Earnings+More - Apr 27: Kambi: clients up, profit down
Apr 27: Kambi: clients up, profit downKambi Q1, Boyd Q1, Morgan Stanley SB Q1 preview, Ontario app update, BlueBet US launch +MoreGood morning. On today’s agenda we have:
Long shot kick de bucket. Click below: Kambi Q1
Accentuate the positives: Kambi group revenues were down 15% but CEO Krisitian Nylen and CFO David Kenyon were keen to accentuate the positives. Kenyon pointed out that although operator turnover had dropped 25% due to DraftKings migrating in Q321 and tough YoY comps, the fall in turnover had seen revenues drop just 15%.
Take your poison: Nylen was tightlipped with regard to the €8m convertible bond/‘poison pill’ Kindred had taken out in the group. Recall, Kindred can convert the bond into shares which would give it a controlling stake in Kambi and affect potential M&A outcomes.
Dutch courage: Kambi’s statement said it expected the regulatory headwinds in the Netherlands “to ease soon”, but Nylen would not provide any timeline on when Kambi clients such as Kindred or LeoVegas might receive their licenses there.
New model army: Nylen highlighted the group’s tech developments and said it would be launching a modular API-based standalone product early next year that would see the launch of an “internal data and pricing and all Abios (esports data and odds) products through a new interface”.
** Sponsor’s message: Venture capital firm Yolo Investments is home to €551m of equity in more than 70 of the most exciting companies across fintech, gaming and blockchain. It continues to build one of gaming’s most dynamic portfolios as it eyes up seed and A-stage opportunities across the sector. Its dedicated 29-company, €183m AUM gaming fund already houses holdings in fast-growing suppliers and operators, including Kalamba Games, SimWin and ThriveFantasy. Yolo Investments is also on the lookout for LPs as it looks to scale new concepts, including its high roller live casino brand, Bombay Club. RSI analyst upgradeRight here, right now: Major Kambi client Rush Street Interactive has been raised to overweight by analysts at Wells Fargo. The team suggests RSI was long the “right stock at the wrong time”, hence the 63% YTD fall in the share price.
Restating the case: Wells Fargo suggests RSI can “(re)distinguish itself as a disciplined operator with a realistic path to profitability”. They suggest EBITDA losses have “bottomed”.
Buy/build: The team note that RSI owns its igaming tech stack which they believe “has scarcity value given the evolving digital gaming ecosystem”. They point to Boyd’s Pala deal (see below) for comparison. Boyd Gaming Q1
Say what you see: Despite repeated questioning on any signs of weakness in the consumer due to inflation and gas prices along with other uncertainties, the Boyd management team insisted their “core customer” was “remarkably consistent”.
Marginal: Smith pointed out that for Q2 a more instructive comparison will be sequential rather than YoY due to the tough comps against the same period in 2021. But he added that the business expects to maintain the elevated margins, albeit not every bip.
Online developments: On sports betting, Boyd continues to expect around $30m in EBITDA for 2022 from its relationship with FanDuel. On its own account, the recent $170m deal for Pala Interactive was touched upon with Smith pointing out its igaming ambitions remained as a regional player rather than having a national presence.
The dog that didn't bark: As with Monarch last week, Truist noted “no impact from macro” and Deutsche Bank said that while record results “in a vacuum” should be viewed favorably, near-term prospects remain choppy given the widespread concerns over consumer spending. Gaming Realms FY21
Slingo yer hook: The games producer said that by Dec21 it had increased its portfolio to 53 games and had launched Slingo Originals with 35 partners including WynnBet, Sisal and Aspire Global. A further 10 more clients were added in Q122.
Morgan Stanley SB Q1 previewA hit and a miss: The MS team says Q1 OSB handle “appears” to have beaten their own estimates by 15% but that GGR will miss by 4% due to lower hold (6.1% vs. 7.5% in Q121).
Raise the roof: Q1 gaming remained strong, 11% ahead of the MS forecast. In response, the team has raised their estimate for 2022 to $44bn from $4.2bn. They are leaving their sports-betting estimates unchanged. Draft excluder: The team has also lowered their Q1 estimates for DraftKings (reporting May 6) to $411m from $452m, though they note this is still in line with company forecasts for between $400m-$420m.
Ontario app updateLeading scorer: Morgan Stanley has also updated their app data analysis for Ontario (provided by Sensor Tower). The team note that theScore continues to slip down the rankings from 65% of app downloads on day one to 16% and 12% respectively for the last two days of the survey data.
Is this helping? MS says it will “also be interesting to see how download share reacts the next few days as Penn’s Barstool President Dave Portnoy is in Toronto promoting the app.” PartnershipsFanDuel has announced an official sponsorship deal with the Yankees. Bally Corporation has agreed a partnership with the Cleveland Browns as part of the group’s launch of its online sportsbook brand BallyBet in Ohio. Circa Sports’ logo will appear on the NHL’s Vegas Golden Knights jerseys through a $10m-a-year sponsorship deal. Light & Wonder analyst updateLight and bitter: Following the recent lottery sale and the subsequent refinancing, the team at Deutsche Bank have trimmed their 2022 EBITDA forecasts partly due to the cadence of product sales (more H2 weighted), lower SciPlay margins and lower ancillary gaming revenues. Blue Bet US launchIn the bag: Australian-listed BlueBet has announced it will launch in the US under the ClutchBet brand name. The company has market access in Iowa, Colorado and Louisiana.
NewslinesSix acres and a mule: Tilman Fertitta, owner (for now) of Golden Nugget Online and soon to be a major shareholder in DraftKings, via his company Fertitta Entertainment, is acquiring six acres on the Las Vegas Strip, opposite CityCenter for $200m, according to the LVRJ. Town Schrier: The advisory firm Tekkorp Capital has announced that industry veteran Steve Schrier is to join the team. Schrier was part of the team that built and sold Ash Gaming to Playtech in 201, then subsequently spent five years at Playtech CCO at SG Digital. Use your loaf: Caesars has expanded its rewards program with the Caesars Rewards Visa card through a partnership with Bread Financial giving users the opportunity to earn reward credits as well as raise their tier status with every purchase. Crown, season four: Crown Resorts has postponed its meeting for a shareholder vote related to the US$6.3b acquisition by Blackstone from April 29 to May 20 as Blackstone has not yet obtained all necessary regulatory approvals. Guide dog: IGT became the first US supplier to receive the Global Gaming Guidance Group responsible gaming accreditation for its sports-betting technology business. Revolutionary front: Brazil’s Senate has said it will create a Parliamentary Front Against Gambling. The proposed legislation, which would legalize casinos, igaming, horserace betting, slots and bingo has been approved by the Chamber of Deputies is currently before the Upper House. What we’re readingUpdraft: NFL draft show expected to draw in 1 million. More on the NFL draft: A market like no other. I guess that’s why they call it the blues: Toffee trouble. On socialI bet they paid when you won tho https://t.co/T5d8nOkVjW New York Daily News @NYDailyNews A Florida-based Genovese family captain and five mob associates were busted on racketeering charges for running a decade-old illegal gambling operation where losing bettors faced extortion or threats of violence, prosecutors say. https://t.co/F3AqXKCXAwThank you for reading Earnings +More Calendar
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Apr 25: Fuel prices cloud gaming outlook
Monday, April 25, 2022
Sub-head: IGT UK lottery lawsuit, the week ahead, the week in shares, startup investor focus - Benjie Cherniak +More
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