raised concerns about slower-than-expected progress toward regulation in some key markets. That, Kambi said, is likely to delay new revenue streams.

The Group will therefore strive to set new goals developed by the Management Board and the new CEO Werner Becher.

Sportradar and Interwetten veteran Becher was announced as CEO earlier this week and will take over on July 25. He replaces long-time Kristian Nylén, whose departure was confirmed in January.

Kambi’s board will now focus on ensuring Becher’s full support in implementing the group’s strategy. New, long-term financial targets will be communicated when appropriate, it said.

Kambi shares initially fell 3.9% from their opening price when the news was announced. They have since recovered slightly, currently trading 1.2% lower from their opening price of SEK 105.80 in Stockholm this morning.

Brazil delays strike on Kambi

Kambi did not specify which markets grew slower than expected, but previous comments indicate he has a specific area in mind.

In its FY23 results, Kambi noted that delays in the opening of the Brazilian market will affect its FY24 results. The group said it is confident of gaining market share in Brazil, but the slow pace of regulation is hurting its long-term outlook. Legal betting and gaming is expected to finally launch from January 1, 2025.

2024 is a “transition” year for Kambi

The same was repeated in Kambi’s Q1 results, released in May. Kambi also said it expects 2024 to be a “transitional” 12 months for the company as it transitions to a new modular product offering split across sports betting technology (Kambi), front-end development (Shape), trading (Tzeract) and esports (Abios).

The group forecasts full-year revenue of between €170 million and €180 million, meaning revenue in 2024 could be lower than the €173.3 million recorded in fiscal 2023.

However, Kambi also said that revenue from recent partner signings will likely materialize by the end of the year. He added that this is in addition to organic growth from existing partners.

Operating in regulated markets is key for Kambi. For example, in Q1, 95% of all sports betting revenue came from locally regulated markets.

Where else is Kambi struggling with regulation?

While the delays in Brazil are clearly taking their toll on Kambi, there are other new markets the company hopes to expand into but is unable to do so due to a lack of regulations.

Speaking after Kambi released its fiscal 2023 results, the former Nylén CEO pointed to California as one such market. While Kambi intends to launch operations in the state at some point, regulation seems a ways off.

“The outlook in some markets has not been as promising as previously anticipated, particularly in California, where 2028 now appears to be a more realistic timeline for regulation,” Nylén said at the time. Recent reports from the Golden State suggest that efforts to develop a regulatory framework may be underway to put sports betting on the ballot in 2026.