Kambi Group plc

Good morning and welcome to a third quarter presentation. I am Christian Neuland and joining me is our CFO, David Kenyon. So I will first give you a brief overview of the third quarter and then David will come in and talk about the financial performance. And then I'm coming back and talk a little bit more in depth about the third quarter. So to the highlights. I think we had a great third quarter. Very strong performance with 41.6 million in revenue, which is a 48% uplift on last year. For a full first nine months, we're up 80% from last year. Very pleased with all numbers, and David will, of course, go through them more later on. During quarter, we also acquired ABIOS, which helps us transforming our sports betting also into an esports provider. With ABIOS, I think we have a great addition to the team, and I will talk more about it later. During quarter, we also expanded with our partner network with two new signings in BetCity in Netherlands. And Island Luck in Bahamas. And, of course, I will talk more about that later. Finally, during the quarter, we launched in two new states. Arizona, which was our 15 states. And just after the quarter, we also launched in Connecticut, which I will talk more about later. But for now, I hand over to David, and I'll come back later. Thanks.

Thank you, Christian. Good morning, everyone. My name is David Kenyon, CFO of Canby Group. I want to start with the financial highlights for the quarter. So revenue was 41.6 million, up from 28.1 million in Q3 last year. That's a 48% increase. Operating profit was 14.7 million, up from 6.5 million. And operating margin was 35%, up from 23% last year as our business model continued to demonstrate its scalability. I want to talk through a few other key events that are impacting the finances also this quarter. There's been quite a few. Firstly, the acquisition of ABOS, which we completed in September. They're a data, content, odds, and visualization services provider to industry operators and technology companies, and a leading B2B esports supplier. We paid approximately 15 million euros upfront for the acquisition and there's around 12 million as a potential earn-out still to come in the coming years. And we used our strong balance sheet to finance a cash acquisition. Secondly, the Netherlands. New regulations started in the Netherlands at the start of October. Some of our main operators did temporarily exit the market, but those who pulled out are confident of gaining licences in the first half of next year. And we also have to mention JVH, who we did sign before regulation started, who are also yet to acquire a license. BetCity did launch on the first day of regulation, and we've been very encouraged by their start. The net effect of being in this newly regulated market with an incomplete suite of operators is approximately 0.4 to 0.5 million per month on our EBIT. However, in the medium term, we do expect to be in a strong position in the Dutch market when all the operators do acquire their licenses. Thirdly, in August, Penn National Gaming announced it had agreed to acquire the Score Media Group. This doesn't impact our current contractual agreement, but I really want to just highlight that based on the official data in the US, Penn National Gaming, they represent around 5% to 10% of our revenue this quarter. And lastly, I'm really pleased to mention the share buyback program that we initiated today. It's a 12 million euro buyback program. Over the last years, our strong performance has really contributed to strong cash generation, and that's put us in a position to be able to start this buyback program. So that will happen in the coming weeks. This is the Canby turnover index, which we always present. It's the aggregation of the results of all the operators. The blue columns are the aggregated turnover, and the orange line is the aggregated operator trading margin. The turnover is indexed. It started at 100 when we first listed, and it's indexed versus that. You can see it has fallen significantly to 575. It is severely impacted, of course, by the migration of DraftKings. So this number here in Q3 almost entirely excludes DraftKings. If we include an estimation of what the DraftKings turnover would have been, if going through our books, 875 to 900 is an approximate range that we think it would. where it would have landed. From a seasonality perspective, Q3 is typically a very quiet quarter in the sporting calendar. Really only in September do we see a return of NFL as well as the soccer season in full swing in the major European leagues. So that's worth highlighting this quarter. The margin was 9%, obviously relatively strong compared to where we've been in recent quarters. But we do note the comment of one of our operators, Kindred, this morning around the weak sports betting margin at the start of Q4. And that is also true for us. The results at the start of the month have indeed been seen many favourites winning. But as we always stress when we talk about operating trading margin, whether it's weak or whether it's strong, it's really only a short term impact and it's nothing that affects the long term of the business. And indeed, on the topic of margin, actually, in our report today, we've raised our long term guidance on margin to eight to nine percent. And this is really driven by the increased popularity of high-margin products, which we're seeing much more of now, such as BetBuilder. This graph is the conversion of our operator turnover growth to our revenue growth. And I have to again flag that this quarter is heavily skewed by the migration of DraftKings, with very little coming through our books actually in Q3. Without DraftKings, turnover is down 14% versus Q3 last year. However, there in the third column, you see the impact of the trading margin, which at 9% is significantly stronger than the 7.2% we saw last Q3. In the other column, there's pretty much a one-off, is the positive impact of the fees we charged to DraftKings in lieu of the service going through our books. So post-migration, we still saw revenues from DraftKings in Q3, and that's significantly impacted our revenue here in the other column. and that took overall revenue up by 48%. This is the last quarter where you'll see any impact from DraftKings. That service has now ceased. It's worth highlighting that DraftKings amounted to approximately 30% of our revenue for this quarter. If we exclude DraftKings from both this year and last year, underlying revenue growth was 22%. Here are the main features of our balance sheet. very strong balance sheet, as we've said in recent quarters, but it's getting stronger all the time. So even after the 15 million acquisition of ABOS, our cash balance was almost 85 million. Our cash inflow, excluding working capital movements and the acquisition, was almost 12 million. And we have a very healthy equity to assets ratio of almost 70%. Lastly, I just wanted to give some updates on the addressable market that we presented in June at the Capital Markets Day. There's been some updates in important markets, which were the kind of pillars of those assumptions on the left there you can see in terms of addressable market. So the main changes this quarter have been in Arizona, where we launched on day one of the market regulation in September, in time for the NFL season. And we're now live with four operators, Rush Street, Churchill Downs, Penn and Kindred. Connecticut became the 16th state we launched in, when we launched in October with Rush Street Interactive, who won a competitive tender to partner the Connecticut Lottery, both online and on property at 15 locations. In New York, we're the lead platform bidder on two consortium bids, with the results of the RFP expected to be announced in December this year. In Canada, legalisation of single sports event wagering came into force in August. And Ontario is in the process of opening its market to private operators, and the application process there began in September. And as I mentioned earlier, in the Netherlands, regulation started in early October. BetCity has started very strongly in that market, and we have high hopes for other operators to be licensed in due course. With that, I'll hand you back to Christian.

Thank you, David. So, yeah, as we also mentioned during the Capital Markets Day, we will update you around our four key pillars that we have mentioned in the Capital Markets Day. And I think we have some really nice updates on all four of them. Firstly, we delivered the bet builder for the NFL for American season. I will go through that more in detail. But so far it has been a great success. On the differentiation piece, we have built and launched the bar top terminals. I will go through that more in detail later on as well. But again, very pleased with the reception we got for that. On the power of a network, I think... We have increased our AI capabilities significantly during the quarter. And we launched successfully fully automated pricing on some of the lower tier soccer leagues with much more to come. And finally, on our scalable business model, we kicked off a rollout of the retail launches in the Belgian National Lottery. And we can do this remotely. And during Q3, we launched 30 retail stores. And today, we stand about 80 stores in total. So, bet builder for American football. I think this has been one of the key projects for a year. And it has been a fantastic success so far. We see... When we look at the bettors on NFL, more than 40% of the bettors have been engaging with BetBuilder. And roughly 20% of all pregame bets is on the BetBuilder. And of course, it is a much higher margin on this product. One thing we have that is unique in the market is that you can... plays this multi-game. So you don't only have to bet within a game and the correlated bets, but you can also combine it with other bets. So you can have, for instance, a baseball match combined with an American football match, which is a great advantage and something that we are quite alone on. And roughly a third of all bet builders is combined with an other event. This is a big project. It started many years ago with soccer, and now we have ruled it out to American football. And with that, I think we are in a position where we can become much, much more fast with new sports. And I think, or I know, that during this weekend, we will start with the college football, which is giving us yet another edge. And I think we are alone on delivering bat builders for college football. And later in the year, we will expand on ice hockey as well to have a great bat builder product. Timely enough for the launch of the Ontario market, of course. And Next year, I think more sports are to come. So we're very pleased with this product. I think VetBuilder is one of the key elements of any future sportsbook. I think it's very, very hard to create a product that is competitive. Most operators are using third-party solutions, whereas ours is fully built in-house. And now we have all the flexibility to keep on developing this. And I think in future years you will see us going into bet builders in play and creating cash outs on bet builders and so on and so on. So I think we are in a great position with what we have built so far. Another thing that I talked about before is our bar top terminals. I think this has been a request from many of our casino operators, especially. And now during G3, we exhibited this new bar top betting terminal, which I think got great traction and many existing operators and prospects really liked it. This is very popular in the U.S. market, traditionally used for casino games and especially card games such as poker. And as usual, I mean, we're taking our online product and adapt it to suit very, very well in the retail market. We have been innovative before, especially when it comes to bring your own device and so on. Once again, very pleased about being able to deliver something new and great to our current customers and future prospects. Next thing I wanted to talk about is automation of our soccer odds compilation. This is a product that we have been working on for a while. Of course, there is probably many who will talk about being able to automate their soccer pricing. What we are doing, I would say, is very, very different. We are not looking at the market. This automated soccer compilation, we can actually open any market. And that is what we're doing on more than 1,000 games across 20 leagues during Q3. So we can be first on the market, increasing slightly higher turnover on these leagues and maintaining a very, very strong sports betting margin on these automated leagues. This is obviously something that we will roll out in a much, much further scale. This is a first test, but I think it's, a small step in the direction of a much, much higher grade of automation in sports betting. Now I would like to talk a little bit about our acquisition of ABIOS. I would say that esports is something we started many years ago with some pricing. I wouldn't say we have had the strong focus to really become a leader in the field. But it's something we have been looking at and looking for the right timing to really become stronger in this field. With ABIOS, I feel we have found a great partner and I think ABIOS is a fantastic company. I really like their leadership and their technology. And I think it's a very, very good fit of cultures. So really pleased with it. I think when we looked at esports, especially during COVID, when most other things disappeared overnight in April last year or even March last year, eSports was one of the things that was there. And we saw that there is definitely a future for eSports. I still think it's a few years away, but I really think this is a great timing to start getting a leadership role in the eSports market. During Q3, we also won a few new customer contracts. Island Luck, which is a clear market leader in Bahamas. Again, our focus in America is paying off and we're very pleased to add Island Luck and the Bahamian market to our offering. Island Luck is regulated in the Bahamian market and, as I said, a clear market leader. And then Bet City, which we launched on day one in Netherlands. And so far, as David mentioned, have performed very strongly. They... yeah at the moment is actually our only operator in the Dutch market so very pleased with getting yet another strong brand in the Netherlands market and I think for the future when we get all of our customers back we will have a very very good position in the Dutch market. During Q3 we did A lot of launches with our existing partners. To start with in Arizona, on day one, we launched with both Penn and Kindred. And shortly after, CDI was also following. And early in Q4, we also got Rushbeat joining in Arizona, as David mentioned. For other states, we launched Penn in five new states during the quarter. And we also launched Kindred in Iowa and Parks in Michigan. On property, we did two launches in Pennsylvania and Arizona with two of our partners. And as I mentioned earlier, we did 33 retail locations in Pennsylvania Belgium with a Belgium lottery. So we have been very, very busy. And I think this is one really strong ability we have to be able to support our partners to launch in so many different markets at the same time. And I think it's a very core strength for us as a company. After Q3, I think the highlight is us launching with Rush Street and the Connecticut Lottery in Connecticut. Connecticut, of course, is not the largest state, but Rush Street is one of only three operators in the state. So it's a very important state still for us to be in. Rush Street will also have a great advantage. The other two operators only have one retail spot each, whereas RSI will be located with 15 different retail locations in much, much more urban destinations as well. So that is looking very good for us. We will Yeah, as I mentioned, we, of course, also launched RSI in Arizona. And earlier in the month, we went live with Racing Western Australia also. We expect Louisiana to be state number 17 in a few weeks. So it is another busy quarter. To summarize the quarter, yes, it's yet another very strong financial performance from us. Revenue up 48%. And I think it's worth pointing out again, this is not the greatest quarter when it comes to sporting events. As a comparable to last year, it's quite a tough comparable because last year, the sporting calendar in Q3 looked way better than it usually do in Q3. due to the COVID effects. So we are very, very pleased to see that the performance is really holding up on a year-to-year comparable. As I mentioned, we acquired EBIOS to become a leading player in the esports field. And other than that, I really think the future is looking bright. Our sales pipeline is very, very strong at the moment. And finally, we initiated a share buyback program today. Thank you very much. And with that, we can take some questions.