Kambi scraps 2027 targets amid slow pace of regulation

Kambi Group has today (4 July) announced it is withdrawing its long-term revenue and earnings targets due to slower than expected progress towards regulation in certain markets.

In January last year, Kambi set out several forecasts and targets it was hoping to hit by 2027.

At the time it set out plans to treble FY2022 revenue. These include achieving revenue of two to three times its FY2022 levels, placing it between €330m (£279.3m/$356.3m) and €500m in 2027. Kambi also forecast operating profit to be in excess of €150m.

Kambi, in February this year, launched a review into the underlying assumptions used to form these targets. From this, Kambi’s board concluded the business has made progress in “areas within its control”.

Slow regulatory progress forces changes

However, the review also flagged concerns regarding slower than expected progress towards regulation in certain key markets. This, Kambi said, would likely delay new revenue streams.

The group will therefore look to set new targets developed by the board and new CEO Werner Becher.

Sportradar and Interwetten veteran Becher was announced as CEO earlier this week and will take over on 25 July. He is replacing the long-serving Kristian Nylén, whose departure was confirmed in January.

The Kambi board will now focus on providing Becher with its full support in executing on the group’s strategy. New, long-term financial targets will be communicated when appropriate, it said.

Kambi shares initially dropped 3.9% from opening price when the news was announced. These have since recovered slightly, currently trading 1.2% down from an opening price of SEK105.80 in Stockholm this morning.

Brazil delays hitting Kambi

Kambi did not specify which markets were progressing slower than expected, but past comments suggest there is a particular territory in mind.

In its FY23 results, Kambi noted delays in the opening of the Brazilian market would impact its FY24 performance. The group said it is confident of gaining market share in Brazil, but the slow pace of regulation is harming long-term projections. Legal betting and gaming is expected to finally launch from 1 January 2025.

2024 a “transitional” year for Kambi

This was repeated in Kambi’s Q1 results, published in May. With this, Kambi also said it expects 2024 to be a “transitional” 12 months for the business, as it moves to a new modular product offering split between sportsbook technology (Kambi), front-end development (Shape), trading (Tzeract) and esports (Abios).

The group forecast full-year revenue of between €170.0m and €180.0m, meaning 2024 revenue may fall below the €173.3m reported for FY23.

However, also on this point, Kambi said that revenue from recent partner signings will likely materialise towards the end of the year. This, it added, is in addition to organic growth from existing partners.

Operating in regulated markets is key for Kambi. For example, in Q1, 95% of all sportsbook revenue came from locally regulated markets.

Where else is Kambi struggling with regulation?

While delays in Brazil are clearly impacting Kambi, there are other new markets where it is hoping to launch but is not yet able to due to lack of regulations.

Speaking after Kambi published its FY23 results, former CEO Nylén highlighted California as one such market. While Kambi intends to launch in the state at some point, regulation still appears some way off.

“The outlook in certain markets has not been as promising as previously anticipated, particularly in California where 2028 now appears to be a more realistic timeline for regulation,” Nylén said at the time. Recent reports from the the Golden State suggest efforts to plot out a regulatory framework may be gearing up, to put sports betting to voters on the 2026 ballot.