Kambi has reported a year-on-year revenue decrease of 26% to €34.9m in Q4 2021.

The decline was driven by the migration of two major former Kambi clients onto their own proprietary sports betting platforms in DraftKings and 888 when compared to the prior corresponding period.

The downturn was also influenced by the fact several of Kambi’s key partners, including Kindred Group, withdrew their services from the Netherlands following the regulation of the country’s online gambling market.

Kambi said operator turnover would have risen by 38% year-on-year had both of these headwinds been excluded.

Q4 operating profit fell by 68% to €7.1m, down from €22.2m in the prior year, on an operating margin of 20.2%.

The reporting period was described by Kambi CEO Kristian Nylén as the toughest he can ever remember, in comparative terms. As well as the aforementioned headwinds, operator sports margins hit record highs in Q4 of 2020 but Q4 2021 was a very different story, with sports results favouring bettors for the most part, particularly at the start of the quarter.

Kambi ended on a trading margin of 7.8% for the quarter despite the rocky start, but that still came in well below Q4 2020’s “unusually high” margin of 9.4%.

It has been a busy week for Kambi. As well as the Q4 results, news emerged late on Tuesday night that Kindred Group – its most significant client in terms of revenue – would come off the Kambi platform by 2026 in favour of in-house technology.

The news was announced alongside a three-year contract extension between the two companies, with Kindred’s proprietary solution to be built on top of its Kindred Racing Platform over the coming years. Kindred plans to expand its sportsbook department from 200 people to 400 people to facilitate that process.

The news was especially significant for Kambi because the extension means Kambi can now cash in a convertible bond at any time, reducing Kindred’s influence over the company and giving the sportsbook supplier ultimate control of its own strategic destiny. Crucially, it also means that Kambi could be acquired by an operator once the bond is repaid.

Kambi’s share price has climbed high due to the fact it could become an acquisition target, but the Stockholm-listed business still faces an uphill battle to control the narrative that key clients are ending partnerships to build their own sportsbook solutions in-house.

Kindred is committed to Kambi for the mid-term at least, but Penn National Gaming, another major US partner, is set to migrate onto its own trading and player account management platform (PAM), built by theScore, in Q3 of this year if all goes according to plan.

Despite the departure of these A-list clients, Kambi has struck several strategic deals with smaller operators during the reporting period. It expanded its US partner network with the signings of omni-channel operator Affinity Interactive and tribal operators Desert Diamond Casinos and Saginaw Chippewa Gaming Enterprises.

Post-Q4, US-facing MaximBet and Canada-facing NorthStar Gaming were also onboarded as sportsbook clients, with Carousel-owned MaximBet leaving its own proprietary technology to join forces with Kambi.

Kambi will also rely on its long-term modularisation strategy to drive future growth. The supplier will drill down into its technology to offer a more tailored and specific solution to operators seeking a hybrid approach to third-party supply.

“Looking back at Q4, growth from the Americas continued to be a key driver of our performance,” said Nylén.

“The Americas region was responsible for 58% of operator GGR and is set to increase further with additional markets to regulate and go live this year across Canada, the US, and South America.

“One of the key quarterly highlights was the receipt of our licence in New York State, which since launching a few weeks ago has quickly grown to become the largest market in the country.

“Not only did Kambi secure one of the few licences on offer in New York, the bid we led as a primary applicant also achieved the highest score from the regulator following a competitive application process.

“Such an achievement is a real testament to Kambi’s reputation in the US and the quality, integrity, and reliability of our sports betting technology,” he added.

Looking at full-year 2021, revenue of €162.4m climbed 38% year-on-year on an operating margin of 35%, which Kambi said illustrated the scalability of the business.

Operating profit rose by 77% to strengthen the company’s cash position, which now stands at €72.3m.

However, shareholders will not be rewarded in the form of a dividend, with Kambi indicating it would look to use the cash on complementary M&A activity over the coming year.

Kambi’s share price closed at SEK259.20 yesterday. It has since risen by more than 1% to SEK262.80 in early trading on Nasdaq Stockholm.

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