Kambi Group plc

Good morning, everyone. We are here today to present our Q3 2022 report presentation. And today with me, I have our CEO, Christian Milen, and our CEO, David Kenyon. We will start to present the quarter. And after presentation, you are very welcome to send your questions through the website, or you can also call in to ask them here. So once again, very welcome and over to you, Christian.

Thank you, Mia. So yeah, good morning everyone. I will begin with a brief overview. Turn to the next slide please. After which David will go through the financial performance. And after that I will go in a little bit more depth on the quarter before we're taking some questions. So, highlights of the quarter. First of all, I'm quite pleased with 12% operating turnover growth during the quarter. Q3 is notoriously a very weak quarter of the year. Very little sport going on. Especially since we started in the US, it has become even higher seasonality impact seasonally. Since the two big sports, the American football only has one month in September and the basketball doesn't start until mid-October. This year we also have some extra headwinds with DraftKings having some turnover in early of the quarter. And we also last year had a big soccer tournament, the Euros, which had the last matches last year. More about the impact of that they will talk about. We also are in... down, tough global economic situation. I would say for us the impact is a little bit softer since we have a lot of business in the Americas where the economics looks slightly better and also we have a very strong currency in the dollar. Outside of that, I think we have done five signings during the last three months, so very happy about where we're going there. Especially Great Canadian that came after the end of the quarter is a great signing, which I will talk more about later on. During quarter we also signed front-end specialist shape games which will have a great impact on our offer where they are having a front-end which is something very much desired by our prospects and it fits very very well into our story and I will talk more about that later. And finally, we have identified BetBuilder as the first product we will go with a modernized offer. And we'll talk more about that later. And the plan is still the same. We're planning to launch this for market in Q1. But first, over to you, David.

Thanks, Christian. Turn to slide four. So yeah, we saw overall a robust financial performance this quarter. We continue to be profitable. We used our powerful balance sheet to fund the purchase of Shape Games. And we look forward to a very busy sporting calendar in Q4. Revenue of £36.7 million was driven by operator turnover growth of 12% and an operator trading margin of 9.5%. And it's against the comparative you see there, 41.6 million, which included around 30% from DraftKings in its last quarter under contract with us last year. Costs before FX and before the shape acquisition, or costs of shape which were added to the P&L, were 32.8 million, which was in the forecast range we gave last quarter. And this led to an operating profit of 3.9 million for the quarter, at a margin of 10.6%. The net cash position of 38.1 million reflects the 35 million we used to acquire shape gains during the quarter. The agreement with Penn that we announced recently has seen the 12.5 million termination fee paid after the quarter end. So I can expect this cash balance to increase significantly during Q4. Turning to slide five. This is the operator turnover index. It sets out an aggregation of the results for operators. The blue columns are an indexed turnover across the portfolio, and the orange line is the operator trading margin, again, aggregated across the portfolio. This trading margin for the quarter was 9.5%, very high this quarter, against 9% in Q3 last year. Year on year, the turnover went from 573 to 640, despite this increase in operator trading margin. Actually, it should be noted there are some factors increasing the comparative that were against the 573. So firstly, DraftKings, the tail end of their business, actually did fall into Q3 last year. So that added around 40 to the index in Q3 2021. And also the last seven matches of the Euro 2020 soccer tournament also in Q3 last year, which added around 20 to the index. But these positives last year were offset by a number of factors, including new customers we launched since then and new markets we've launched into, Connecticut, Louisiana, New York, amongst others. I really want to drill down into that 640 because it's quite an interesting quarter. We start with July with a very quiet sporting calendar. Then during August, we see the return of the major European soccer leagues. And then in September, in the middle of the month, the NFL season starts. So we see a very rapid progression of the index turnover during the quarter, up to 257 in the month of September. Rolling that forward into Q4, in October onwards, of course, we'll see full months of NFL and soccer. The NBA season also started last week, and the college basketball season will begin in mid-November. On top of that, the Soccer World Cup also starts in mid-November and runs for a month before the major European soccer leagues resume in short order after that. So I think the Q4 sporting calendar is going to be extremely busy and this September run rate you see here should be exceeded each month in Q4. Turning to slide 7, the revenue conversion chart. So at constant exchange rates, operator turnover was up 5% on Q3 last year. This was boosted by the dollar being stronger than last year versus the euro. This grew the growth to 12% in total. As I mentioned, the operator trading margin was higher than last year at 9.5%, up from 9%. Whilst tax and marketing deductibles were also higher than last year, with increased taxes that we shared in the Netherlands, Connecticut and New York amongst others. The biggest factor on this chart, of course, is in the other column. and it's a significant negative impact this quarter. The biggest single item there is DraftKings. So in Q3 2021, approximately 30% of our revenue came from DraftKings, and the vast majority of that was shown in the other column in Q3 last year. That, of course, disappears this year. But that negative is offset by, to some degree, by fixed revenues from Mohegan Sun, by our revenues from Avios, and also by the revenues from Shape, which accounted for around a million euros in the month of September. So the net effect of all those items is a 12% decrease in our revenue to 36.7 million. Turning to the cash flow on slide eight. So our opening cash balance at the start of the quarter was 81.6 million. And as you see, the biggest single item affecting the cash was the acquisition of Shape. We used 35 million of our cash, and that took the closing balance to around 45 million. As I mentioned, I think this balance will increase significantly during the quarter. Not only do we expect the very busy sporting calendar to generate good results, but also the recent agreement with Penn has seen that $12.5 million come into the bank for Canby since quarter end. And finally, I wanted to introduce Shape Games. From a financial perspective, we've brought a profitable and fast-growing company. They work with a number of major operators, including Danske Spiel, Norsk Tipping, and Jack Entertainment. Their revenue model works in a number of ways. They offer it in different ways to different operators, but it can be either through fixed fees, a revenue share, or on a per-resource basis. The biggest cost they have is their staff. They have around 70 staff, mainly based at the head office in Copenhagen. And we look forward to a successful partnership going forward. So with that, I hand you back to Christian.