Global Online Betting Legalization And Latin American Expansion Will Shape Future Markets

Key Takeaways

• Expansion in regulated markets and innovative products are driving broader customer reach, recurring revenues, and long-term client relationships.
  
• Efficiency initiatives like AI adoption and targeted client diversification boost margins, revenue stability, and earnings visibility.
  
• Regulatory pressures, competitive pricing, client losses, and operator in-sourcing threaten Kambi's margins, revenue growth, and stability in both existing and emerging markets.

Catalysts

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

• The company continues to benefit from global expansion and the gradual legalization of sports betting, especially in Latin America (with recent deals like RedCap and growth in Brazil), and the ongoing regulatory process in North America, which are likely to drive multi-year revenue growth as new markets open and existing ones mature.
  
• The proliferation of online, mobile, and in-play betting-supported by Kambi's modular platform, high-performing Bet Builder product, and growth in esports turnover-is set to support higher betting volumes, broaden the customer base, and enhance recurring SaaS revenues.
  
• Continued investment in product innovation, especially the rollout and cross-selling of Odds Feed+ and esports solutions, is expected to unlock additional wallet share from existing clients, increase long-term stickiness, and boost top-line revenue through new client wins and upsell opportunities.
  
• Ongoing efficiency and cost-savings programs, including the adoption of AI and automation for trading and risk management, are slated to come on stream through 2025-2026, which should drive margin expansion and improved operating leverage, positively impacting net margins and earnings.
  
• The company is actively diversifying its revenue base by targeting Tier 1/0 operators, state lotteries, and retail sportsbook deals in regulated, high-barrier-to-entry markets (e.g., North America, lotteries, and new market entries like Puerto Rico), which should provide stability for future revenue and better visibility for cash flows and earnings.

Kambi Group Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Kambi Group's revenue will grow by 3.7% annually over the next 3 years.
• Analysts assume that profit margins will increase from 5.1% today to 14.8% in 3 years time.
• Analysts expect earnings to reach €28.0 million (and earnings per share of €0.79) by about July 2028, up from €8.6 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 14.9x on those 2028 earnings, down from 42.1x today. This future PE is lower than the current PE for the SE Hospitality industry at 15.2x.
• Analysts expect the number of shares outstanding to decline by 4.5% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.68%, as per the Simply Wall St company report.

Kambi Group Future Earnings Per Share Growth

Risks

• Regulatory risks remain elevated for Kambi, as recent tightened regulations, higher gaming-related taxes across key markets (Netherlands, Sweden, Illinois, and Colombia), and deposit limits directly impacted turnover and revenue; potential future regulatory headwinds in other regions (e.g., upcoming tax increases in Brazil) could further compress net margins and dampen earnings growth.
  
• End market volatility and underperformance in Latin America-especially Brazil, which has so far fallen below expectations and faces new gaming taxes-raise doubts about the company's ability to deliver sustainable expansion and significant new revenue streams from high-growth jurisdictions in the near term.
  
• Margin compression is a persistent threat as competitive pressures, particularly in Latin America and Europe, have led to a multi-year industry decline in revenue share percentages (from 20–25% to now 10–12%), and Kambi expects to offer even more attractive pricing to win market share, potentially eroding profitability and future earnings.
  
• Client concentration and migration risks are apparent, as exits or insourcing by major clients (e.g., Kindred leaving the U.S. and dot.com markets, Mr Green/32Red migrations) have negatively impacted turnover, and upcoming platform launches by operators (e.g., LeoVegas creating their own sportsbook) may reduce dependency on Kambi's full-service offerings and threaten revenue stability.
  
• The adoption of AI and automation, plus the move towards modular/specialist solutions (e.g., Odds Feed+), while creating operational efficiencies, could enable leading operators to build or buy proprietary in-house platforms-reducing Kambi's total addressable market and pressure pricing, affecting both long-term revenue growth and EBITDA margins.

Valuation

• The analysts have a consensus price target of SEK154.939 for Kambi Group based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of SEK194.86, and the most bearish reporting a price target of just SEK115.08.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €188.6 million, earnings will come to €28.0 million, and it would be trading on a PE ratio of 14.9x, assuming you use a discount rate of 7.7%.
• Given the current share price of SEK141.9, the analyst price target of SEK154.94 is 8.4% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
• 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.