kambicapital markets day
TRANSCRIPT
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Kambi Capital Markets Day
Accelerating success
Kambi Capital Markets Day
22 June 2021
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1. Model of success – Kristian Nylén, Chief Executive Officer and co-founder
2. Platform for success – Erik Lögdberg, Chief Operating Officer
15-minute break
3. Mapping out success – Cecilia Wachtmeister, EVP Business & Group Functions
4. Measuring success – David Kenyon, Chief Financial Officer
Q&A
Kambi Capital Markets Day
Agenda
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Legal Disclaimer
This presentation is not an offer or solicitation of an offer to buy or sell securities of Kambi Group plc (“Kambi”). It is solely for use at a capital markets event and is provided as information only. This presentation does not contain all of the information that is material to an investor. The presentation in and of itself should not form the basis of any investment decision. Each recipient is strongly advised to seek their own independent financial, legal, tax, accounting and regulatory advice in relation to any investment.
Kambi is not making any financial forecasts or giving specific guidance as to future performance.
Certain data in this presentation includes information and statistics regarding markets and other companies and was obtained from various external data sources and Kambi has not verified such data with independent sources. Accordingly, Kambi makes no representations as to the accuracy or completeness of that data and such data involves risks and uncertainties and is subject to change based on various factors.
This presentation contains forward-looking statements. Such statements are based on Kambi’s current expectations and are subject to risks and uncertainties that could materially affect its business and results. Please read Kambi’s earnings reports and most recent annual report for a better understanding of these risks and uncertainties. Any forward-lookingstatements are made as of the date of this presentation and Kambi expressly disclaims any duty to provide updates to these forward-looking statements, and any estimates and assumptions associated with them. Certain statements contained in this presentation reflect Kambi’s current views with respect to future events and financial and operational performance. Except for the historical information contained herein, statements in this presentation which contain words or phrases such as “will”, “aim”, “will likely result”, “would”, “believe”, “may”, “result”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”, “seek to”, “future”, “objective”, “goal”, “strategy”, “project”, “should”, “view ”, “will pursue” and similar expressions or variations of such expressions may constitute “forward-looking statements”. These forward-looking statements involve a number ofrisks, uncertainties and other factors that could cause Kambi’s actual development and results to differ materially from any development or result expressed or implied by such forward-looking statements.
Kambi undertakes no obligation to publicly update or revise forward-looking statements contained herein, whether as a result of new information, future events or otherwise. In addition, forward-looking statements contained in this presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. You should not place undue reliance on forward-looking statements, which are made as of the date of this presentation.
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Model of success
Kristian NylénChief Executive Officer
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Kambi today
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A brief overview
30+ partners
c.5mactive player accounts
35 regulated marketsacross 6 continents
€117.7m revenue in 2020
€78m cash balance
900+employees in 7 countries
Kambi Capital Markets Day
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Investment caseKambi is the clear front-runner in the market and will only go from strength to strength
Superior technology and know-how
Highly scalable model Exceptional growth potential
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Illustration of growing addressable market
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Increase in regulated markets is fuelling Kambi growth
2016 2017 2018 2019 2020 2021 2022 2023 2024 20262025
35 - number of regulated markets Kambi is active in is growing rapidly €44bn - €63bn
Potential global TAM 2026
<€20bnCurrent global TAM
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Sports betting –the most complex piece of enterprise and end-user software imaginable
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Superior technology and knowhowFormidably challenging for others to imitate
Our focus on these three core areas – where differentiation is of limited value – has been paramount in establishing Kambi as the B2B sports betting industry’s clear market leader
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Superior technology and knowhowFormidably challenging for others to imitate
Technology
− Operational 24/7/365
− 500,000,000+ transactions per month
− c.5-10m bets placed and settled around the world every day
Our focus on these three core areas – where differentiation is of limited value – has been paramount in establishing Kambi as the B2B sports betting industry’s clear market leader
Kambi Capital Markets Day
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Superior technology and knowhowFormidably challenging for others to imitate
Technology
− Operational 24/7/365
− 500,000,000+ transactions per month
− c.5-10m bets placed and settled around the world every day
Risk management
− More than 20 years’ experience
− All risk and trading managed centrally
− Network effect of c.5m active accounts
Our focus on these three core areas – where differentiation is of limited value – has been paramount in establishing Kambi as the B2B sports betting industry’s clear market leader
Kambi Capital Markets Day
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Superior technology and knowhowFormidably challenging for others to imitate
Technology
− Operational 24/7/365
− 500,000,000+ transactions per month
− c.5-10m bets placed and settled around the world every day
Risk management
− More than 20 years’ experience
− All risk and trading managed centrally
− Network effect of c.5m active accounts
Regulation
− Consistently first to market
− Unblemished compliance record
− Leader in sports integrity efforts
Our focus on these three core areas – where differentiation is of limited value – has been paramount in establishing Kambi as the B2B sports betting industry’s clear market leader
Kambi Capital Markets Day
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Proprietary model(Vertical integration)
Outsourced model
Two ways to gain sportsbook capabilities
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Technology ownership or business control and flexibility?
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Learning the lessons from other industries
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Apple
TSMC
Outsourcing is central to the strategy of large, successful organisations
BBC
Ericsson
Boeing
Rolls Royce
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Vertical integration of sportsbook risks inferior product at higher cost base
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Challenging two key assumptions relating to vertical integration
− Vertical integration normally means higher cost base
− With outsourcing you can share costs of scalable, non-core elements
− Playing product quality catch-up is expensive, with no guarantee of success
− In meantime, an inferior product and lack of expertise will impact revenue
Cost savings?
− Sportsbook requires continuous investment to remain compliant and competitive
− High fixed costs leave businesses vulnerable to external uncertainties
− Operators in a regulated sports betting industry will be judged on efficiency and ability to generate profit, particularly if public
Financial sustainability / efficiency?
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Kambi also takes a collaborative approach We don’t seek to provide everything to everyone
Operator empowerment, local knowledge and brand
Kambi sportsbook platform
Integration of niche specialists
Superior proposition at lower cost base
Official data suppliers
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What does Kambi success look like?Two scenarios
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Tier one operators realise in order to compete in the long-term they must leverage the many benefits
of the Kambi model
Tier ones remain vertically integrated but through higher fixed
costs and an inferior product are overtaken by emerging operators who leverage the Kambi model
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Kambi’s four strategic pillars
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Strong compliant core platform to
enable growth
Delivering regulatory, financial and technical security and stability
The industry’s only sports betting specialist
Differentiation and empowerment
Enabling partners to take control where it matters most and express their respective
brands
Power of the network
Leveraging unique global network data to enhance
product and service for all
Highly scalable business model
Signing and launching newpartners with relatively minimal
impact on costs
Sportsbook success and value creation
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Platform for success
The future of sportsbook provision and the role of the Kambi platform
Erik LögdbergChief Operating Officer
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Outsourcing benefits starting to outweigh in-house
− Kambi has proven its business model and the many benefits ofscalability are starting to show
− We have cemented our global B2B leadership position
− Our partners are highly competitive with the leading B2C brands while running their sportsbooks at a fraction of the cost
− However, Kambi’s outsourced model still has much more to give and has the potential to become the outstanding option due to its exponential efficiency advantages
Kambi Capital Markets Day2020
What is the next ”point of disruption”?
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In this section we address three areas:
1. Breaking down the “outsourcing” concept
2. Where in the sportsbook are the strongest cases for outsourcing based on scalability and where are the important differentiation possibilities?
3. How Kambi proposes to leverage scalability advantages while empowering differentiation
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1 2
The outsourcing concept
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To acquire capacity or expertise to perform bespoke tasks for your
business
To leverage cost and throughput advantages from a supplier that operates a scalable model across its network of customers (SaaS)
Two models of outsourcing
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Structure of a sports betting operation
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Brand and Marketing
UI
Sportsbook Platform Betting domain, bet management and distribution
Odds and Markets
IT infrastructure and Hosting
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Parts of a sportsbook perform to a higher level with scalability benefits
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Scal
abili
ty B
enef
its
UI
Odds and Markets
Hosting (i.e. Cloud)
Brand and Marketing
When possibilities increase to bring something unique to the end-user, beyond high performance and precision, then the benefits of scalability decreases
When the ability to compete only is driven by high performance and precision then the benefits of scalability increase
Differentiation Needs
SportsbookPlatform
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Sportsbook platform costs versus other product investments
− Every year a bigger proportion of the total sportsbook costs is invested in the platform capabilities
− This is driven by regulatory requirements, structural changes to the product, new ways of creating a sportsbook and increased load
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2010 2020
Platform
Platform
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Regulatory requirements driving platform transformation Bet Builder (IEC) development driving platform transformation
Today’s Sportsbook
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Where “only” delivering bare minimum requires highest sophistication and investments
Offerings
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Today’s Sportsbook
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Where “only” delivering bare minimum requires highest sophistication and investments
REGULATORY SECURITY
FINANCIAL SECURITY
TECHNICAL SECURITY AND DISTRIBUTION
With its scalable platform, focus, network data and experience
Kambi has the potential to solve these challenges best in the
market and allow for those that use them to compete far more
effectively
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A next generation Kambi Sportsbook
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Adapting to fit market needs and new technology
Kambi Sportsbook Today
Kambi Capital Markets Day
UI and APIs
Platform
Data and Odds
Introduction of Rich Data and AISeparation of scalability and
differentiation
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A next generation Kambi Sportsbook
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Adapting to fit market needs for scalability and differentiation
Kambi Capital Markets Day
Through modularization creating an even more powerful and distinct Sportsbook platform that is independent and agnostic to differentiation requirements
The Kambi SportsbookPlatform
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A next generation Kambi Sportsbook
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Adapting to fit market needs for scalability and differentiation
Kambi Capital Markets Day
The app interface will offer all the tools, APIs and support to freely and efficiently package the sports betting offering for the end-users
The interface will be used by Kambi, operators and 3rd parties in the same way
The Kambi SportsbookPlatform
The AppInterface
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A next generation Kambi Sportsbook
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Adapting to fit market needs for scalability and differentiation
Kambi Capital Markets Day
The data and pricing interface connects internal as well as external data and pricing to the platform
The Data and Pricing Interface
The Kambi SportsbookPlatform
The AppInterface
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15 min coffee break
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Mapping global success
Cecilia WachtmeisterEVP Business and Group Functions
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Where we were five years ago
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The picture in 2016 400,000Active unique
players on Kambinetwork
11Regulated markets
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Where we are today
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Global growth +5mActive unique
players on Kambinetwork
35Regulated markets
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Seizing the US opportunity
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Where we have launched
1st in New HampshireTook first
legal wager
1st in New York Took first
legal wager
1st in New Jersey Took first legal online wager
1st in Pennsylvania Took first legal online wager
1st in IndianaTook first legal online wager
1st in Iowa Launched on first
day of market
1st in MichiganTook first
legal wager
1st in IllinoisTook first
legal wager
1st in ColoradoTook first
legal wager
Kambi has launched:
Online and retail
Retail
Online
1st in TennesseeLaunched on first day of
market
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Est. Percentage of US population
Much more to come in US
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Only scratched the surface
AlaskaHawaiiIdahoUtah
CaliforniaGeorgia
South CarolinaTexas
AlabamaKansas
KentuckyMaine
MassachusettsMinnesotaMissouriNebraskaOklahomaVermont
Wisconsin
Arkansas
Colorado
Delaware
District of Columbia
Illinois
Indiana
Iowa
Michigan
Mississippi
Montana
New Hampshire
New Jersey
New Mexico
New York (retail)
Nevada
North Carolina
Oregon
Pennsylvania
Rhode Island
Tennessee
Virginia
West Virginia
RegulatedRegulate before
end of 2022Regulate in 2023-24 Regulate 2025+ Regulate before end of
2021
ArizonaConnecticut
FloridaLouisianaMaryland
New York (online)North Dakota
OhioSouth DakotaWashington
Wyoming
2%26%14%26%32%
Projections based on current available information. Legislative sessions in certain jurisdictions are due to come to an end in July 2021, therefore timings could change. New York (online)
used for population calculation.
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Global opportunity
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What to look forward to outside US in coming years
JapanEst. 2024-25
ArgentinaExp. 2021-2023
BrazilExp. 2022
CanadaEst. 2021-22
IndiaEst. 2025-26
EuropeSecond tech phase
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Americas (non-US)
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Canada and South America
Canada:
− Current expectations for Ontario to go live by Q4 2021 with other provinces to follow
− Province by province approach requires flexible, compliant technology
− Similar sporting profile to US, with hockey set to be main sport
− Kambi is a member of Canadian Gaming Association, sharing global experiences with regulators
South America:
− Argentina in process of going live on province-by-province basis, Kambi live in Neuquén
− Brazil expected to go live in H1 2022
− Population of 200m+, projected to be among the top five largest regulated markets in world
− Highly focused on soccer and tennis, little/no product development costs
− Other countries in region also expected to regulate
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Europe
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In-house tech is struggling to keep pace
Second phase opportunities:
− Europe is the most mature online sports betting market
− Technologies that were fit for purpose years ago are no longer able to remain competitive
− This process has been expedited by increased regulation and complex compliance requirements
− This technology cycle will present further opportunities for Kambi
− Expect to see similar cycles in other regions in the future
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Asia
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Japan and India most likely in coming years
Japan:
− As in many other markets, Japan is considering the regulation of sports betting to generate tax revenue
− Sports betting is available in limited form but could be extended to include baseball and soccer
− Likely to be a highly regulated market, Kambi would be well positioned partner with local brands
India:
− Conversations around sports betting in India have been ongoing for many years
− More recently, some states have explored regulating sports betting, looking to recoup revenue and reduce instances of corruption
− A state-by-state approach seems likely, with a variety of regulations, favouring the Kambi model
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Where we could be in next five years
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Exponential global growth
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Why Kambi is well positioned
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We know what it takes to succeed on a global level
Growing global networkProvides Kambi with ever more powerful data to
outcompete market
Expertise in complianceCoupled with regulatory track record to realise
opportunities quickly
Global productAlready serving six continents, relatively little
development work required
Model for successStrong core sportsbook providing scale, cost and
differentiation benefits
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Measuring success
David KenyonChief Financial Officer
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Total Addressable Market 2026
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TAM US
Reasons for success:
− Proven track record of launches across multiple states/locations
− Partnerships with market-leading multi-state operators
− Superior quality of US product and regulatory compliance
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TAM US
Reasons for success:
− Proven track record of launches across multiple states/locations
− Partnerships with market-leading multi-state operators
− Superior quality of US product and regulatory compliance
New Jersey €0.7bn GGR potential
Pennsylvania €0.9bn GGR potential
Illinois €1.0bn GGR potential
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TAM US
Reasons for success:
− Proven track record of launches across multiple states/locations
− Partnerships with market-leading multi-state operators
− Superior quality of US product and regulatory compliance
New Jersey €0.7bn GGR potential
Pennsylvania €0.9bn GGR potential
Illinois €1.0bn GGR potential
New York€1.5bn GGR potential
Ohio €0.7bn GGR potential
Arizona€0.4bn GGR potential
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TAM US
Reasons for success:
− Proven track record of launches across multiple states/locations
− Partnerships with market-leading multi-state operators
− Superior quality of US product and regulatory compliance
New Jersey €0.7bn GGR potential
Pennsylvania €0.9bn GGR potential
Illinois €1.0bn GGR potential
New York€1.5bn GGR potential
Ohio €0.7bn GGR potential
Arizona€0.4bn GGR potential
Texas €1.7bn GGR potential
California €2.7bn GGR potential
Florida €1.1bn GGR potential
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TAM US
Reasons for success:
− Proven track record of launches across multiple states/locations
− Partnerships with market-leading multi-state operators
− Superior quality of US product and regulatory compliance
TAM: €15bn - €20bn
New Jersey €0.7bn GGR potential
Pennsylvania €0.9bn GGR potential
Illinois €1.0bn GGR potential
New York€1.5bn GGR potential
Ohio €0.7bn GGR potential
Arizona€0.4bn GGR potential
Texas €1.7bn GGR potential
California €2.7bn GGR potential
Florida €1.1bn GGR potential
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TAM Americas (non-US)
Reasons for success:
− Successful launches with market-leading operators
− Strong product fit
− Track record of regulatory compliance and agility
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TAM Americas (non-US)
Reasons for success:
− Successful launches with market-leading operators
− Strong product fit
− Track record of regulatory compliance and agility
Canada €2.1bn
GGR potential
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TAM Americas (non-US)
Reasons for success:
− Successful launches with market-leading operators
− Strong product fit
− Track record of regulatory compliance and agility
Canada €2.1bn
GGR potential
Brazil €2.0bn GGR potential
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TAM Americas (non-US)
Reasons for success:
− Successful launches with market-leading operators
− Strong product fit
− Track record of regulatory compliance and agility
Canada€2.1bn
GGR potential
Brazil €2.0bn GGR potential
Argentina €1.0bn GGR potential
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TAM Americas (non-US)
Reasons for success:
− Successful launches with market-leading operators
− Strong product fit
− Track record of regulatory compliance and agility
Canada€2.1bn
GGR potential
Brazil €2.0bn GGR potential
Argentina €1.0bn GGR potential
Colombia €0.7bn GGR potential
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TAM Americas (non-US)
Reasons for success:
− Successful launches with market-leading operators
− Strong product fit
− Track record of regulatory compliance and agility
TAM: €4bn - €7bn
Canada€2.1bn
GGR potential
Brazil €2.0bn GGR potential
Argentina €1.0bn GGR potential
Colombia €0.7bn GGR potential
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TAM Asia
Reasons for success:
− Track record of selling and delivering globally
− Proven ability to adapt quickly and effectively to local legislation
− Strong global product fit
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TAM Asia
Reasons for success:
− Track record of selling and delivering globally
− Proven ability to adapt quickly and effectively to local legislation
− Strong global product fit
India €2.5bn GGR potential
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TAM Asia
Reasons for success:
− Track record of selling and delivering globally
− Proven ability to adapt quickly and effectively to local legislation
− Strong global product fit
Japan €5.5bn GGR potential
India €2.5bn GGR potential
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TAM Asia
Reasons for success:
− Track record of selling and delivering globally
− Proven ability to adapt quickly and effectively to local legislation
− Strong global product fit
TAM: €7bn - €10bn
Japan €5.5bn GGR potential
India €2.5bn GGR potential
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TAM Europe
Reasons for success:
− Significant partnerships with market-leading operators outperforming market
− Superior quality of European product and regulatory compliance
− Future growth from existing customers, new regulations and new signings
− Current TAM: €15bn
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TAM Europe
Reasons for success:
− Significant partnerships with market-leading operators outperforming market
− Superior quality of European product and regulatory compliance
− Future growth from existing customers, new regulations and new signings
− Current TAM: €15bn
TAM: €18bn - €26bn
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TAM summary by region 2026
Sources: Vixio/H2GC/Kambi's own internal estimates
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US market size by 2026 €15bn - €20bnAmericas (non-US)market size by 2026 €4bn - €7bn
Europe market size by 2026 €18bn - €26bnAsia market size by 2026 €7bn - €10bn
Potential global TAM €44bn - €63bn
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Kambi market share 2026
64
Potential global TAM €44bn - €63bn
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Kambi market share 2026
65
Potential global TAM €44bn - €63bn
Kambi market share at 15%
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Kambi market share 2026
66
Potential global TAM €44bn - €63bn
Kambi market share at 15%
Potential operator GGR €6.6bn - €9.5bn
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Kambi market share 2026
67
Potential global TAM €44bn - €63bn
Kambi market share at 15%
Potential operator GGR €6.6bn - €9.5bn
(less) Gaming taxes(less) Marketing deductibles
Subject to various regulatory and other assumptions
Commission rate % and other factors
=Potential revenue from 15% market share in 2026: €400m - €600m
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Business model
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Underlying scalability
Product development
Kambi does things once, for the benefit of all operators
Trading and risk management
Technical infrastructure Regulatory compliance
Illustration of scalability
Revenue Opex
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IT development
Cost areasKey pillars of cost
Trading & Risk
Data suppliers
Analytics
Corporate
Product development
Channel enhancements
Market expansion
New customer integrations
Revenue growth drivers
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• Very high barriers to entry in terms of cost and complexity
• Widening moat to alternative options
Competitive moatMajor barriers to entry due to high cost of running and maintaining a best-in-class sportsbook
Significant continuous capex investment
• Product development
• Infrastructure
Experience and know-how
• Operation of best-in-class sportsbook
• Agility to adapt to market evolutions
Regulatory and technical compliance
• Complex licensing landscape
• Significant infrastructure requirements
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Strategic rationale for outsourcing
Insourcing runs risk of inferior product with a high
fixed cost base
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Strategic rationale for outsourcing
Insourcing runs risk of inferior product with a high
fixed cost base
Enables our partners to focus on core competencies
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Strategic rationale for outsourcing
Insourcing runs risk of inferior product with a high
fixed cost base
Enables our partners to focus on core competencies
Partners benefit from Kambi’s
continuous investment
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Strategic rationale for outsourcing
Insourcing runs risk of inferior product with a high
fixed cost base
Enables our partners to focus on core competencies
Partners benefit from Kambi’s
continuous investment
Variable cost of service based on partner
profitability
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Strategic rationale for outsourcing
Insourcing runs risk of inferior product with a high
fixed cost base
Enables our partners to focus on core competencies
Partners benefit from Kambi’s
continuous investment
Variable cost of service based on partner
profitability
All elements of regulatory and technical compliance
are taken care of
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Strategic rationale for outsourcing
Insourcing runs risk of inferior product with a high
fixed cost base
Enables our partners to focus on core competencies
Partners benefit from Kambi’s
continuous investment
Variable cost of service based on partner
profitability
Easy access to growth in
new markets
All elements of regulatory and technical compliance
are taken care of
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Strategic rationale for outsourcing
Insourcing runs risk of inferior product with a high
fixed cost base
Enables our partners to focus on core competencies
Partners benefit from Kambi’s
continuous investment
Variable cost of service based on partner
profitability
Easy access to growth in
new markets
All elements of regulatory and technical compliance
are taken care of
Partners are strategically positioned to capitalise on
any new market opportunities
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Balance sheet
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Kambi's balance sheetStrong balance sheet, perfectly positioned to support both organic and acquisitive growth
Net cash at 31 March 2021 Cash inflow Q1 2021
Equity/assets ratio as at 31 March 2021
value of shares available to be issued for M&A purposes
€70m+ €17m
75% €120m+
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M&A target areas
Complementary products
What are we looking for in the market?
Player account management
systems
Offering enhancement
Artificial intelligence/ automation
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Investment case
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Investment caseKambi is the clear front-runner in the market and will only go from strength to strength
Superior technology and know-how
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84
Investment caseKambi is the clear front-runner in the market and will only go from strength to strength
Superior technology and know-how
Highly scalable model
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Investment caseKambi is the clear front-runner in the market and will only go from strength to strength
Superior technology and know-how
Highly scalable modelExceptional growth
potential
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Q&A
kambi.com
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