Kambi Group plc

Good morning everyone and welcome to Canbis Q2 Report presentation. My name is Mia Nordlander and I am Senior Vice President in Invest Relations and Sustainability. This morning I'm here with our CEO Christian Jolén and our CEO David Kenyon. Today we will start to hear about some highlights from the quarter from Christian. Then David will talk about the financial summary and Christian will come back and talk about some commercial and strategic updates. Then a short summary and finally time for questions. You can either call them in here to us in the studio and you do so by pressing the pound key and five or you can send them to me here in the chat. So once again, very welcome to our presentation and over to you Christian.

Thank you Mia and good morning. So yeah Q2 I would say is a very strong financial performance. We have turnover plus 20 percent if we're excluding Penn online and this is of course driven by the large football tournaments Euro 2024 and Copa America. The result was very bookmaker friendly so we had a quarterly record margin this quarter. I will talk more about the tournaments later on in the presentation. Early on in the quarter we signed one of the largest tribes in the US, Choctaw Nation of Oklahoma. They are very large in Oklahoma of course and the proximity to Texas means that we have a lot of traffic from Texas as well. And this proximity to Texas also opens up for a lot of potential if Texas opens up at some point. I will talk more about that later as well. As ever we have completed a number of partner launches and most importantly we started with Svenska Spel and with LiveScoreBet ahead of Euro which was on time and very important both for us and our partners to get those launches out ahead of the big tournaments. And of course we have appointed Vennert Bescher as our new CEO and he starts tomorrow taking over from me and I will talk more about that later as well. But for now I hand over to David.

Thank you Christian, probably for the last time but thank you. So revenue for the quarter was 45.7 million versus 42.9 million Q2 last year and for the first half 88.9 million compared to 86.9 million. As Christian mentioned this was driven by a really strong sporting calendar and an excellent performance with a strong margin in those events. I will talk more about those. Our total costs were within our guided range and this led to an EBIT earnings poor interest tax and amortization on acquisitions of 7.5 million up from 5 million this time last year. For the first half we had the same metric was 13.3 million up from 10.8 million. We carried out 3.3 million euros worth of buybacks in the quarter and nevertheless our cash balance increased from 46 million to 52.7 million at the end of the quarter. 46 million at the start of the quarter, 52.7 million by the end of the quarter and I will run through that cash flow shortly. This is the turnover index which sets out the aggregation of our operators performance. As usual the blue columns are an indexed aggregation of the turnover with the operators and the orange line is the aggregated operator trading margin. The turnover for the quarter was 704 on the index. This was an index that was set at 100 originally when we first listed. So this index of 704 this quarter it's a 3% growth from last year on the face of it but 20% when stripping out the Penn online impact. This of course was really helped by the significant level of activity on both the euros and the copper America. In the euros we had 40 of the 51 matches fell in Q2 and the copper had 22 of their 32 matches in the quarter. And overall these two tournaments alone contributed 9% of our turnover this quarter. The euros in particular had a really strong margin with some very operator friendly results. And this really contributed to the strongest margin you will see on this graph here. So .3% across the quarter. This very high margin may have had a slight dampening effect on our turnover but I think all in all we can conclude it was an extremely strong quarter from an operational perspective. This of course led to a strong cash flow for the quarter. So as I mentioned we had an opening cash balance of 46 million and on top of that we made an operating profit of 6.2 million. Our tax movements here you see included a tax refund of 4.6 million which is part of the annual corporation tax payment mechanism in Malta. We also repurchased 3.3 million of shares at an average price of around 97 krona per share. And this led to a closing cash balance of 52.7 million. An extremely healthy balance sheet as we move forward. A bit more detail then on the buybacks we carried out. So as I said we did 3.3 million in the quarter. That's 392,000 shares and this now takes us to 636,000 shares repurchased in the first half for a value of 5.6 million. We now hold .4% of the total shares in the company through buyback schemes. And in May we announced a long-term capital allocation policy to really set out our stall with what we will do with buybacks going forward. Which is to return capital to shareholders through buyback schemes whilst preserving sufficient capital in the business for our operational requirements. I think in practice what this means is we'll be likely to see more material amounts used for buybacks and longer periods. Over longer periods than we've done historically. And we'll of course start carrying those out as soon as we can. So yeah, with that I'm going to hand you back to Christian.

Thank you David. And that's also for last time then probably. Let's see. Here's an overview of the commercial milestones for Q2 and Q3 so far. I will of course talk more about Choctaw, Svenska Spelan, and LiveScore later. So I will focus on the other ones. With Qwiff we did Tesseract, signed very first, a non-Cambic partner. And we also got the product launched with Qwiff quickly ahead of Euros. So very pleased to see this working as a standalone service. And I think the first result has been very positive. Already in Q3 we have launched VirginBet. I will talk more about that of course since it's part of LiveScore group. But we also signed 711, which we signed in Q4 last year. They have been growing steadily as a casino vertical in Neverland since 2022. And they received their sports betting license and have just started a sports betting business. And Choctaw Nation, which we signed a few days after the Q1 report, I think is a very important long-term strategic deal for Cambi. It gives us first of all a big presence in Oklahoma when that state decides to regulate. But as you can see on the map here, the proximity to Dallas gives them probably a lot of traffic if Oklahoma would regulate before Texas. But also with the possibilities of Texas regulating, Choctaw Nation has a fantastic position. They are an official partner of the World Series champions, Texas Rangers. And with the last proposal of regulation that was tied to professional teams, that would give Choctaw Nation a very, very good possibility to also get a good foothold in Texas if and when Texas decides to regulate. So this is a deal we have been working on since I think 2019 and we are very, very pleased to finally get it done. Just before the Euros, we did successful launches both with Svenska Spiel and Live Score. As you can imagine, this is two deals where they migrated away from other suppliers, which means that they had very particular product requirements and there is more complexity doing these kind of migrations. This has went very, very smooth. I'm very impressed with what we have been able to achieve doing these product requirements in time. And I think the early results from the big tournaments has been very, very positive both for Svenska Spiel and Live Score Group. With Svenska Spiel, we also saw Shape Games delivering a unique front-end to Svenska Spiel. So again, we get some added value of the Shape Games business to be able to support the deals such as Svenska Spiel. With Live Score Bet, we have also a couple of weeks ago successfully migrated the largest brand Virgin Bet. So they are also up and running in the UK market now. And with that, we have managed all of Live Score's migrations of their current business in Nigeria, Netherlands, UK and Ireland. We had two very large and important football tournaments, which usually happens every second year, either with the Euros and Copa America or the World Cup. It has been a little bit different the last couple of years because of choices of locations and of course COVID. But I hope we're back to the normal route now. And as you can see here, the growth we have had on these two tournaments has been quite good. With Euros, which is of course in very established market for us, you see a very nice growth of 14%. But what I really want to highlight here is Copa, which had a growth of over 200%. And I think this is a testament to our position in the Latin American market and especially in Colombia. It's worth noting that Colombia actually reached the final. Thankfully for us maybe, they didn't win the final and I think that really has contributed to great results on both the Euros and Copa during this tournament. During the Copa America final, we also saw 1.3 million bet builder bets. And I think one thing we would like to highlight is that out of this 1.3 million, 690,000 was unique, different combinations. And I think this shows a little bit on where the betting industry is going and the importance of being able to have a very, very large and flexible system for in-event combinations. And I think we are very proud with the technology we have built now. These bet builders for soccer is of course traded and risk managed by Tesseract. So we expect to be able to keep on the level of offering we have for these two big tournaments to the large football leagues during the autumn. I also just want to show the importance of these tournaments compared to other important events. And as you can see, Copa America actually outshined even the NFL playoffs and Super Bowl this year. Was big even March Madness. And as you can see, Euro was significantly larger than the other tournaments on this picture. I'm also very pleased to announce my successor, Werner Becher. Werner will actually start tomorrow. So very pleased with that. Werner was a standout candidate in a field of very strong candidates, I would say. His background in technology, coupled with his industry experience both in the B2C and B2B field, has been very contributing factors to the appointment. And I'm exceptionally confident that he will be a great successor to me. Of course, I will myself continue from the board, which I was elected to join in May. And I will remain closely involved with the business and ensure that the hand rule will go smoothly and then focusing more on the long term strategy. So to summarize the quarter, we had two very successful tournaments in Euro 2024 and Copa America. We were leading product and I think this really underlines how strong our sports betting product is at the moment. We, as I said, are very delighted to have appointed Werner as our new CEO. And with his experience and leadership, I'm confident that he can take Cambi to the next level. We are continuing with our long term strategy to open up our platform and provide a portfolio of services. And with that, I would like to thank you. It has been a fantastic journey for me personally. I'm very proud of what we have achieved during these years and I believe we have set up a great foundation for future success.

So thank you very much, Christian. Thank you very much, David. It's time for questions. We will start with the telephone. So first of all, I would like to welcome Oskar Rundqvist from ABG. It's your turn. Please go ahead.

Perfect. Thank you, Mia. And yeah, first of all, thank you, Christian as well. And I wish you all the best in your future endeavors. I'm happy to see you on the board as well. So my first question would just be on the employees and the OPEC development, which seems to have been flattening out a little bit. Also looking at your implicit H2 guidance on OPEC. We can see that employees are flattening out or slightly being down a little bit. So can you just talk about the headcount going forward and what you expect in terms of potential OPEC increase or if that should be flattening out from here driven by the AI trading?

Thanks. I can take this one. Yeah, I mean, you're right. Firstly, that has flattened out and I think we've seen our headcount stabilize over the last 12 months. Going forward, I think we haven't put out a guidance yet. We typically will do that later in the year for next year. But long term, there will be some synergies from the divisions that we're through the acquisitions we've made with shape, but also the TESRAC division. So, you know, we'll set those out in detail when we have a very clear timeline for them. But absolutely, I think both of those areas can provide headcount synergies.

Got it. But I think it's, you know, the sort of 10 to 15 percent OPEC increase year over year that you talked about a few years ago. Is that sort of can we interpret that that's not going to happen going forward or is that, you know, too much to say at the moment?

I don't commit to a number at this stage, but I mean, I think you're seeing a slowdown in the costs already now and there are those synergies still to come. So, yeah, we'll keep you posted as and when we can be more clear on that.

Yeah, perfect. Thank you. My second question would you be, you know, in respect of your final day, Christian, I think I have to ask the question on the pipeline. So I noticed that obviously you can't say anything about it, but you haven't begun the new buyback program now after the report. So I guess you could be some sort of, you know, more related thing. So respect that you can't say anything about that, but just sort of in general, I think you've commented a little bit on the pipeline as well before. Is it anything that you can say? Are you still keen on delivering a solid age to in terms of in terms of signings or is it anything that you can elaborate on?

Thanks. Yeah, of course, I can't comment on any specifics, but I still steadfast in in what I've said earlier quarters. We have a very strong pipeline. And as I said, we've we've talked to I mean, we started talking to shock during 2019 and we signed them a few months ago. So some cycles are very long, but I'm very, very positive. And I think we will have a good chance to to to do more business in the future.

Thank you. Just the final one, just on on shock. Obviously, a great opportunity in in Oklahoma and also also Texas. Do you have any sort of view on the Texas regulation in in 2025? It's correct me if I'm wrong, but it's 2025 or 2027. We could potentially see it. Is that anything that you are seeing any positive signs on?

No, I think. I mean, yeah, there is positive signs, but in the end, I mean, it is a political decision. And it's really hard to to to to know what will happen, especially now and when you also have election coming up. That may change things. But yeah, I think there is a chance for sure. But that's something happen next time up.

Got it. That was all. Thank you, Christian. Thank you.

Thank you very much. Next person is your Atling from Pareto. Good morning.

Yes, good morning, all. And just echoing Oscar here. Congrats, Christian, on the on the tenure coming to an end in a very, very good way. I have a couple of questions. So just thought with the top line guidance for for for the full year and not raising it. So that the midpoint sort of implies flat growth here in the second half of the year. But could you add some more comments to how you view the guidance now compared to when you first issued it? Maybe.

Yeah, I mean, first, I can say we're obviously more confident we're going to hit it because we're halfway through and we're well on track towards hitting it. Also, you know, in terms of tailwinds here, we have the recently launched partners such as LifeScore and Svenska Spell. So we'll get obviously get a full half of revenues from those customers. But the really key one to mention here is the the pen transition fees. So we first half we had six six months of those that will only have one month of those in the second half. So that's a five million headwind on the kind of first half versus second year, second half of the year. Also, of course, we've had a high trading margin in the in the first operator trading margin in the first half and the euros and copper, like I mentioned. So those, of course, weren't necessarily those tournaments. And we only get the tail end of those in the second half. And then probably the last one to mention is the Swedish gaming tax increase, which is another headwind. We talked about 0.4 million headwind in the second half. So you can see there's quite a few moving parts. There's here that's why we didn't really want to narrow the range. But, you know, hopefully we're still confident, very confident we're going to be well in that range and hopefully towards the upper end.

Yeah, fair enough. And then on the on the betting margin, could you say how much of that strong margin is driven by increasing penetration of bet builder and how much is just the favorable results in sort of the normal betting product?

I don't have any numbers on it. But of course, I think on on on the two big tournaments here, we had over 30 percent of the turnover coming from from bet builders. So I think it has quite a big impact, especially when you have big tournaments. But, yeah, except the first couple of days in Europe, I mean, the results was exceptionally betting friendly, bookmaker friendly. So I think, yeah, what you see a new record on margin, it's definitely more to be contributed to the great results.

Yeah, you can't quantify the difference in margins between bet builder and

just

regular

bets. And no, I mean, they are they are quite correlated since even bet builders are very much based on the good results. So it's

hard. Yeah. And then obviously this probably had an impact on turnover, as you mentioned in the report. I know you sort of guided on how much of an impact that has on turnover. Is that something you could do here in the quarter as well?

You mean the dampening effects of the margin? It really isn't an exact science. So we don't like to put a number on it as such. But it's clear that when when the margins over 10 and we, you know, guiding a lot lower than that, it's it's not an exact science. I don't know. It's

hard. We tried to figure it out, but it was not really possible.

And

then just the final two ones. If you first, you could share the contribution from shape and then second, if you have any comments on on the future with Leo Villegas when that contract ends and if you think there's any possibility of an extension or if that's lost business when current contract ends. Thanks.

Yeah, I mean, on the modules, we look at them all together now as a whole. So of course, ABOS, shape and Tesseract, they contribute around five million on a revenue basis and small positive on EBITDA basis. Shape being the biggest element within those three.

And on Leo, I mean, we don't know very much at the moment. And of course, the platform we have acquired is not yet customized to do it to do all the different geographies. So, yeah, we'll see. But there will surely be discussions during the autumn on how Leo and MGM decides to do with transition.

Yeah, and can you can see when the current contract ends

precisely? No, we have never disclosed that. Okay. All right. That's all for me. Thank you. Thank you.

Thank you very much. Next in line is Martin Arnell from DNB. Good morning.

Good morning, everyone. I wanted to follow up on this implied guide for the second half. You commented on the headwinds, if you look first half versus second half with the 10 fees. But how does it look year on year? Because you did almost 12 million last year in the second half and the implied midpoint guidance range or midpoint from the range now is like six million, I think.

Well, things change fast year on year. Yeah, that's not. We're mostly focusing on analysis on versus the first half. So, yeah, I don't we're not really forecast providing a forecast for the second half. So, I mean, it's not what I want to go into too much.

No, but it's an implied guide. But if I frame it like this, the pen revenue that you had last year, you're not going to have this year in the second half. Do you know how much that is on top of your head?

Yeah, I mean, that is so that we had a five million headwind again from the second half last year. Okay.

So at least that's the five million. So then you're the implied guide is fairly flat. This is on the second half. And I was just wondering if if there was anything more that we should have interpreted that.

But no, the Swedish tax one I mentioned, it's a new a new headwind for us, which will start this second half, which we didn't have last year. That's no point formula, but there's probably not many other specific points to call out.

Maybe another thing, another thing to point out when we versus year on year, of course, the headwinds with new contract terms, that's of course impacting us as well year over year.

Yeah, okay. Thank you. And then can you comment a little bit more on this comment on the lower data supplier costs that certain partners are engaging with supplies directly? If you could elaborate a little bit more on that, please.

Yeah, I mean, the partners are free to basically with data, they can either come through us and we act as a kind of hub for all our partners direct to liaise with the data supplies or they can go direct and do their own deals. And doesn't really matter to us in so far as if they come through us, we have a cost and a revenue. And if they go direct, we have neither. So this is just a question of one or two of them going deciding to go direct as opposed to reaching it through us, just so they have their own personal relationship with the data suppliers. So zero impact on eBay just affects revenue and cost lines.

Okay, thank you. And then my final question is on what's your expectations on potential launch in Brazil at this point?

I think we still expect and hope that the first of January is the date that everyone is targeting.

Yeah, it seems to be some delays with the regulation, to be honest. But hopefully we'll we'll launch first of January. But you never know with Brazil. I've been saying last couple of years that this is the year that we still hopeful.

Yeah, okay. Thanks. That's all for me. And good luck in your new role, Christian.

Thank you.

Okay, thank you very much. Now it's time for questions from the web. I start with you, Christian. Can you give some insight in on Bali's launch in the UK? Are they planning to launch more brands in the UK or other markets?

Don't think we have any plans to launch any new brands. So I think it's the existing brands we're doing with launch with.

A few questions about some bugs during the Euro and Copa. Anything you can share with us what happened?

I can't go into any details really, but we did some launches of improved tooling, which had some teething problems. But overall, we had some mishaps that was corrected very quickly. But overall, I would say that the product has become much, much stronger. And the result of these improvements, I think we also have much, much better risk control now than we had before.

Thank you, Christian. Anything you can share with us, development been for ABEOS during for e-soccer during Euro and Copa?

To be honest, I don't know the numbers, but in general, what I can say about e-soccer is that it is absolutely flying. If it were to be considered a league, it would probably be one of our largest soccer leagues. So it has really taken off and it's very, very pleasing to see. And I hope we will have the same effect with e-basketball soon.

Thank you. And the last question here, dialogue with new customers for Bet Builder. That's right. Anything you can share there? What's the interest? No,

of course, there are dialogues. I can't share very much more until something is happening.

Thank you very much. Thank you, David. Thank you, Christian. We will miss you a lot. Thank you for all these fantastic years. Actually, now I have a surprise for you. I have a special guest. Very welcome, Werner Becher, to the stage. Our new CEO from tomorrow.

Hi, everyone.

Christian mentioned that your background comes from tech, but also from the industry. Can you please give me some more information of your background and who are you?

Yes, thank you. So my career started as a software developer and later I co-founded one of Austrian's leading software companies. After a successful exit, I was CEO of Interveten, a B2C betting and gaming operator for eight years. And we tripled the revenues in these eight years. In 2019, I moved to the US as managing director for Sportradar. And we had an ASDAQ IPO in 2021. And I moved then back to Europe as CEO of Europe, Middle East, Africa and Latin America. So I think I have a strong tech background. Yes. And having been in the shoes of B2C CEOs myself, I think I also understand a little bit the challenges operators face today. And at Sportradar, of course, I could build a great B2B network in our industry around the globe, selling modular services.

Great. Sounds like a perfect fit for us. But why do you find Camby interesting? What's your view?

Yeah, I think this is an easy question. So Camby is clearly the leading independent sports book company on this planet. And as a betting operator, if you want to compete with this big global tier one operators out there, if you really want to compete with them, I think you have to talk to Camby. We must be on top of your partner list. Why? Because this is from my perspective, this is a critical time for the industry. I see many operators struggling out there. Why? Because of technology is evolving really rapidly. And with Camby as a partner, I think all the operators can be sure that they will stay ahead of the game.

Great. And last question. What are you most excited about?

So first of all, I would like to thank Christian. I think he and his team have done a great job. And I'm honoured that I will be handing over an incredible company tomorrow from Christian. Camby has a very, very good reputation in the industry and clearly offers the best sports book platform and will continue to do so in future. My vision for the company is to even expand the TEM of the company on top of the sports book platform we already have today, fully in line with the long term strategy of the company to also offer now our arts feeds, our managed trading, our bet builder, player profile and much more services as easy to integrate services for our customers. And the foundations are definitely already in place. And I come in now with my network and some experience in pricing and selling products like that.

That sounds fantastic. So welcome from tomorrow then. And thank you everyone for listening in to us. Werner, David and I will be back on the 6th of November for the Q3 report. And I wish you a very lovely day. Thank you very much.