Mobile Adoption And Global Liberalization Will Transform Betting

Key Takeaways

• Widespread adoption of innovative Odds Feed+ and scalable sportsbook technology could boost recurring revenue, margins, and reduce customer concentration risk.
  
• Expansion in regulated markets, strong esports growth, and operational automation position Kambi for sustained top-line growth and long-term competitive advantage.
  
• Regulatory pressures, customer migration, competitive threats, client concentration, and shifting market trends are undermining revenue stability and margin growth for Kambi Group.

Catalysts

Provides sports betting technology and services to the betting and gaming industry in Europe, the Americas, and internationally.

• Analysts broadly agree that Kambi's product innovation, especially through Odds Feed+, will drive growth via new tier-1 operator deals; however, this may understate the transformative EBITDA impact if Odds Feed+ is rapidly adopted as the de facto odds provider in emerging regulated markets and by migration of existing customers to premium deals, materially lifting net margins and recurring revenue.
  
• Analyst consensus expects growth from market expansions such as Brazil and Ontario, but is likely overlooking the potential for Kambi to become the preferred platform in multiple high-growth regions simultaneously as liberalization accelerates, amplifying revenue growth with a strong first-mover advantage and substantial client stickiness.
  
• Kambi's rapidly growing esports division is already a top-5 revenue generator for its sportsbook, positioning the company to capture outsized wallet share as younger demographics drive exponential esports betting volume, supporting sustained high top-line growth and increased operator lifetime value.
  
• The company's investment in scalable, modular, and omni-channel sportsbook tech, plus new entry into tightly regulated markets such as Nevada, uniquely positions it to win large, multi-year public sector contracts ahead of slower competitors, driving long-term, high-margin revenue and drastically reducing customer concentration risk.
  
• The ramp-up in automated AI-powered trading and operational efficiencies is likely to reach an inflection point by 2026, unlocking step-changes in cost reductions and productivity that could significantly outpace consensus margin improvement projections and boost long-term normalized earnings.

Kambi Group Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Kambi Group compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Kambi Group's revenue will grow by 3.7% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 7.4% today to 14.4% in 3 years time.
• The bullish analysts expect earnings to reach €28.0 million (and earnings per share of €0.99) by about July 2028, up from €13.0 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 19.5x on those 2028 earnings, down from 24.3x today. This future PE is greater than the current PE for the SE Hospitality industry at 12.7x.
• Analysts expect the number of shares outstanding to decline by 3.56% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.71%, as per the Simply Wall St company report.

Kambi Group Future Earnings Per Share Growth

Risks

• Kambi faces intensifying regulatory scrutiny and rising gaming taxes across several key markets, including the Netherlands, Sweden, and Illinois, leading to both reduced turnover and higher compliance costs, which pose a long-term risk to revenue growth and margin expansion.
  
• Leading customers like LeoVegas and others are migrating toward in-house sportsbook technology, with Kambi's own management highlighting customer migrations and lost contracts (including Kindred and 32Red), which increases the risk of customer churn and directly reduces future revenues and earnings stability.
  
• Increased competition and falling B2B sportsbook revshare rates, driven by technological advances (especially from AI-powered platforms) and consolidation among operators, are placing sustained downward pressure on Kambi's pricing power and take rates, thereby compressing net margins over time.
  
• Kambi continues to depend heavily on a small number of key clients and is vulnerable to adverse contract renegotiations, commission rate reductions, and nonrenewals-as underscored by the material impact of lost transition fees and changes to major contract terms-resulting in ongoing top-line and earnings volatility.
  
• The slow pace of growth and underperformance in core new markets such as Brazil, coupled with shifting consumer preferences toward alternatives like eSports, virtual reality, and social gaming, threaten to dampen traditional betting volumes and undermine Kambi's long-term revenue prospects despite ongoing diversification efforts.

Valuation

• The assumed bullish price target for Kambi Group is SEK194.1, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Kambi Group's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of SEK194.1, and the most bearish reporting a price target of just SEK112.45.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be €194.6 million, earnings will come to €28.0 million, and it would be trading on a PE ratio of 19.5x, assuming you use a discount rate of 7.7%.
  
• Given the current share price of SEK124.1, the bullish analyst price target of SEK194.1 is 36.1% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.