Kambi Group plc

Hello and welcome to Canbi's Q2 earnings call. At this time all participants are in the listen only mode. After the speaker presentations there will be time for questions and answers. If you're following us on the teleconference and wish to ask a question please press star 1 1. If you're following us through the webcast you may submit your question through the chat. Please be advised that today's conference is being recorded. The agenda for today. We will start with some highlights from Werner, which will be followed by the financial summary by David. Then Werner will come back with some operational updates. Following this, there will be time for the Q&A. With that, I would like to hand over the conference to you, Werner. Please go ahead.

Thanks, Mattias, and good morning, everyone. Q2 and the weeks following have been a fantastic business period for Camby, as our report shows this morning. While the World Cup went just about as well as we could hope, our performance prior to the World Cup had also been strong. This morning, we posted a 13% increase in Q2 revenue, with EBITDA doubling year on year. With that growth coming despite the payment of credits for operational issues we had in April, as discussed. As a result, We are today increasing our EBITDAG guidance from 2025 now to 23 to 27 million euros. This increase is part due to the World Cup, where we outperformed our high expectations, processing more than 100 million bets, turnover in excess of 1 billion euro and an operator trading margin of 18%. And that's just only for turnkey and does not include our odds feed plus services. And in terms of new business, at the start of the quarter, we signed a partnership with a group of Canadian lotteries, giving us access to seven more provinces in Canada. Since the quarter end, we added Pure Casino on our turnkey in newly regulated Alberta, along with Retabat in Spain and Peru for Oatsfeed Plus service. And of course, I'll talk more about all these shortly, but first over to you, David. Thank you, Werner. Good morning, everyone.

Let me start with the headline numbers for Q2. We delivered 45.9 million of revenue, which is up year on year versus 40.5 million last year. Operating expenses were 31.5 million, down from 31.7 million in the prior year quarter. And that operating discipline translated into a material increase in profitability. Adjusted earnings before interest, tax and amortization on acquisitions or adjusted EBITAC came in at 7.6 million, up from 3.7 million last year. We continue to grow the top line while keeping a tight grip on cost, so the incremental revenue is dropping through and increasing our profit. The extremely strong World Cup results continued into Q3, with the final finishing late on Sunday evening. Our outperformance on the whole tournament is the key factor in us today raising our expected full-year adjusted EBITDA from 20 to 25 million to 23 to 27 million euros. Turning now to the operator trading dynamics and this slide is where we're monitoring the underlying level of activity in the network on our turnkey sportsbook, the main revenue driver in the business. This turnover index gives you a view of overall betting turnover volumes, originally indexed at 100 when we listed. And the orange line shows the aggregate operator trading margin across the network. The operator turnover index this quarter was 685. As expected, due to the seasonality of the sporting calendar, this was a slight decrease from Q1, where we had the NFL playoffs and March Madness college basketball. This was partially offset in Q2 by the return of the MLB season, Furthermore, the turnover in the quarter was also boosted by the Football World Cup, although the strong margin did serve to limit the turnover, and certain soccer leagues around the world moved or reduced their seasons around this big tournament. Versus Q2 last year, Kindred and Leo Vegas migrations from various markets were more than offset by this World Cup impact, and the launches of a number of new customers, resulting in a 2% year-on-year turnover increase. The operator trading margin was also much higher this year at 14%, which of course has the effect of suppressing the level of operator turnover. We saw this strong margin in the World Cup at around 17% during Q2, but also in the rest of the offering, with operator-friendly results in the Champions League also worth noting. Now let me walk you through the year-on-year change in adjusted EBITDA. This bridge explains what drove the move from 3.7 million last year to 7.6 million this quarter. At a high level, the biggest driver is the operating leverage, with revenue growth flowing through whilst the cost base stays controlled. The first light blue bar represents the impact of the operator trading margin outside of the World Cup. At 13.4%, this was significantly higher than the 11.5% we saw in Q2 last year. Our launches comprise a number of new operators across turnkey, frontend and oddsfeed plus services, including Ontario Lottery and Gaming and PMU. The third light blue column relates to the net impact of major football tournaments. The FIFA World Cup was a huge success for Cambi and its operators. In Q2, with over 500 million turnover and around 17% margin, we saw approximately 6 million of revenue. The good results continued into Q3 until the final concluded on Sunday and at an even higher margin than we saw in Q2, leading to the increase in expected adjusted EBITDA for the full year to 23 to 27 million. On this slide, we offset the revenues we had last Q2 from the FIFA Club World Cup and the impact on turnover of the high margin and adjusted football calendars to show a four million year on year increase in profit from these tournaments. The migrations column includes various market transitions in the last year by FDJ United and Leo Vegas. Whilst the gaming tax another column includes the year-on-year impact of revised contractual commission rates with certain customers, a greater tax impact in Colombia amongst other jurisdictions and the low single-digit millions of credits for technical downtime in April that we mentioned when we released the Q1 report. Our cost of sales, which mainly comprised data costs recharged to customers, increased as our revenue and number of new customers grew, and also included the higher costs associated with the World Cup data. Our operating expenses were down as we saw the impact from our savings programme, with reductions across various cost lines more than offsetting inflationary pressures. The main FX impact, a constant currency, was a 0.4 million increase in the value of revenues from Colombia due to the stronger peso. All of these factors together resulted in a 102% increase in adjusted EBITDA to 7.6 million. Finally, this slide summarizes the quarter's cash movements. I'm looking at three things here, really. The cash generation from operating performance, the working capital effects in the period, and then any investing or financing impacts. Operating profit for the quarter was 5.8 million. This includes a net 1.3 million realized on the sale of a dormant subsidiary holding a gaming license we no longer needed. Our working capital position improved as we received an additional €1 million as part of this subsidiary sale to cover a deposit held with a gaming regulator. As we typically see in Q2 each year, the cash outflow in relation to tax was unusually large as we pay our full-year annual corporation tax in Malta during Q2. We also used €3.6 million to carry out share buybacks in the quarter. On that note, in June we announced a share repurchase program to the value of 100 million SEC or 9.2 million euros, which will run until November this year. This leaves a closing cash balance of 33 million at the end of June. Passing back to Werner.