Kambi Group plc

and very welcome to Canby's Q4 2023 report. My name is Mia Rodlander and I am Senior Vice President, Investor Relations. And today I am here with our CEO, Christian Nylén, and our CFO, David Kenyon. Today, we will hear Christian and David present the quarter and the year. And after the presentation, you will be able to send questions to us. You can either do so via telephone or you can send them to me on the web. So, let's start. We will start with Christian to talk about some highlights from the quarter, and then some feedback and review from the year behind us. Then David Canyon will take over and talk about our financial summary and outlook, and then Christian will come back and talk about the Q4 commercial and strategic updates. Then we have a short summary and then it's time for question. So over to you, Christian.

Thank you, Mia. Good morning. So yeah, the quarter Q4 revenue came in 2% down year on year if we exclude the PEN termination fee. This was a year where comparison is towards 2022 when we had the World Cup. I think that would have meant that it's roughly the same. On a full year basis, we're the same. Taking out the PEM termination fee, we're up full year 13%. As I said in the report, this is not a result we are very satisfied with. There are numerous reasons for that, but the main ones I would say is we would have expected higher revenues from Shape Gaming and from our largest partners that we expected to perform better than they did. During the year, I think we have done some additional signings. Of course, we have already talked about the large ones in Q4, Svenska Spel and LiveScore. but we have also done a couple of more 7-11 in Netherlands and bingo in predominantly Belgium and I will talk more about them later on as I said we are not that pleased with the results from shape games and therefore we decided to do an early settlement agreement they will go through the details later on but what I hope this will mean is that we will quicker get to a full integration between organizations which will mean both financial synergies, both on the revenue side and the cost side. We have also given a full year guidance for 2024, which David will go through more in detail. All in all, I would say that we feel we have done great strategic progress during the year. to set us up for future success. And I will talk a little bit more about that on the next slides. But first, just a reminder, on the Capital Markets Day in early last year, we gave five growth drivers of what is important to reach our 2027 financial targets. These drivers were, as you can see, Utilize the platform to retain key partners, roll out AI pricing, extend our lead as a supplier in Americas, sign tier one operators across the portfolio and launch a major regulated market in Asia. I will go through progress on four of these boxes, but in Asia, I would say nothing has happened so far. So it's not very much to talk about on that point yet. For financial targets, they are under review and we will come back with a projection during the year. But one thing that has happened is that in the last weeks, it became quite clear that California is very unlikely to happen. We don't believe there will be a referendum this year, which would have been a prerequisite for that to happen within the period of 2027. So now we believe the best case for California is 2028. so in in 2023 yeah retain key partners we have done seven partner renewals some of them the few of them by almost the largest we have now rush street leo vegas and betplay and we have created a more open platform and as i will talk later on we will bring on a third party supplier for first time in in a few months time. We have talked about rolling out AI powered trading and at the moment 75% of our pre-match soccer is traded on the new platform. We have during the year taken more than 200 million bets from Tesseract powered pricing and we expect during the year to go live with in-play on soccer and with tennis. We believe we have extended our lead as a number one supplier in Americas. We have launched in several new states in US and we have done multiple launches in Latin America, especially in Argentina during 2023. But we all are waiting for Brazil to happen and that is of course very important thing to happen in 2024. And finally on this signing, tier one operators across the portfolio. We have done a few very significant signings during the year. Bally's live score and Svenska Spel are probably the three largest we have done during the year. So all in all, I would say we are very pleased with what we have done during 2023. And I think we're very well positioned for the future. With that, I hand over to David. I'll come back later on again.

Thank you, Christian. Good morning, everyone. So Q4, revenue was 44.3 million versus 45.2 million in Q4 2022, a quarter which included the Football World Cup. All the numbers I show you on this slide for last year exclude the one-off PEN national gaming termination fee of 12.6 million, which was recognized as a one-off in Q4 last year. Operating expenses this quarter were 27.3 million and were lower than Q4 2022. The FX loss we had was much smaller than this time last year. And there was also a one-off credit this quarter in relation to some IFRS 2 costs on share options. And the result was that our earnings per interest tax and amortization on acquisitions was 8.5 million, up from 7.9 million in Q4 last year. There were some items affecting comparability which came below the line, which I should talk about for this quarter. Firstly, in relation to the acquisition of ABOS a couple of years ago, we made a 5.6 million payout on the earn-out to them. This resulted in a 1.5 million credit being taken on the P&L for release of the unused contingent consideration on that investment. Similarly, as Christian mentioned, we made a payout in relation to the shape earn out. This was a full and final settlement of that earn out agreement. It was a payout of 4.7 million in the quarter. This led to an 11.3 million credit being released onto the P&L again for unused contingent consideration. Similarly, we did an annual impairment review, as we have to do each year. And again, on the shape, which aligns with the earn-out assumptions, but we took a one-off non-cash impairment expense of 12.4 million. So all those items came below the line, but they're all taken there in Q4, and they actually net to around 0.4 million across all those lines. Turning to the full year numbers, again, excluding the termination fee from last year's numbers, revenue up 13%. But as Christian said, we're not fully satisfied with that number. If we look back to what we had hoped for, I'd say some of our existing key operators delivered less than we anticipated in the year. Specifically, Kindred, who have talked about finding themselves affected by regulatory measures in both Belgium and Norway. and Penn, who were quite outspoken in the fact that they were reducing their marketing prior to the online migration. And both of those two key customers really did impact the numbers that came through to us on our revenue share. Christian also mentioned the kind of development of SHAPE not being as we'd hoped at this stage. Of course, that contributed to the early earn-out settlement agreement and the subsequent management restructure that we've made in that division. And I think on the back of those changes and that settlement agreement, we actually still believe we have a strong complement to our strategic plans for the whole Canby group with SHAPE. The underlying cost growth this year, stripping out the impact of Shape, FX, and the one-off I mentioned on IFRS 2, is actually underlying cost growth of 6% year on year. And then adding back in the impact of Shape and FX, that led to EBITDA on pre-acquisitions of being flat around 25 million euros for the year. The net cash balance at the end of the year was 50.5 million after some pretty major cash transactions during the year, which I'll talk through now. After the turnover index. So this one is the aggregation of the operator performance across the network. So I show each quarter and it shows the blue columns are the aggregated indexed amount of turnover through our network across all our operators. And the orange line is the aggregated operator trading margin. The turnover you see is a steep rise from Q3 up to 789 from 602. Of course, Q4 has a strong sporting calendar, including soccer, NFL, NBA and college basketball this quarter. If we look back to Q4 2022, that number of 913 included 168, which was a contribution from the Penn online business. Excluding that, so for the underlying growth in our turnover, it was up 6% despite last year having that Football World Cup. The margin for the quarter was 8.3% versus 8.1% last Q4. I can say it started quite low in October, then did pick up strongly as the quarter progressed. Onto the cash flow now. So this is on a full year basis. We had 60 million in the bank at the start of the year and made operating profits of just under 20 million. But then there's some significant cash outlays you see on the right-hand side of the slide. So 10.4 million in tax payments. This comprised both corporation tax and withholding tax. We've repurchased 8.3 million of shares during the year in Q2 and Q4, and I'll talk more about that. In Q2, we repaid the convertible bond to the Kindred Group. This was for €7.5 million. And the earn-out payments I've discussed, so €4.7 million to Shape and €5.6 million to ABOS, virtually all in Q4, have also come out during the year. And this leaves us with a net cash balance at the end of the year of €50.5 million. We have been doing quite a few share buybacks this year, as I said, in Q2 and in Q4. So, we've repurchased 462,000 shares during the year for €8.3 million, representing just under 1.5% of the shares in issue. We've actually now repurchased 986,000 shares since we started doing buybacks. And of those, we've used 247,000 to settle share options. This leaves us with a bank of 739,000 shares at the end of the year, representing 2.36% of our total share capital. And there's various potential uses for those shares, including either cancellation or using them to settle incentive schemes. So looking ahead to 2024, so we don't normally make revenue guidance, but there's so many moving parts here in the 12 months ahead that we felt kind of the need to really specify the impact of those on us. Starting with the revenue then, so obviously we have 173.3 million as a starting point for 2023, and there's both headwinds and tailwinds when we look ahead into 2024 on that number. Firstly, the headwinds. So Christian mentioned a raft of extensions of key partners for us, and some of them come with changes to the commercial terms in return, of course, for longer commitments to the contract. The biggest impact is for the Kindred Group, as we've mentioned before, that the new terms in that contract taking effect from 1st of January this year. There have been operators leaving the network, and the biggest financial impact, of course, is from Penn National Gaming transitioning their online business. As part of that agreement for the transition, there were transition fees to cover 15 million, but those end in July 2024. And of course, the loss of the online business after those transition fees end is a material headwind for us versus 2023. Also in 2023, there was a non-recurring license fee in relation to the shape business, which we recognized in Q3, just under 3 million. So those are the headwinds, but in terms of tailwinds, what is there? We have regulation in Brazil looming. We don't know exactly when, but it's a very exciting opportunity for us. The timing is uncertain, but of course we'll keep you posted when we have any certainty on that. It does look like being a competitive market. It's a mature grey market, you can call it, and over 100 operators have expressed an interest in taking a sports betting licence. But we are looking forward to that launch as and when it happens. In terms of potential additional growth from our modules, in particular, I can highlight ABOS and Christian was going to share some of their growth prospects later in this presentation and also some of our other modules have potential for growth in 2024. And of course, the 2023 partner signings. So both LiveScore and Svenska Spel are yet to launch, and we hope they launch during this year and they can contribute to our revenues, of course, and hopefully in a material way in the second half of the year. And we hope to see growth from Bally's, which was the other big signing, which when they kind of changed their approach on marketing from a less measured approach that we're seeing at the moment, then potentially that has growth potential for us in 2024 also. In terms of costs, our operating expenses, excluding FX, were 151 million this year, 2023. And we're making a forecast that cost growth will be limited to 155 to 165 in the coming 12 months, in spite of the inflationary pressures which we're, of course, seeing. And there are still further synergies to be delivered, and we're not seeing the full benefits of those yet in 2024. So those synergies, particularly in relation to the further development of the TESORAC trading functionality, will likely come further down the line for us. So overall, this leads us with 170 to 180 million guidance on revenue and 155 to 165 guidance on OPEX. Clearly, there are pushes and pulls on those 2024 revenues, but our long-term prospects do remain solid, and we've really limited our cost growth in 2024 accordingly. And with that, I'm going to pass you back to Christian.