01 Strategic report Annual report and accounts 2017 Kambi Group plc Kambi at a glance We deliver the ultimate Sportsbook proving to be the most efficient and Creating service, from frontend user effective means of competing in interface to customer intelligence, today’s international market. premium risk management and odds With more than 600 passionate compiling, all built upon software and highly skilled people working sports betting we have developed in house. across our six international offices, experiences Kambi’s vision is to work in close we possess the skills and strength partnership with our customers of resource required to stay ahead across the globe to create unique and engaging of all competition. sports betting experiences. Publicly-listed, licensed and fully This co-creation model not only Kambi Group is a multi- compliant in every regulated sparks innovation, it also drives territory where it operates, Kambi award-winning supplier of financial performance for us and is the ultimate choice for operators premium sports betting our customers. Above all, our wishing to win in a competitive services delivered through ability to produce and to act upon space with a premium sports the insights required to develop a its proprietary technology to betting product. licensed gaming operators. fully scalable and future-proofed Sportsbook makes us unique in our Kambi Group plc is listed on the market place. First North at Nasdaq Stockholm under the symbol ‘KAMBI’. As the costs and complexity associated with developing and maintaining a high-quality and regulatory compliant Sportsbook continue to rise, so too does the demand for Kambi’s market-leading offering. As a result, the number of visionary operators competing in regulated markets across the globe to which we provide our services is growing fast. Currently active in six continents, our scalable model is 6 Active in six continents, our scalable model is the most effective means of competing in today’s international market. Annual report and accounts 2017 Kambi Group plc Introduction Yet, within this demanding leading sports betting platform but Springboarding environment, consumers’ simultaneously acts as a powerful expectations continue to rise as incubator for innovation and visionary they increasingly demand a quick, differentiation. accessible and engaging sports Through Kambi’s API-managed Sportsbooks betting experience. The breadth frontend and empowerment tools, of choice for sports bettors visionary operators have a powerful A revolution is sweeping means operators can ill afford to twin opportunity. Firstly, they can stand still. Restricted by legacy through the sports betting mould the service to complement technology and rising costs, industry. Fast expanding their individual marketing however, many have inevitably regulated markets, rapidly strategies. Secondly, they can struggled to keep pace with manipulate and innovate upon the evolving technologies, change. changing consumer habits platform to develop exciting and – these forces and more are In short, the demands on operators unique experiences for their player today are vastly different from base. conspiring to make operating those of just a few years ago. The end result is a cost-efficient, a Sportsbook an increasingly As a consequence, operators market-leading Sportsbook that complex and resource-heavy everywhere are seeking new gives operators the advantages challenge. solutions, technologies and of differentiation and benefits business models to provide the of scale, at just a fraction of the answers. investment otherwise. These factors have seen the demand for B2B sports betting services rise considerably – with Kambi becoming a leading player Our visionary in this increasingly thriving and Sportsbook competitive space. Kambi’s partners are visionary is a powerful operators who realised the status- quo was no longer a realistic incubator for route to success. This was the case both with operators new to innovation and sports betting and those that were operating on legacy Sportsbook differentiation. technology. With our Sportsbook at the core of our offer, we give our customers a data-enriched service that not only provides a market- 8 Annual report and accounts 2017 Kambi Group plc Chairman’s statement Lars Stugemo Digitalisation is quickening frameworks setting the high standards we see today. This means not only do the pace of change we have a necessity to entertain the We’re in the midst of the Information consumer, but also a duty to protect and Age, a period of increased knowledge ensure a sustainable industry. and understanding of all around us. It’s Continued digitalisation, as well as a global phenomenon largely driven by greater knowledge and understanding of continued technological advancements, behavioural data, enables us to deliver on which in turn has furthered the both counts, offering players an exciting digitalisation of the world in which we and safe environment in which to play live. and enjoy. The advance of digitalisation is Ever since its inception, Kambi has been having palpable effects – rapidly one of the leading innovators in its space, changing the way businesses operate with its data-driven technology focus and consumers behave, with a more providing the platform upon which we’ve information-rich methodology delivering successfully built an unrivalled sports greater efficiencies, convenience and betting experience. personalised approaches to product development and consumption. Our growing operator network gives us vision over millions of players across six The betting and gaming market in which continents, painting an informed picture Kambi operates has been at the forefront of how end users behave and interact of this digital adoption and evolution. with our product. This provides the scale We are continuously raising the bar of data required to draw increasingly in our production of high-quality and accurate conclusions, informing Kambi entertaining experiences to meet the on how best to lead and provide its growing demands of the end user. customers with a crucial competitive In the same way with which consumers edge. interact with technologies and devices This information-enriched approach evolves, the boundaries of what was ensures we consistently create the user thought possible are forever being experience and entertainment factor pushed. This has created a thriving players seek, forever innovating and technology and data-driven industry, iterating our technology and products to one spurred on by the heightened meet their demands. competition created by its increased opportunities. By doing so, Kambi is uniquely positioned to provide its network with the high This reshaping of the gambling industry quality and efficiency required to has seen it increasingly recognised and compete in regulated markets, with the respected by regulators across the globe, effectiveness of our approach reflected with the wider adoption of regulatory in the proven success enjoyed by our customers. Lars Stugemo Chairman 10 Annual report and accounts 2017 Kambi Group plc A view from the CEO Kristian Nylén Reflecting on a year also strengthened the relationship we have with each customer, not to mention of achievements securing valuable revenue streams for With four new customers added, four years to come. key accounts retained and a prestigious Of course, it’s an easier task to retain sports betting supplier award won, customers when they are growing. 2017 will long be remembered as a very Thanks to hard work and expertise on successful year for Kambi. It is certainly both sides, Kambi customers consistently one I look back on with pride. outperformed the market. During 2017, The addition of these new customers the turnover among Kambi’s network of meant Kambi had managed to win new operators rose by 16% year-on-year – up business in eight consecutive quarters against a period that included Euro 2016 up to Q4 2017. This is an impressive run and the summer Olympics. and one that I’m glad to say we have kept The year wasn’t all plain sailing, however. going into 2018. We’ve always believed In terms of operator trading margin, in the scalability and differentiation it was very much a year of two halves. capabilities of the Kambi Sportsbook; Our operator trading margin in the first with each new customer we add to the six months of the year suffered from a network, we provide another piece of run of player-friendly results, although evidence to support this. it bounced back strongly in the second Three of our new customers – Colombia’s half. We have always advised that betting Corredor Empresarial, Bulgaria’s National margins will rise and fall but average Lottery AD and South Africa’s Sun around 7%. However, such was the run International – enabled us to enter their of favourable sporting results during the respective regulated markets for the first second half of the year that our 12-month time. As a result, the Kambi Sportsbook operator trading margin came in at 7.4%. is now available in six continents, making We also carried out a strategic review us a truly global sports betting provider. of the business to ensure we were in Greentube, our fourth contract win of the best possible shape to capitalise 2017, has already launched in Romania on what is a time of significant change and Italy, illustrating the reach of the across the global industry. The forces Kambi Sportsbook. of change included a number of major While new customer wins are important, markets moving towards regulation, the retaining current business is equally prospect of legal sports betting across crucial. At the start of 2017, we focused the US, and operators in mature markets on extending deals with four key transitioning to third-party provision. customers who were entering the later The review process also re-affirmed stages of their contracts. I’m delighted Kambi’s core belief that a scalable to report that we were successful. These third-party solution is the best and most contract renewals do not just reflect efficient method for enabling operators positively on the quality of service we to achieve long-term success.