Kambi Group Plc Class B · OMXSTO:KAMBI
Kambi Group Plc Class B — Investor Day (May 2019)
75 slides from Kambi Group Plc Class B's investor day presentation, May 20, 2019
Slide 1: Capital Markets Day
Capital Markets Day 20 May 2019 London
Slide 2: Welcome
Welcome 2 Capital Markets Day - 20 May 2019
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Slide 7: Introducing Kambi
Introducing Kambi 8
Slide 8: Our heritage
Our heritage We always wanted to be the best Sportsbook in the world 9 Capital Markets Day - 20 May 2019
Slide 9: Pursuit of perfection
Pursuit of perfection Obsessively improving every aspect of our Sportsbook for our operators and their players 10 Capital Markets Day - 20 May 2019
Slide 10: Kambi today
Kambi today Premium B2B supplier leading the market with outperforming customers − Global Gaming Awards: Online Sports Betting Supplier 2018 & 2019 − EGR North America Awards: Sportsbook Platform Provider 2019 Sports Betting Supplier 2019 − EGR Intel Power 50 list: Nine Kambi customers recognised 11
Slide 11: Scalable model
Scalable model Building scalable and flexible technology 12 Capital Markets Day - 20 May 2019
Slide 12: Kambi today
Kambi today Premium B2B supplier leading the market with outperforming customers Partnering with 700+ 20+ people Listed on First North customers 65% at Nasdaq Stockholm since 2014 1m+ EBIT 2018 7 active customers locations per month active in Process 5.75bn 6 First legal bet 480 m Market cap contine
Slide 13: A growing appetite for sports betting
A growing appetite for sports betting Providing an additional layer of entertainment for sports fans across the world − Live sports is one of the most popular forms of entertainment in the world − Access to TV screens and viewing platforms has never been greater − Events such as the Soccer World Cup
Slide 14: Transforming to reach new heights
Transforming to reach new heights Success will transition Kambi from a small to large organisation 15 Capital Markets Day - 20 May 2019
Slide 15: Organised for growth
Organised for growth 16
Slide 16: 85% of the major barriers are internal factors
“85% of the major barriers that successful companies face in scaling their business are internal factors” Source: HBR 17 Capital Markets Day - 20 May 2019
Slide 17: Where we were versus today
Where we were versus today Rapid growth and expansion Staff Active Regulated Servers Live events members Customers end users revenues globally per year 2010 No local 80 2 100,000 licensing 1 20,000 2019 700+ 20+ 1m+ 70%+ 50+ 200,000 18 Capital Markets Day - 20 May 2019
Slide 18: Prioritising our audiences
Prioritising our audiences Maximise the efficiency and engagement Entertaining Customer Return on Employee experiences Satisfaction Investment engagement 19 Capital Markets Day - 20 May 2019
Slide 19: To succeed we need to win in three areas
To succeed we need to win in three areas Maximise the efficiency and engagement 20 Capital Markets Day - 20 May 2019
Slide 20: Structure, process and tools
Structure, process and tools A scalable set up, well positioned for future opportunities − Disciplined strategy processes and approach with long and short-term targets − Agile product development with regular incremental planning sessions − Sophisticated sales processes – improved prospecting and de
Slide 21: Talent
Talent Building a high performing culture Attracting Retaining − Doubled number of development teams − Specific trader development 87% 10-11% approach: “Would Technology Directly from universities recommend attrition Kambi as a great − Robust employee branding place to work” and referral scheme Deve
Slide 22: Culture and reputation
Culture and reputation The bedrock of a company’s value proposition 23
Slide 23: Kambi is in a position to really succeed
“Kambi is in a position to really succeed over the next 3 years – 88%” Source: Culture Amp, Kambi employee survey 2018 24 Capital Markets Day - 20 May 2019
Slide 24: Growing our business
Growing our business Set up for commercial success 25
Slide 25: Growth with current partners and securing new ones
Growth with current partners and securing new ones Partner Success and Challenger Selling methodology 26 Capital Markets Day - 20 May 2019
Slide 26: The power of partnerships
The power of partnerships A key driver of organic growth & product development − No matter what the starting point, Kambi springboards operators to the next level Zero to local hero Financial transformation Leading retail in Pennsylvania for BetPlay for 888 for Rush and Parx Market leader Changed to
Slide 27: What is a visionary sportsbook
What is a visionary sportsbook We turn down prospects that are not aligned with our segmentation A prospect must have: Some of Kambi’s market leading clients − The ability to become a top brand in a local market, we prioritise potential market leaders in smaller markets over global players without m
Slide 28: Kambi sales expert-led approach
Kambi sales expert-led approach Challenger methodology and clear focus − Retaining a high price point means an extensive focus on challenging prospects through education at Some of Kambi’s market leading clients prospect C-Level − Every meeting has a focus on providing value to the prospect, even if
Slide 29: Market development focus
Market development focus Regulation market strategy 1 in NJ st On January 1st 2019 Kambi In Q1 2019 had more Lead B2B market in Latin America – market launched six customers than 80% market New Jersey – took leader in Colombia and well online and across 2,000 share (revenue) in first legal online be
Slide 30: Partner recommendations
Partner recommendations Testimonials Matthew Cullen Jason Robins VP of Interactive Gaming CEO, DraftKings and Sports, Parx Casino “Having decided to launch a sportsbook, we conducted a “If you look at what we were trying to do out of the very thorough process where we looked carefully at all gates a
Slide 31: Probity and integrity
Probity and integrity Set up for US market entry success 32
Slide 32: Ready for regulation
Ready for regulation Kambi’s solution to complexity 2010/11 − Licensed in 2 jurisdictions 2019 − Licensed in 9 jurisdictions Accredited in − 13 jurisdictions Further certifications: Alderney Malta 33 Capital Markets Day - 20 May 2019
Slide 33: The US market challenge
The US market challenge Prepared to succeed − A transparent corporate structure, secure technical systems and a market leading product are key to obtaining licenses and attracting visionary sportsbooks − We aim to build lasting partnerships with regulators as the market matures − Our brand and messa
Slide 34: US regulatory projections
US regulatory projections 2023 and beyond Live in Live in 2019- 2018 2020 Live in Live 2021- after 2022 2022 Unlikely to regulate 35 Capital Markets Day - 20 May 2019
Slide 35: Sports Integrity
Sports Integrity 36 Capital Markets Day - 20 May 2019
Slide 36: Our integrity partnerships
Our integrity partnerships Sharing intelligence and best practice Regulators Sporting Federations International Data Suppliers Organisations 37 Capital Markets Day - 20 May 2019
Slide 37: Integrity front and centre
Integrity front and centre Self-regulating our offering 15 Alerts handled per week 50+ Events blocked each day 38 Capital Markets Day - 20 May 2019
Slide 38: Invested in integrity
Invested in integrity Open cooperation and transparency at the core of our effective approach 39 Capital Markets Day - 20 May 2019
Slide 39: Sportsbook 2.0
Sportsbook 2.0 Successfully navigating through conflicting demands 40 40
Slide 40: The core product
The core product 480,000,000 Real-time Odds/month Risk Management UX sports data 41 Capital Markets Day - 20 May 2019
Slide 41: Scaling it up…
Scaling it up… Customers Bet offers Geographies Sports End- users Channels 42 Capital Markets Day - 20 May 2019
Slide 42: Differentiating…
Differentiating… 43 Capital Markets Day - 20 May 2019
Slide 43: The challenge of scaling into US
The challenge of scaling into US Key challenges to overcome 1) New continent - with state-by-state regulation 2) New channel – Retail at scale 3) New end-user - American sports bettors 44 Capital Markets Day - 20 May 2019
Slide 44: Growth in a new continent and channel
Growth in a new continent and channel 45 45
Slide 45: Licenses, regulated territories and certifications
Licenses, regulated territories and certifications Regulated by 2007 2010 2012 2013 2017 46 Capital Markets Day - 20 May 2019
Slide 46: New Channel
New Channel Retail in the US at scale − Stayed scalable in retail – using the same online core to launch retail − Been firm about where our retail product starts and ends − We don’t do hardware, but we do excellent hardware integration − We do APIs, to enable operators with a current large install b
Slide 47: Bringing the online pace to the retail space
Bringing the online pace to the retail space ‘Bring your own device’ − Enables players to research and prepare bets in smartphones or tablets from anywhere in the state/country for quick and easy placement on-property − A QR code containing the player’s bet slip selections will be generated on scree
Slide 48: Delivering for a new end-user
Delivering for a new end-user 49 49
Slide 49: Localising product
Localising product US players have different expectations − Extensive user research − Odds, margin, bet types, terminology, aways @ homes, in-game parlays, clock, etc. − Teaser+ − Landing page differences − Varying degrees of end user sports betting knowledge − Greater focus on player-related market
Slide 50: Next Generation Trading Platform
Next Generation Trading Platform Core Sportsbook In-event/ Bet Builder
Slide 51: Next Generation Trading Platform
Next Generation Trading Platform Core Sportsbook In-event/ Bet Builder
Slide 52: Kambi Odds Compiling
Kambi Odds Compiling Big Data, Mathematics and Specialists Machine Learning Traditional Statistical Specialist Odds Algorithms Models Compilers 53 Capital Markets Day - 20 May 2019
Slide 53: Next Generation Trading Platform
Next Generation Trading Platform Core Sportsbook In-event/ Bet Builder
Slide 54: Bet Builder
Bet Builder Building for the future 55 Capital Markets Day - 20 May 2019
Slide 55: Creating new capabilities to meet future demands
Creating new capabilities to meet future demands 56 56
Slide 56: Making algorithms and data first class citizens
1. Making algorithms and data first class citizens within Kambi 57 Capital Markets Day - 20 May 2019
Slide 57: Large scale agile development
2. Large scale agile development 58 Capital Markets Day - 20 May 2019
Slide 58: Investment in product development throughput
Investment in product development throughput Raw development capacity +60% +35% development capacity in 2018 development capacity in 2019 59 Capital Markets Day - 20 May 2019
Slide 59: Creating an Ecosystem to springboard innovation
3. Creating an Ecosystem to springboard innovation across the industry 60 Capital Markets Day - 20 May 2019
Slide 60: Kambi's vision for the outsourced Sportsbook
Kambi’s vision for the outsourced Sportsbook Exponentially more value to the end-users through a more efficient and collaborative model Sports betting End user value Bet Builder Cash Out Regulations Mobile Live 2005 2010 2015 2020 2025 61 Capital Markets Day - 20 May 2019
Slide 61: Economic Model
Economic Model 62
Slide 62: Revenue model
Revenue Revenue model Approximately 90% of revenues come from a share with operators Commission based on: Capped Fixed elements deductions and recharge Gaming Tax for player Stakes Payouts incentives of live event e.g. Free Bets data costs In Q1 2019: 76% Operator GGR 71% was up by 46% of operator N
Slide 63: Revenue: Kambi Turnover Index
Revenue Kambi Turnover Index 500 10.0% 398 400 369 9.0% 334 307 281 277 273 300 254 259 8.0% 239 242 203 221 219 200 147 163 160 7.0% 119 109 124 100 100 6.0% 0 5.0% Turnover Index Margin% Consistent growth in levels of total operator turnover Typical seasonal impacts include the football and NFL se
Slide 64: Operator trading margin
Revenue Operator trading margin Range of operator trading margins 40% 32.8% 35% − Operator trading margin in 30% Q1 was 7.8%; the 24 month 25% rolling margin is 8.0% 20% 14.0% 15% 10.6% 9.7% 8.5% − The operator trading 10% 5% margin can fluctuate 6.2% 6.6% 0% 5.0% significantly in the short -5% 1.5%
Slide 65: Operator trading margin outlook
Revenue Operator trading margin − Going forward, we expect that the operator trading margin development will be impacted by: Betting Price Customer patterns/ differentiation USA portfolio products tools − The balance of these factors − Strong correlation between − Current guidance is 6.5-8.0%; will
Slide 66: Revenue growth drivers
Revenue Growth drivers Annual revenues by year €m − Since 2014, revenue has 80.0 76.2 62.1 grown annually by an 60.0 56.0 23% 47.7 11% average rate of 21% 36.0 17% 40.0 33% 20.0 0.0 2014 2015 2016 2017 2018 Future revenue growth will be driven by: − Underlying growth of − Adding new − Regulatory dev
Slide 67: Costs: where and why we are growing expenditure
Costs Where and why we are growing expenditure − Since 2014, cost has grown annually by an average rate of 18%, a deliberate level of investment to build our market-leading Sportsbook Annual opex by year €m 70.0 63.4 60.0 54.4 17% 50.0 47.2 15% 40.3 17% 40.0 33.2 21% 30.0 20.0 10.0 0.0 2014 2015 201
Slide 68: Costs: areas of expenditure
Costs Areas of expenditure − Majority of our cost base is fixed − Cost growth is not directly linked to revenue growth − 2018 cost areas: Cost of operating a market leading Sportsbook − Staff costs/amortisation: 57% − Other (office, telco, marketing, travel, live events data): 43% User experience, A
Slide 69: Scalable business model
Costs Scalable business model − Taking on new operators is not a driver of significant cost growth − Additional costs for live events data (recharged), account managers and technical support, travel − Integration costs are limited and use existing resource − The ongoing service and product developme
Slide 70: Scalability in the US
Costs Scalability in the US − Scalability will also apply in the US: − Up front costs as new states regulate for licensing (due diligence, advisory fees) and local technical set-up (servers) − New office in Philadelphia to provide additional localised support to our partners and further expertise on
Slide 71: Costs: strategic approach
Costs Strategic approach Overall, our cost development is a deliberate strategy to continue building our competitive advantage Both in the US and worldwide, the set-up enables a highly scalable business model 72 Capital Markets Day - 20 May 2019
Slide 72: Balance sheet
Balance sheet Strong platform for future growth The Balance Sheet Intangible assets of €13.4m is very strong with Our current net net assets of cash position is €60.8m €33.5m relating to capitalised costs on development projects amortised over 3 years We are cash This strength, along with Gives us a
Slide 73: In summary
In summary Poised to reach new heights Revenue, Opex & EBIT development €m 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 2014 2015 2016 2017 2018 Annual revenue Annual opex Annual EBIT − Growing our profits enables us to keep − Our customer portfolio, market-leading investing in our product to remain
Slide 74: Q&A panel
Q&A panel Open floor questions to Kambi leadership and speakers 75 Capital Markets Day - 20 May 2019
Slide 75: Thank you
Thank you 76 Capital Markets Day - 20 May 2019