Hello everyone. I am so glad to see so many people here in our Stockholm office, and of course with us through the web. Very welcome to Kambi's Capital Markets Day 2023. For those who have never met me before, my name is Mia Nordlander. I am Senior Vice President Investor Relations, and I have had the privilege to be with this company now for almost five year. Time is flying when you're having fun, and I will have even more fun with this whole new strategy. I will be your host today, and we have a very exciting afternoon ahead of us.
Before we start, we have some formality to cover, so I would like to remind you that some statements that we make during this presentation may be forward-looking statements that are subject to risk and uncertainties, and they should not be relied upon as statements of historical fact. We accordingly also assume no responsibility for updating any forward-looking statements made as part of this presentation, except required by applicable law or stock exchange regulation. We are not making any financial forecast or giving specific guidance to future performance, and this full disclaimer will be included in this PowerPoint presentation and available later today. I told you we have an exciting afternoon, and here is the agenda for today. I will start to talk about Kambi and who we are and what we do for those who are new to us.
Our CEO and co-founder, Kristian Nylén, will come on stage and talk about his view. Our COO, Erik Lögberg, will talk about the journey to a limitless sportsbook, and then we'll have a short break for coffee. Cecilia Wachtmeister, our CCO, will talk about optimizing commercial potential, and then our CFO, David Kenyon, will talk about the growing revenue opportunities. Kristian will come back on stage with some closing remarks. Finally, we'll have time for questions. I know there are two microphones laying around here, so if you're in this room and want to ask question, you can just raise your hand, or if you're following us through the web, you can send them to me, and I will read them for you. What can we expect from today?
When you have heard us all, there are five key takeaways I want you to take with you. The first one is that we are the world's number one sports betting supplier with a long track record of success. Further market regulation and increased outsourcing demand will grow revenue opportunity for us. Also, the addressable market will also increase because of our, we will start selling models and moderate products. We will remove product boundaries with cutting-edge algorithmic trading capability. We have a lot of revenue opportunities ahead of us, and by optimizing the cost control, we early this morning communicated that the 2027 EBIT targets of EUR 150 million, or more than EUR 150 million, which of course very exciting.
Who are we? First of all, we are a company with more than two decades of experience and more than 12 as a B2B. Kambi was founded in 2010 by our CEO, Kristian Nylén, and our board member, Anders Ström, as a spinoff from Kindred. The reason was really to help operators overcome rising barriers to entry and increased pressure on the technology. There were two trends in the market. First of all, live betting started to become more and more popular, and this of course required more investments into the technology. Second thing was the regulation started to happen, which also put pressure on the operators. By pooling the resources, we really saw a scalable and a cost-efficient way to help operators to enter the market and to compete with the biggest and the bests.
We listed on Nasdaq First North Growth Market in 2014, and four years later, we took the first online bet in the U.S. after PASPA was repealed. That was big and something we're really proud of course. Today, we have more than 1,100 talented employees across eight countries, and we power more than 40 operators in more than 50 markets across the globe. Now you know who we are. What do we do? We actually only do one thing, and we do it best: sports betting. Here on this slide, you see the sports betting value chain, and it starts with official real-time data, and this comes from a venue. For example, a football game between Liverpool and Chelsea, and since I'm a Chelsea fan, of course, I need to bring them to this example.
These data is then sent to Kambi, who process with our algorithmic models and of course, also our traders, both pre-match and live. These traders are of course very good with understanding the sports, but also with the numbers. Interesting fact is that last year we had 1 billion bets. That's a lot of data, right? A lot of bets. We're up and running 24/7, you need to have a very strong technology to do so. We turn this data within seconds to odds, and that is not easy. Of course, we also need to make sure that the odds is accurate and that we're following the regulation in the markets.
For example, here in Sweden, it's not allowed to offer bets if the majority of team is under 18. That's super important. Of course, it also need to be easy and fun to find the odds, find the, yeah, to place the bets. It's not Kambi that makes the transaction with the end users. This goes through the operator, and the operator had the flexibility to make it look completely unique to attract the end users, so they can place the bet with their favorite operator. Give you an example here again. Let's say I want to bet on this Chelsea game. I want to do a combination and use something we call Bet Builder. There I can combine correlated selections.
I will actually naturally, if I could bet, but I'm not allowed, an operator that have Kambi as a sportsbook, because Kambi has the best product out there. It is very, very difficult to do this. Even, one of the, well, some of the biggest operators out there, they are using suppliers. Kambi sportsbook is so good, so we actually recently won an award for the most innovative product. That's impressive, right? Let's then take this example again. Let's say that I want to bet on Chelsea to win, Kai Havertz to have over one and a half shots on target, and more than three and a half yellow cards in the game. This is a very fun way to bet because you can actually win more if you multiply the odds.
It's getting more and more popular out there. Back to my bet. I will go to the operator and place my bet. There is actually also where I make the payment, it's Kambi who does it. When the game is over, the bet will be settled, and my money will be on the account with operator. Since the start of Kambi, we knew that operating in a sustainable way was crucial to become the market leader and the best supplier of sports betting technology. Since day one, we have operated our business in a fair and sustainable way. On this slide, you see an overview of our strategy, and I will cover the three most important areas here. The first thing is sports integrity.
The foundation of this industry is built on trust that the sports is played in a fair way. Any breakdown of this will have huge implications, and therefore protecting it from sports manipulation is crucial. We work closely with our partners, our suppliers, and of course regulators, and we educate our employees to build awareness and detect signs of sports manipulation at the earliest of stages. Secondly, we have cybersecurity, and as a technology company, information security and mitigating cyber-related risks are very important. We were already doing a really good job here, but we need to constantly improve ourselves, and we do that through employee training and robust, sophisticated process in place. Finally, people, diversity, and business ethics.
We only recruit the best talents without any other considerations. By upholding business ethics, we also achieve the highest level of diversity. The key to success are our people, so we want to have an environment where all our employees can excel and thrive. To summarize, being a sustainable company has been in our DNA since day one. The rating institute MSCI recently upgraded us from triple B - A. We will continuously improve ourself, and that will make us the number one sportsbook supplier in the world, which we already are, of course. Over to you, Kristian.
Thank you, Mia. Thanks for a great introduction. Good afternoon, everyone. Great to see so many faces. I mean, this almost feels like a pre-pandemic, when we actually met a lot of more people than we used to do the last couple of years. I will start a little bit with just having a very short recap of 2022, of course, without any numbers. We have a quarter report in a few weeks' time. Just to set the scene a little bit, and then I will start setting the scene for what Erik, Cecilia, and David will talk about, our new strategy.
I would say 2022, after a few quite, let's say eventful years, where we had a few customers who left us, that was quite big, a pandemic that we had to go through. I think 2022 has been a much calmer year. We could really focus on the business again, and I think we have had a great commercial momentum during the year. As we will see soon, we have really focused on develop our strategy going forward.
We renewed the contract for three of our largest customers, Rush Street and betPARX, two of our most important customers in the U.S. Market. Very pleased with those renewals, and of course also Kindred, which is probably our most important customers, since we were founded back in 2010. With Kindred, I would say it's was very important for us to feel that we had a long-term commitment, and now we are tied with them for, yeah, when we signed it for five more years, but now it's four more years then.
At the same time, we also communicated that we have achieved the financial targets that were set out for us to do an early repayment if and when we would wish to do so, for the convertible bond. During the year, we did a record 10 signings, most signings we have ever done in one single year. I will not mention so much about the different companies. The one I would like to mention just a few words, and I will talk much more about it in a few weeks when we have a Q4 report, is Rei do Pitaco, which was our number one target in the Brazilian market. I commented before that we really struggled to find who will be the leading local players in the Brazilian mar ket.
With Rei do Pitaco, we believe we have a really good shot of taking a great market share in Brazilian market. They are a Brazilian DraftKings or a Brazilian FanDuel. They're doing fantasy sports for the local market in Brazil. It should be an operator who can really do some good in the Brazilian market when it eventually opens, of course. We did, I would say, a remarkable 60 launches during the year. On an average month, that's five. And I can tell you that it's not always it is five in one month. Some months it's much more. I think this is outstanding and just shows the capabilities we have.
Yeah, we have a fantastic team to work with integrate new operators and launch in new markets. Of course, you talk can't do a recap of 2022 without talking about the World Cup. Again, I will not talk so much about it was kind of a strange situation. We have never had a World Cup in November and December. Obviously, it's much, much better for any sports betting company when it is in the summer because summers nothing really happens when it comes to soccer. I must say, I think it was a absolute great success. As a football fan, it was an amazing tournament as well. It's hardly ever seen such good football, I must say.
For us and our operators, I would say that we had a really, really good tournament. I think we displayed an amazing product. Erik will talk more about it later, the expanded Bet Builder we had for World Cup was really, really good. We were only one able to have instant betting on penalty shootouts, as far as I know at least. Mainly most important is that we really started to test our new third-generation trading on the World Cup. Only pre-match so far, but the results are amazing so far. Again, Erik will talk more about it soon. Of course, the final was a new record for a turnover on one single soccer event.
During the year, we also did an acquisition of Shape. I think for us, this was something we're really looking for after analyzing the market. We have seen more and more that our customers are demanding native apps. We have not had that capability in-house. Some of our largest operators have done it themselves, or we have been able to give our operators an wrapped version of our HTML5 client. With Shape Games, I think we take a massive step when it comes to actually being able to give customers an even bigger and better solution for front ends. In the U.S. market at the moment, I think roughly 90% of all US mobile users are choosing apps over browsers.
It has become very, very important to have this technology in-house, I would say. This technology will be sold standalone. Shape, we will not require any Shape customer to use the Kambi platform. Of course, I mean, for us, to be able to add it to our turnkey solution, makes a big, big difference. It will be great for cross-sell. We have a lot of customers who are already looking at the Shape front end. As an example, they recently signed BetCity. That was about 2022. I was thinking of just talking a little bit about the complexity of doing a sportsbook.
I started in this business more than 20 years ago, 2000 to be exact, as a trader at Unibet. At that point, live betting didn't even exist. The pre-match was more or less only betting on a home draw or away, so three outcomes. Systems were highly unreliable, and it was quite acceptable that the system was down one hour on a Saturday. Everything was operate.com, so I mean, you didn't have to think about the regulations at all. I think why I'm telling this is I don't think people understand how complex sports betting actually is. Today, we are processing more bets on a daily basis than Amazon are taking orders. We I think Mia said that we are close to 1 billion odd changes on a monthly basis.
Odd changes on a monthly basis.
We are operating in more than 50 different regulations. We are translating real-time data from, on a average day, probably 1,000 different locations, in real time, translating it to probabilities, publishing it to odds. We have professional punters that's trying to take advantage of this. All of this we are doing 24/7, 365 days a year. If you compare to a stock exchange, for instance, they can have service windows every evening or every weekend. All our systems has to be upgraded, updated when the systems are operating. I would say it's such a massive complexity, and I would say most who are trying to replicate what we have are failing massively.
We are the clear market leader, I would say, and we don't really benchmark ourselves compared to B2B market even. What we benchmark our product against is Flutter and bet365, which I think is probably the two only operators who have a product that is on par with what Kambi's doing. For us, it's kind of obvious to do a benchmarking against them because that is the competition our operators are facing on a daily basis. With what Eric will talk about soon, the third-generation trading, I hope and think that we have a good chance of actually taking a leap and being better than both of these companies as well. During the last 12 years as Kambi, I think we have built an amazing brand as well.
being consistent provider with a very high quality. I think, and with Gerard's team, building a great brand. As you can see here, we have benchmarked ourselves to our biggest competition at the moment, in a research together with SBC. When the gaming people are asked aided, almost everyone know that Kambi is a sports betting supplier. But more remarkable is that unaided, more than half of respondents actually know about Kambi. As you can see, almost no one knows about our competition. I would say we are in a great position as it is.
What we have seen, I guess now we're coming in a little bit on why we are changing a little bit on our strategy and why we think that there is a reason for us to tweak it a little bit to make everything even better. Of course, some tier ones have been outsourcing, I think only by acquisition really, but still they are insourcing their product. Having said that, there is no one who do everything in-house, not even bet365 any longer. They have signed a deal with Simplebet, I think, recently. No one is doing everything in-house, and I think that is really important.
If you look on more mid-tiers and newcomers in the market, which is really important, especially in U.S. and LATAM at the moment, they demand a turnkey solution still, and that will not change going forward. Somehow we need to evolve to fit both types of customers. I think we started talking about this a long time ago about modernization, and I think most of this day will be about how we can handle different customers. The future, I'm pretty sure that even the tier ones will start outsourcing more and more. For us, I think it's really important to get the relationships with the tier ones now, because if we have the tier one's operators on a little piece now, we will get more pieces when the industry progresses.
If you look at any industry in the world, outsourcing is always where people end up when they need to reach profitability. Why do we believe that outsourcing will increase? First of all, it's just more and more regulated markets, and in regulated markets, it becoming tougher and tougher conditions to follow. For operators, that usually means less profitability and also more and more technical pressure. For us, I think we like regulation. We're good at it, and it gives us more and more opportunities. The macroeconomic outlook, I mean, we all know where we are. Rising inflation, rising interest rates. It's becoming tougher to have fixed costs, and we can help the operators with that. With Kambi, they can pay commission on the revenues rather than having fixed costs in-house. Investors demanding profitability.
In all cases, I would say we can help with that as well. I heard some operators talking about saving money by doing it in-house. I would say that is never the case. There is not one operator in the world that I wouldn't be willing to give a price that made it cheaper for them to do it with us than do it in-house. As long as they want a world-class product, of course. Then if you look at the internal pressures, yeah, it's a massive gap for most, except bet365 and Flutter, to having a great product. There's two ways to solve that. Either you have to spend even more money, and it will take you a long time to close that gap, or you outsource. Players are, of course, gravitating to the best products. It's once...
2 ways to solve that: have a great product or retain them with bonusing. Finally, a lot of legacy tech is failing. You can't compete. It's so slow, you can't really get to a situation where you can compete with a product anymore. In many cases, they are restricted and can't enter new markets because they can't get the tech to deliver a regulatory, re-regulated offering in a new market. Last year on the Capital Markets Day, we were talking already about what we were thinking about when opening up a platform. I'm not sure we used exactly these wordings, but what we definitely have been trying to do is to open up our platform to give more control to operators on deciding on their product. Creating independent standalone services of two reasons.
One, it makes our technology much more efficient. We can work on different things at the same time in a much more efficient way. Of course, with that, we can also create standalone services. Of course, we bought a few standalone services as well in Abios and Shape. We will see more and more standalone services going forward in our modernization. With more focus, we can also become market leader in different areas, both when it comes to a platform and different products that we can add on top of a platform. My last slide, and then I will hand over to Erik and Cecilia and David to explain this even more in detail.
What I hope we can show after today is how we can increase our addressable market by opening up the platform and provide standalone services. How we will continue to grow anyways because there is a lot of new markets and a lot of new opportunities out there for us. Finally, how algorithmic trading will make us taking a great leap and give us a unique USP in the future. Thank you. I hand over to Erik.
Thank you, Kristian. Hi, everyone. My name is Erik Lögdberg. I'm COO here at Kambi. This industry, I think, is up for quite a few very interesting challenges the coming year as it's getting more and more mature. As it's moving towards what we call the limitless sportsbook. With limitless sportsbook, we mean a sportsbook, we're moving towards something where you can bet on anything at any time. With our new strategy, we think we're achieving two things mainly in this environment. We think we're setting ourselves up to create value in several areas of the sportsbook better than anyone else. We're also setting ourselves up to deliver this value in a multitude of new ways to fit the specific operator and customer challenges that will come up there. I plan to talk about how we are gonna do this.
I want to start a bit with a helicopter perspective of changes we're going through here, scale, modularize, scale. As you know, 2010, we were once modularized, I guess you could say. We were broken out to really focus on the sports betting opportunity only. For most part of our journey, it's been a journey of scaling. Scaling across countries, across channels, across customers, and across new products. This has taken, of course, a lot of investment in time and money to achieve this. I think most importantly for us, it's required a really clear eye on the target, a clear eye on the scalability target. How we have been operating has been that no opportunity really during these years could ever be more important than our system and business own scalability.
I think that is what has taken us to where we are today. We have with a relatively lean organization, compared to the big in-house books Kristian just talked about, managed to stay in the forefront of sports betting. That is because of this conviction we have had to build one solution for all use cases in our business. I will spend most of my presentation today, of course, on the last part here, scaling modules and what happens 2023. I wanna stay a bit on the opportunities Kristian briefly mentioned that we saw back in 2020 when we started formulating our new strategy. We saw, of course, we had this great technical momentum of scalability, but we saw there was a chance for us to take on new opportunities now.
We had reached the type of scale and product competitiveness that we could afford to look wider. We saw opportunities if we could create a more open service, we could allow our operators a greater deal of degree of differentiation. We saw that the assets we were creating as part of the full turnkey could really be valuable to anyone in the industry, not just as part of a turnkey context. If we could find a way to take those also outside the turnkey, we saw huge market opportunities. Thirdly, we started seeing how sportsbook production essentially would change from the ground up. If we could find a new level of focus internally, new innovation power, we would have the chance to be the first to really leverage new technologies and take a leap.
The question was then, of course, how do we continue to ride on that technical momentum that we had on the scalable platform while also capturing all three of these opportunities? What we did, we started to break our service up in product modules. On a high level, the product modules were trading, the bet platform, and the user experience. We set two missions on each module. First one, to provide the best service possible within their respective area. The second one, to seamlessly integrate to each other, of course, to deliver the turnkey, but also to integrate to third parties, to external parties. For instance, we tasked our trading module to be able to integrate to our own platform, of course, but equally be able to integrate to others platforms.
Vice versa, the platform would be able to integrate to our trading module, but also to external trading modules. We set a goal for ourselves back then, around two years ago, to go through with this separation, in time for the World Cup, come together again through the new integration phases and operate in a modular fashion. As we heard, we made that goal. I will admit it was a small margin, but we made it and we delivered a fantastic World Cup. For our players and partners, this was totally seamless. The only difference they would have seen was a much stronger soccer product, but they still had the same stable delivery from the turnkey. Behind the scenes during World Cup, things actually worked pretty different. We worked in a modularized way.
As we move forward now, and start scaling into each of these three areas, building on those products and that new foundation and strategy we have, the turnkey continues to be absolutely crucial here. The turnkey is where these modules will come together and evolve and test new products. They can do all that without replicating costly capabilities such as regulatory compliance or data. That makes it quite unique, our strategy, that we both have these modules, but we still have them in the big turnkey context with 5 million active players. 1 billion bets, 1 billion odds changes is a lot of information that is valuable for all parts here as they're gonna evolve the products. I'm gonna go through now the three areas, the platform.
I will start with the platform, then go the trading, and then last user experience, where we're headed in each area. Sports betting is probably most of the times associated with the odds, the probabilities, the bet offers. Actually, at the center of everything is something else. That is the bet platform. This is where you have all the regulatory compliance, you have the risk management, you have the bet acceptance, and this is where you really set the standards for how everything is orchestrated together. It's, I guess, the bank system of sports betting. It's the place where things never can go wrong and where the transaction load is very high, and like Kristian said, it is always on. It's a big challenge to create this platform. Many have tried, most have failed.
I think even bigger challenge is probably to, over the years, keep adapting this platform. If you look back to 10 years, there is sort of new things like mobile coming, cash out, the cloud, the Bet Builder, the new regulations. Every one of these items, they really start asking difficult questions on the platform, and your challenge is to move the whole platform with you into these new products or countries. What you often see around us is how companies starts spreading their business onto several platforms. It become a retail platform, it becomes a U.S. platform, it becomes a future platform, but there goes the scalability, and then you become slow and very expensive. What we have done, very successfully is to really manage to stay on this one same platform, although everything around us has changed.
We have taken the platform with us through all these changes. Today, we operate 5 million active players across more than 50 markets, 6 continents, more than 50 partners, and we do this on the mobile, on the web, and on retail, and it's all from the same system. Anything we invest in this now, it comes to the benefit of all stakeholders. Like Kristian said, we did 60 launches last year. That is actually mostly across the departments I head up. I was really surprised when I heard that number. I barely noticed it, and that's because it's so streamlined, automated, and we have solved these problems already somewhere in the world, and we just reuse them. We can spend most vast majority of our investments on innovation, product development because of the scalability.
What does it mean then, the modularization strategy in the context of this bet platform? It means that all the great things we heard that this platform is doing, it will continue to do, but it can now also do that with others. The point of that, of course, is customer differentiation, handing more control to our customers. They get to decide more what goes into this platform, and they get to more decide how to package what comes out. In short, for us, the big change has been two things. It has been to create two interfaces. One we call the Trading Gateway, and the other one we call the User Experience Gateway. Our User Experience Gateway is very mature at this stage.
I think in many aspects, it goes faster and cheaper for our customers to develop user experience on our platform than it does for their competitors on their own in-house books. The Trading Gateway, of course, was what we now went live with during last year. World Cup was really the major milestone for us that we showed that this now works, systems separated, trading and platform. Going forward now with the Trading Gateway, it will be about expanding it, optimizing it to our internal trading units, but also start taking in external trading operators or third parties onto this platform. Bottom line here is that this gives us a greater commercial flexibility. More optionality for us in commercial to design packages that can fit specific operator situations. Having gone through the platform, we move over to the trading.
What we mean by that is the production of the sportsbook offering. It's creating all the markets, all the odds, setting the probabilities. We think we are in a fantastic position here already. Like Kristian Nylén said, there are a few B2Cs that are up there with us. We also think with a third-generation trading that we'll come to, we have a good shot at taking a leap even farther away from any B2C or B2B competition here, and we'll get to that shortly. First, it can be good to understand how we think about trading and the trading strategy, I guess. Players will, end users will, to a high degree, choose the sportsbook that best can entertain them, right? This is entertainment we're doing, actually.
The first thing to know about trading in a sportsbook, as opposed to what it may sound like, is that this entertainment, it is created from the trading function. The more sophisticated your trading function is, the better you will be at entertaining. I want to illustrate this with an example. What you see here is a graph. It shows bets per minute during Croatia-Brazil in the World Cup now. The game went to penalty shootout. You can see how during the relative short time period that the penalty shootout actually takes, we took 20% of all the bets on this game only during that period. Why? It's because that's when it's exciting to bet.
I mean, even if you're not a bettor, maybe you watch the game, you know that your heart rate goes probably twice as fast during that penalty shootout than minute 20. It is with betting as well. That's why you want to bet. The thing is, though, the more exciting it is, it is also harder to actually trade this. To get precision probabilities during this penalty shootout is very difficult. I mean, you're down to the mental strength of one person that decides everything, right? Compared to minute 20, we've been in that situation a million times. That's very easy. If you don't get accuracy in your probabilities there, you will present the end users a very bad product. You will take down your offering, as opposed to what Kristian mentioned, we expand the offering there.
You will take down your limit, you will reject bets, and you spoil the entertainment. That's of course a rare example. We don't have Croatia-Brazil penalty shootout every day, unfortunately. The point is, every day across the world of sports, you have thousands of these little moments. Just think about the break point in tennis. Same thing, exciting, difficult to trade. Think about you have bet on corner and the ball starts rolling towards the corner flag. That's when you want to cash out. You don't want it closed. This is what costs, and this is what becomes complex in sports betting. We invest a lot in our organization and algorithms to keep this exciting offering open all times, always available, allow high stakes, keep fair and high odds to the players, and take away any friction. There's still a lot to do.
I mean, we've been optimizing this for 10 years. We still improve significantly on our KPIs every year by iterating, becoming a better trading organization and better tooling. Trading quality, important, of course, features, is another thing that is key for the trading to produce. Bet Builder, as we heard, it's when you combine two bet offers within the same event. That has been the battleground of sports betting for the past four or five years or so, and you can see why. Our leading product now, we have 40% of our active customers, they use this product regularly. It now accounts for 15% of our total revenues on pre-match. Probably on big games, you get much higher than that relatively.
It's a new form of betting, and I think it's fair to say it's by far the most difficult thing the trading functions and sportsbook maybe have faced the last 10 years. Vast majority of all operators in the market, they actually haven't pulled this off. They outsource this to a third party. We took around five years ago a strategic decision and said, "This is really going to be the norm. This is just going to be expanding. This will be a new way of betting. We need to change both our platform and our trading system quite significantly to be able to get speed in this type of development." That's where we really picked up now. We were first to launch what we call the Multi Builder. It gets even worse. You're combining a Bet Builder with another Bet Builder.
We were first to launch that. I think we were alone on the market probably for a year or so. For us, now this takes up 70% of the total Bet Builder are Multi Builder. Of course, this being a product on the market that to a high degree already is outsourced, us having a big edge here makes this a very interesting case for us to start selling also as a separate module outside the turnkey. I think it's a great example of what you see of a product being evolved within a turnkey context, the type of level you can reach there with the experience and with the data and with the feedback loops, as opposed to products being evolved outside a sportsbook. Another great edge we now have within trading is esports with Abios.
We acquired Abios in 2021, actually not long after we formulated our new strategy. That new strategy made it more interesting for us to look at M&A. It was easier for us then to see how niche specialists really could contribute to the full ecosystem. That's what Abios does. They are a specialized organization in their specific domain of esports, of course. They really benefits from Kambi's scale. On the other hand, they really contribute to Kambi, adding an edge into our turnkey service. We believe esports will be more and more important, maybe will be a top five sport or so. I think an important part of that is if you're a top five sports, yeah, maybe that's 5% of revenue, something like that, it's pretty good.
Also, if you're the top five sports, probably 30% of end users every now and then use that product. That's where you really want differentiation, because then many end user will actually choose your sportsbook because you have an edge in that esport. Abios deliver trading and odds and widgets and streaming, and they do that within the Kambi network and also outside. Their biggest focus is on trading. To lead in the industry on esport trading the way Kambi is leading on traditional sports, and they certainly have the proprietary data to back that up, and now they combine that with Kambi's data as well. They will go live in Q1, both on the Kambi network and with their own partners with their new trading product.
Quality in trading to create a higher degree on entertainment, the Bet Builders and the esports, those are examples of why we are ahead already in this market. third-generation trading then is our big bet for the future. It's something we have not talked so much about up until now because it was a research project that has actually been going on for a bit more than two years now. With the success in World Cup, we are now confident that our plans and our strategy and the systems here will hold up. We want to share a bit more what this actually is. To understand third-gen, we first look at second-generation trading.
Second generation trading is what most out there do today, and what Kambi do as well, to a high degree. It's a pretty advanced system. You will have algorithms in that setup that have been evolved and optimized for 10 years, machine learning and all that. The thing is that the human is still somewhat in the center. The human oversees all the information flow, and the human essentially drives this algorithm with a set of parameters that the human can understand. What happens then when the product gets more and more complex? We're building up more and more data internally. From the stadiums, we're getting more and more data, down probably to the XYZ coordinates of every player and every ball. What do you do with that?
This bubble of information absolutely explodes, and it becomes impossible for the human to process this. The eye-opener here is that we have to change the process. It cannot continue around the human if we're gonna take this further. We have to build this process around the algorithm itself, and that's third-generation. If we build it around the algorithm, we can work in no exaggeration, we do dimensions a million times bigger than the type of parameter set that a human can work with. With today's computing power, there is no limitation, almost, what you can do. What we do then instead is we bring in the human right at the end here, and we let the algorithm ask the human the questions the algorithms can't answer, which typically will be where the data set is not rich enough.
Humans are amazing to solve those type of problems. Why does this matter? Well, take it back to our trading strategy. Essentially, it's about this. If we can use that bubble of information that is a million times bigger, we can deliver on our trading goals far better. When we do that, we can take away all those boundaries for the end users in what you can bet on and how you can bet towards the limitless sportsbook. We thought to share a bit more. Actually, we during the launch here, during World Cup, we did some interviews with the teams building this. I wanna share a short video with some comments and perspective from them. Oh, there might be some management guy here. Don't mind him. Focus on what the expert says.
Algorithmic trading is the method of pricing and changing odds without the intervention of humans. One of the advantages with algorithmic trading is that you can do a much more structured iteration of quality. We have been able to break the market that is being the bookmaker pricing events first.
We were able to price something that's so obscure as Iceland second division soccer in a fully automated way. It all clicked.
Come 2018, 2019, I guess, is when we sort of really decided to, for the very long term, start doing things quite differently.
Well, one of the best things we did was that we kind of we had a startup mentality, within this project, but at the same time, we had the kind of all the muscles of Kambi behind us with we had the customers, so we can iterate really quickly on something. For example, something like soccer is gonna be very difficult for me to program all the rules for interactions between corners, cards, player shots, and so on. The data will tell you all of it if you have a lot, and we have.
We're much faster than our competitors and much faster than our operators' competitors, which is quite crucial. Also bet offers, the ability to have hundreds upon hundreds of different bet offers for the operators to pick and choose from.
We don't need to have a human to manually change any odds. That's amazing because there are so many events every day.
Every hour, it's almost impossible nowadays for a human to handling all those events and all those offers.
Automation, that's something we need to be really good at. Some central KPIs like pricing accuracy, that's one important thing we need to be good at.
We talk about the sort of moving towards the limitless sportsbook. In a way up until now, I think sportsbook product development has much been driven from, I guess, the trading department's ability to price and risk management, manage certain bet offers. I think this is shifting now towards when you are more fully automated, there's really no limit to what you can do. The best argument for why AI is the future that more and more of the player behavior is moving to the types of product that only complex algorithms can deliver.
It's not just going to be an advantage in the future, it's gonna be a requirement because something like combinability, now it's a feature, but it's gonna be a requirement. I mean, it's gonna be strange in a couple of years if you have an outcome that you can't combine with anything.
Okay. To finish off on Third Generation here, guess the question is, are we ahead here? Are others doing this? Impossible for us to exactly say, but when we look out there on what the products are achieving, when we listen to big, big companies, what the big sportsbook, what they're focusing on, we don't see much of this type of Third Generation out there. It probably makes sense. It is very hard to do, and it's a big risky bet to do. Gartner says that 85% of all machine learning projects fail and never reach production. It's often not so much about creating these algorithms actually. I mean, that is difficult, but there's a lot of people that can create good algorithms. It is more how you pave the way from these algorithms in your business and organization.
That algorithm-first approach, that is a transformation for a big part of the company. I'm glad to say that we are among these 15% now. We're over that hurdle. I think also we were lucky enough to be in a very good position to be just a sportsbook product company. Nothing more, nothing less. That meant we had all the data you really need to do this, and we had the full decision power in the solutions we build, but we're also nimble enough to do transform. If you're a niche supplier not doing turnkey, you certainly can build good algorithms, I imagine, but that is just a small part. How do you fit that into the full turnkey context? That we saw, that was by far the more challenging part.
If you're big iGaming supplier, how are we gonna make this your number one priority? You don't do this journey we have done unless it's really the company's number one priority. That's for sure. Hope I managed to explain a little bit about third-generation trading at least. Let's just look at some impacts we see already, early signals. We launched it during World Cup. It took over all the pre-match. Now it's running the top four or five leagues, and we're quickly adding more and more leagues as we go now during Q1. The player props betting, so when you bet on the actual player, Messi to shoot on target, that type of thing, it went up to 16% of the total turnover because of increased quality in the product and broader offering.
Actually, we could see how competitors started following our prices. The Bet Builder went up to 24% of the total turnover because of the increased entertainment value in the offering. It should be said, those two things you do in second generation as well, but you don't do it with the same quality, and you don't have the same possibility that we have now to iterate fast, further, and improve. The third one, full product published in 90 seconds, that you don't do in second generation. When the final whistle blew of the group stage games in World Cup, we clicked the button, and in some extra checks, probably in 90 seconds, the playoff games were up with a full offering, the 500 bet offers or so.
That used to take us five hours at best. It takes our operators, competitors still five hours to do this. Those are some early signs showing us that this really is something else. Now going forward, probably the most exciting thing is that we more and more can scale now with data. Not with people, not with building heavy systems, heavy, costly. It takes time. That goes exponentially faster, that type of scaling with data. That's trading and third-gen trading. My last section is the user experience. User experience is more so than any other area, I would say here, is about differentiation, is very important. That is a challenge, of course, being a scalable business. How do you supply that? We have since long introduced a developer platform.
If operators want something very different, if something needs to be very different localized, we have the development platform where they can build this themselves. As we saw with the trading that we have a unique position for our trading as part of this Kambi context, we could see the same with user experience. We could see that we could aim higher here in our own user experience going forward, but we needed to complement our capabilities. We have a multi-channel and multi-brand platform. It delivers great experiences on the core sports betting journeys. We have this development platform, of course, where you can create your own client, parts of it or all of it. What we didn't have was a native app service. As you can see here on the, on this slide, especially with U.S., that had become more and more important.
The American consumers across all industries, they are on the mobile like most, but on the mobile, they almost never use the browser. They consume everything through apps. Another thing we didn't have was the ability to deliver really bespoke user experience for an individual operator, create bespoke features. We could let them build it themselves, but often what we saw more and more, they wanted us to build it. We also saw opportunities in other areas around the core sports betting journeys, such as personalization, such as gamification. Enter Shape. Shape really ticked all these boxes that we were missing for us. They had a modular app platform. They could deliver full native apps, but they could also deliver components into someone else's app, and they worked a lot with bespoke user experience.
They had a scalable platform, but they could do bespoke branches of that for each operator. That we thought was very valuable to add to our portfolio. They also had a great portfolio of site services such as personalization and social and gamification. Like when we added the third gen to the trading, when we opened up our platform, this was the missing piece on the UX side that Shape added. They also could go for product leadership in this area. We think the challenges will be pretty big here. Also for us, as we move into India and Japan, you can imagine there might be quite different requirements all the way to data costs in markets like that, or to very different experiences might be required.
Not least, the limitless sportsbook, how are you gonna be presenting that type of offering? During the break, actually, we'll play you a short video from some ideation about, how the third gen trading and the limitless sportsbook might affect user experience you can look at if you're interested. Finally, to sum up, we believe that a big part of the market will not get close to the type of level that we think is gonna be needed in these three areas with the third gen trading, with adapting this platform to the continuous new requirements that comes from product and regulations, or to keep delivering relevant user experiences cost efficiently down to a localized level.
We believe with modernization that we have a really good chance at doing this best in the industry and that the modernization, we can also then deliver more bespoke solutions to the specific operator challenges that will come. I'd imagine these are interesting times being in the commercial organization, and Cecilia will tell you all about that after the break. Thank you.
Back here, 20 past.
Welcome back, and I hope you all feel energized now after the presentation of Erik Lögdberg, when he went through how we are now going to open up our platform and modularize our services. I can honestly say that I have never felt more excited in my role as the Chief Commercial Officer for Kambi as I do today, because this opens up fantastic opportunities for us. What I'm going to do now is to walk you through how we intend to bring this to the market and capitalize on those opportunities. Oh, it's me doing that. Yeah. What this openness and modernization strategy allows us to is to create targeted offerings for different customer needs out there in the market. We have created these three targeted offerings, the Kambi Complete, Kambi Flex, and Kambi Select.
Kambi Complete, that is, in essence, what we're doing today, our full turnkey market-leading offering, which suits operators that want to rely on a completely and market-leading, completely outsourced offering or solution. With Kambi Flex, that is basically our open platform with the mix and match of the different Kambi services on top of that. This is a perfect solution for those operators who have a wish of a more open and flexible approach. For instance, those operators who want to do some of their trading in-house but still rely on a market-leading high-quality sportsbook from Kambi. Finally, we do have what we call Kambi Select, and this we think will be a very appealing offering to those operators who have their own tech stack in-house.
For whatever reason, and as we heard from Kristian also, all operators do outsource to a certain degree, and maybe they want to leverage some of our market-leading individual services. If we look a little bit more in detail what those kind of services can be, well, it can either come from our traditional Kambi trading services, pricing and trading services, but we can also offer services from our UX side, powered by Shape Games that we just recently acquired. Also we have from our esport, Abios, various suites of different services that could be offered as individual modular services. From the Kambi trading, we can offer whatever odds feeds. It could be local feeds. It could also be the Bet Builder that Erik was talking about. It could be instant markets.
We know that this is asked for because, as we've heard, many operators have not been able to develop, for instance, Bet Builder in their in-house development and have had to turn to other solutions on the market. What we also can offer, and which we think will be extremely exciting, is our third-generation algorithmic trading that Erik went through. This, of course, as we heard, will be a game changer. For those since we believe that we do have an edge here, we do not foresee that anyone can come close to any such offering, at least within the foreseeable future. When this becomes a norm or when we start to roll this out on a broader scale, this will immediately become a requirement on the market. Those operators that cannot do this on their own, they will fall behind.
We think that this will also be a very highly sought for and attractive service to acquire from or outsource to Kambi. Moving on to the UX and Shape Games, they of course, can provide an out of the box front end. As we heard also, they are working with various operators around the globe to develop very bespoke front ends to different operators that are unique to them. This will become even more important because first of all, sports betting is transforming into becoming an entertainment product. The bettors wants to be excited and they want to interact with our sportsbook, and they want to interact also with other players, which they can do through the engagement tools that Shape Games is also offering.
Not least, like Erik also was telling us about, when we now start to rolling out this limitless sportsbook, a really powerful front end, and how that is going to be presented is going to be key. We think that with Shape Games being the clear market leader in this domain, that this will also be a very highly attractive service to outsource or for us to sell to different operators. Finally, we also have something that we call free-to-play, and we have great experience from here. This is basically that you can let operate or players place bets, but in pre-regulated markets, it's not real money betting. I can give an example here.
We have our partner, JACK, in Ohio, who just recently now beginning of January, launched for with real money betting. 12 months before that, they have been using the free-to-play, and hence they have been able to build up a huge customer database. Obviously they had a head start against other competitors in the Ohio market now when real money betting opened up or finally opened up. If we think about there are many big markets yet to be regulated, such as Brazil, India, and Japan. If someone would like to get a head start in those markets, that could be a very interesting offering. Esports, that is something that really starts growing now, and we see that it will have a huge potential.
There is a wave of regulating esports, Abios can offer a range of services such as feeds, odds, or widgets for operators to complement or enhance their sportsbook with and to attract esports players. Their odds are really targeted to esports fans, and they follow all the major leagues, esports leagues or esports tournaments, sorry, around the globe, and they do that on the fastest data available on the market. We think also here that operators would like to tap into these services in order to broaden their sportsbook and attract esports players. Now, with these offerings, we obviously have a mean of addressing a wider range of operators than we have been able to address previously. If you have a look at how the sports betting operating market looks like, we can broadly divide that into three different segments.
We have what we call the select outsourcing and the partial outsourcing, and the full outsourcing. As you can see, we're mentioning outsourcing everywhere here because the fact is, as we've heard several times here today, that no one is really doing 100% in-house. Everyone tends to outsource at least some parts. The select outsourcing, those are typically the major big players, the tier ones of the world. They own their own platform, and they manages most of the operation of the sportsbook in-house, but outsource selected parts of it. In the partial outsourcing, sorry, I'm also going to say that just because of the pure size of them, the tier ones, our estimate is that they represent around 50%-60% of the global gross gaming revenues of the world.
Going to the partial outsourcing, these are the operators who do not have their own platform in-house. They want to, and they're happy to outsource that, but they do want some openness and flexibility, such as maybe doing some of the trading themselves, or maybe complement the sportsbook with other third-party bespoke offerings. This segment represents around 20%-25% of the global GGR market, according to our estimates. Finally, we have the full outsourcing segment, and this is where Kambi has traditionally been targeting. These are the operators who want a fully market-leading, full-turnkey sportsbook. This segment represents 20%-25% of the global GGR. This is obviously the segment where we have been focusing, and we have been doing a very good job in that.
We are the undisputed and clear market leader in the full outsourcing sportsbook segment. I mean, a proof point of that is not only we have around or more than 40 customers, we are present in more than 55 jurisdictions, and we also have numerous rewards that have been dedicated to us. We think now that it's time for us to broaden our horizons and to address also other parts of the sports betting market. That is exactly what our modularized strategy or modularization of our product is allowing us to. If we map those offerings to these different segments, we can see that we are now unlocking the 75%, the remaining 75% of the market.
With Kambi Complete, we will of course continue to engage with those customers who want to and who appreciate and value a full turnkey sportsbook solution. With our Kambi Flex, we will now be able to engage with those operators who also want to leverage our world-leading sportsbook platform, but who wants to do some of the trading in-house themselves or manage other parts of the sportsbook themselves. Finally, we now have, with our Kambi Select, interesting and appealing standalone services to offer to those operators who do have their in-house tech stack and manages a lot of the sportsbook themselves. Now I'm going to dive a little bit deeper into each and every one of these segments and explain how we intend to leverage on those opportunities. Let's start with the select outsourcing segment.
Just to remind ourselves, these are the tier-ones. They do have their own tech stack in-house. Predominantly, these are the tier-ones of the world with huge or long, several years of sports betting knowledge, or leaders in mature markets. What do they do have is their own tech stack. They do actually also outsource some parts. Our estimation, based also on external data, is that on average, 10%-15% of their GGR is derived through outsourced products. This is obviously where we want to tap in. That's where we believe that we have some interesting services to offer these operators in forms of our pricing and trading services, our UX services that I went through, and our esports services from Abios.
Another interesting factor of this segment, in our view at least, is that we believe that there is a potential or there is a likelihood that this portion of outsourcing, which currently is 10%-15% of their GGR, actually has the potential to increase. Why do I say that? Well, first of all, as market matures and competition intensifies, it will be really important. You will need to have a leading product in order to be competitive in the market. We are seeing already today that many of these tier-ones are actually struggling with it. Most of the tier-ones haven't been able, due to the complexity, to develop their own Bet Builder. We believe that product innovation will continue to drive further outsourcing from this segment also.
Looking at the complexity of regulatory environments, which is constantly increasing, and for each jurisdiction you're adding to your tech stack, puts another layer of cost and complexity to your own sportsbook platform. That brings cost, of course, and is time-consuming and complexity. Of course, both to keep up with competition in product innovation and to keep up with all the regulatory environments and those changes, that has a cost in itself. If you fail in any of those and go late to market, either with new product features or come late into a market where you want to establish a position, that has a huge opportunity cost. That is a risk we believe that those operators would like to avoid. Finally, cost of capital is increasing. Macro factors are shifting to profitability.
There will be an increased pressure on operators to show cost efficiency. We believe that many operators will start to reevaluate what really is making sense to do in-house and what is maybe more cost efficient, or maybe that I can obtain higher quality by outsourcing parts of the sportsbook, or some services of the sportsbook. We believe that it's neither sustainable or cost efficient for operators in the long run to do everything in-house. Therefore, we think that there is a probability that this portion will actually increase even in these tier one segments. Why do we believe that what are our USPs, or why do we believe that we will be successful to address this segment of tier ones who has their own sportsbook in-house? Well, first of all, it all boils down to the quality of the product.
If you don't have the best NFL product, if you don't have the best soccer product, if you don't have the best Bet Builder product, you will fall behind competition. That's actually what we're seeing today. I've said it numerous times, but I will repeat it again. Many of these players have, due to complexity, not been able to develop the Bet Builder. Since a Bet Builder functionality is of such high demand out among the players, they have been looking to other solutions to insource. Our Bet Builder is the market-leading Bet Builder, and it is that because we developed it from the basis totally integrated within our sportsbook.
That not only makes it consistent with the rest of the sportsbook, so we have the same probabilities in our Bet Builder as in single bets, but it also allows us to add new sports at a very rapid speed. This is also what is being recognized. I mean, we're really proud to have received the EGR Award for Innovation for our Bet Builder. The motivation from the judges were that our Bet Builder showed true innovation and differentiation, and also that outpaced most of the major US operators. We are happy to bring this as one of the services that we can offer out to this segment. Furthermore, we've heard here that we believe that we are the pioneers within the third-generation algorithmic trading, and that this will really change or be the game changer in the m arket.
If operators, once we start to roll this out on a broader basis, there will be sort of a market demand for this. For those who cannot do it in-house or solve it in another way, they are risking to fall behind. With this third-generation trading, as we heard, or algorithmic trading, this can create the limitless sportsbook, and that is what the market is going to demand. Furthermore, with Shape and Abios, we do have the true market leaders within those segments, which is once again showed by different awards that they have received.
Shape Games really can offer this front-end true differentiation with their front-end products and engagement tools, which are going to be more and more important because the sports betting is becoming an entertainment product, but also because when we are moving to this limitless sportsbook, that is what is going to be required in order to be able to present all this endless, limitless offerings. Abios, sorry, Abios also clear leader in their market. Since esport now is starting to become regulated in the U.S., we see state by state considering regulations or doing regulations, and we think that that will also be the norm in Latin America. We think that there's an appealing opportunity for many of these operators to complement their sportsbook with these esport services in order to attract new customer database.
Finally, since we are pulling our modular services from our full turnkey, we can actually put together very bespoke packages for operators, and we can meet whatever operators need there are. Say for some operator might want to outsource the Nordic sports together with in-event combination in some U.S. sports or together with something else, we can put that together in a bespoke package to that operator. That is very unlike other players in the market providing isolated services because they tend to focus on one single service. The value for the operator is, of course, that first of all, they can fill their gaps with our different services.
They can pick and choose, but also they only have to do that with doing one integration, not multiple from different suppliers, and they don't have to manage several or multiple supplier relationships. We're happy, and we know that we have a world-leading turnkey platform. That means that our individual modules are part of a bigger scope so that we know that they are proven, reliable, and tested, and we're now happy to offer that up to this segment. From our position, it's also a very good opportunity for us to start to build relationships with these customers, which in the future could lead to further upsell. Let's go into the partial outsourcing segment. These are the operators that do not have their own in-house tech stack. They want to outsource it, but they also want some flexibility.
I was mentioning before it could be that they want to do their own trading in some specific sports, or they want to have an open platform where they can introduce services from other third parties. Typical customers we find here is, for instance, the state lotteries. They usually have their own trading organization. Or it could also be legacy European operators who have been on their own tech stack, but that tech stack have become outdated. It no longer is either cost-efficient or it's no longer can provide the functionality that they are needing. They are thinking about moving over to a fully outsourced or an outsourced model, but they still want to keep some of their trading capabilities in-house.
For these operators, the Kambi Flex is a perfect solution where they can benefit from our proven, reliable, and world-leading platform, pick and choose whatever services they want to have on top, and complement that with their own capabilities or other third-party products. Why do we think that we will be successful here? Well, first of all, for operators that do wish to have some control on their own, they no longer have to evaluate the risky road of either going down to buy a sportsbook or to develop a sportsbook on their own. In terms of acquiring a sportsbook, I mean, honestly, there are not that many options left there, at least not to the level of quality that Kambi can provide them with.
If you consider to build your own sports book, we can for sure say that that is not an easy task, and it for sure takes some substantial time, and it's going to require some significant investments, and without having any sort of guarantee that that will succeed. For those operators who want some sort of own control, the Kambi Flex is a perfect solution where they can leverage our world-leading platform, and they can complement that with their own USPs, such as their own trading or their own capabilities, so they do get the flexibility that they are asking for. Many of these operators are also valuing the compliance capabilities that we are having and the speed to market since they are probably going to want to go into new markets, and there is the strength of Kambi.
We know that we are really good in regulatory compliance, and we have a track record in launching first on the first day in so many markets. The Kambi Flex really provides the optimum of two worlds for these operators, that they can still do some of the operation in-house and rely on our market-leading product or platform. We come to the full outsourcing segment, and this has been the bread and butter for Kambi since our inception 10 years ago. We have done a fantastic job here, not only manifested by the number of operators we have as customers, but also manifested by all the awards that we are receiving constantly. Operators in this segment can actually vary quite a lot.
It can be from tier ones down to new entrants in new markets. It could also be tribal operators who have the asset of market access in terms of license for a market. It could also be other players who are sitting on an asset, a valuable asset, such as a huge customer database, and want to enter the sports betting market to leverage and capitalize on the opportunities there. Big media houses, for instance, is one example of those. What these customers are looking for is that they do not want to focus on marketing, brand, and customer acquisition, and not so much on technology. They are looking for a reliable, high-quality, competitive, but also cost-efficient solution. This is where Kambi really has been excelling in the market. Why do we think that we will be successful here?
First of all, we are the undisputed leader in the B2B outsourced, fully outsourced turnkey solution. If we think about We believe that this segment of the market will continue to be highly relevant and very important for us. Because if we consider the markets that are yet to be regulated, we've been mentioning them before, Brazil, Japan, India. We should not forget either that in the U.S. there are still around 20 states to become regulated. In many of those, the access is restricted to tribal operators only. For these in these scenarios, what these operators most probably will look for is to have a very competitive solution to a cost-efficient manner and speed to market is going to be of extreme importance. These are what operators can get from a Kambi full turnkey solution.
It is also quite risk-free because you know that the cost of the sportsbook is always going to be in relation to your revenues. That is another angle that these operators are appreciating. In fact, we can see that operators that do choose to go on a turnkey solution often tends to be more profitable than others. You will hear more about that in the next section from our CFO, David. Finally, one of the key assets that we have and that these operators can leverage is the full power of our network.
We have, like we've been saying, over 40 customers in 55 jurisdictions, and the amount of data, real-time data, that we collect from this network, that helps us to continuously improve our offering and we also can see how the behavior of these players are evolving, and we can improve our product and our offerings. We put also continuous development into our platform to secure that we are on the edge and that we are pushing the boundaries constantly to have a very competitive and market-leading product. The beauty of all this is that with these offerings and with the fact that we are now opening up our platform and modularizing our services, is that first of all, we will have a relevant offering for all operators, regardless of their strategy, but also regardless of where they are in their life cycle.
From now, operators do not have to feel confined into one solution, one static solution. They can actually, throughout their life cycle, jump or move between these different offerings. If you take an example, let's say a company or an operator joins us on a Kambi Complete full turnkey service. A few years down the line, they might, when they have matured, when they have built up sportsbook competence, maybe they want to actually trade some sports themselves. It could be because they are sponsoring some teams or they believe that they have an edge in a particular sports. We can easily move them over here. They can still benefit from our majority of our sportsbook, from our really well-proven platform, and complement that with whatever they want to maybe take in control in-house themselves.
Likewise, we can envision an operator who have been using some of our modular services on their own tech stack. A few years down the line, as we have heard, it's not easy to maintain and develop your sportsbook platform in order to keep it on the competitive level. They might run into the problem that the tech stack doesn't really work for them any longer. They can't keep up with competition in terms of functionality, or they can't keep up with all the re-regulatory compliance or requirements. Still, they have competency in-house, they want to continue to trade or do other stuff. They can easily move over and benefit from our sports betting platform and pick and choose what they want to leverage from our portfolio and what they want to do on their own.
To summarize, we think that we are extremely well-positioned for the future. Not only are we present in a market that is growing, sports betting is getting regulated on day by day in more and more space, in more and more countries or markets, and the industry is growing as in itself. With our broader portfolio, we are also in a position to upsell and cross-sell. We have 40 customers, plus it's not that many of them that have either Abios or Shape. Now, after our acquisition of Abios, we have 6 customers who have complemented the sportsbook with Abios feeds and widgets. Of course, we see a possibility since user interface is going to be more and more important, and I think we've stressed it several times here, to offer their personalized user interface to our existing customer base.
Likewise, I also think that there is a possibility that, or we hope that there is a possibility, that we also can leverage the customer base that Abios and Shape has in order to upsell our standalone modular services or even our sports platform. We also find ourselves in a position where we have a much stronger PR proposition for new partners or prospects, because now we are a one-stop shop for those operators who want to have a combined sportsbook with a native front end. Since, once again, it's going to be extremely important to satisfy the engagement of the players that they want to interact with the sportsbook, with the other players, and also with this limitless sportsbook that we see coming here in the future, that could be a very appealing proposition.
We're now doing a much tighter integration between Kambi and Shape, which will allow further enhanced functionality. Finally, with this new proposition, the new offerings we are having, we can address all the segments of the market, regardless of the operator strategy or where they are in their life cycle. With that, I hope that I have been able to get you equally excited and convinced that we are extremely well-positioned for the future. Thank you very much. Sorry. Yes. Let me introduce David, our CFO.
Thank you. Thanks, Cecilia. Hello, everyone. Good afternoon. Welcome. My name is David Kenyon, I'm the chief financial officer for the Kambi Group, today I'm gonna talk you through our financial prospects in the context of Erik's product development strategy, then Cecilia's presentation now on how she intends to commercialize the new portfolio that we have. I'm gonna start by focusing on the revenue opportunity. I'm gonna tell you how the revenue opportunity is growing, I'm gonna tell you what steps we're taking to really maximize our potential revenues. Firstly, we really think that the B2B sportsbook market is gonna grow rapidly in the coming years. I'll talk you through shortly some of the key regulations that we see happening in the next five years.
We also think that the global economic conditions, as we see at the moment, are really going to drive an increased appetite for outsourced services. Even operators who want to own their core technology will still use suppliers for be it core or adjacent services. High-quality sports data will drive automation, as Erik talked about. That's going to drive new product opportunities for us and open up new revenue streams. UX will become all the more important in this global economic conditions as operators need to have a kind of cutting-edge UX to retain and attract customers. What are we doing? What steps are we taking? We're not just letting the market grow, we're also taking active steps to maximize our revenues. You've heard about our market-leading technology, which we think will help us continue growing the turnkey revenue and sales.
Also, we're enhancing our portfolio, as you've heard today, with our open platform and the modular services. This is gonna open up all new revenue streams and opportunities for us, and I'll talk you shortly through how that significantly increases our addressable market. Let's look at the addressable market. I mean, we're obviously in many regulated markets today, but you can see here there's some really key territories we've picked out that we think can materially grow the addressable market in the coming years. Firstly, in the U.S., we see potential regulation in Texas and California. We think Texas can be a one and a half to 2 billion EUR GGR market at maturity, whilst California even bigger. California, we think, can be a two and a half to 3 billion EUR market.
In Brazil, there's talk of regulation, we hope it's coming soon. We estimate that to be a EUR 2 billion market. As Kristian Nylén mentioned, we've made our first signing there, which we're very excited about. Looking further beyond that kind of timeframe into Asia, India and Japan, we think may regulate. India, we estimate at a EUR 2.5 billion market, and Japan, EUR 5.5 billion market. These are just five examples of kind of territories we see that could regulate in the coming years and are absolutely kind of game-changer in terms of the addressable market we can look at. You may remember back to the last Capital Markets Day, we talked of a total regulated sports betting market globally of EUR 44 billion-EUR 63 billion in 2026.
Obviously, market conditions have changed somewhat and the regulatory timetables have shifted. Now we're looking at a market of $50 billion by 2027. Maybe we've just moved on from that lower range of 44 in 2026, now we're looking at $50 billion by 2027. The important thing is not that it's doubling between now and then, but that we're also changing our business model, and that massively increases the parts of the market that we can address. Whilst we're today, we're looking at addressing $11 billion of a $27 billion dollar market. By 2027, we think we can actually address and look at all of that $50 billion dollar market. Our addressable market goes from $11 billion - $50 billion in the next five years.
I'm gonna talk you through, firstly, on the revenue side of things, by the different parts of the business, what we do today to drive revenue, and why we think each part of the business will grow in the future. Starting with the turnkey. Of course, this has been the cornerstone since we listed in 2014. This is what's driven our profitable growth to date. We've got a history of increasing operator turnover. The blue columns in the, in the chart there is an aggregation of our operator turnover, and you can see a consistent level of growth, despite a few bumps in the road that I'll touch on later. Overall, it's a very impressive increase in growth.
The orange line there is the operator trading margin, where you can see, again, a steady level of profitability around the 7%-9% level over the years. With our revenue share model, which drives most of our revenues, that has led to an increase in annual revenue from EUR 76 million in 2018, steadily increasing through to EUR 162 million in our last full reported year of 2021. I'll talk more later on our scalable business model, but you'll see that's continued that's been a kind of another cornerstone of our business model, and that's applied through the years. That increase in revenues has fed through to an increase in operating profit, EUR 12 million in 2018 growing through to EUR 57 million in 2021.
We've got a very strong conviction as a company that operators who use Kambi for the turnkey are more profitable than those who try and buy it or build it and then run it in-house. It's for many reasons. You've probably heard some of them today, but I'll just try and pull it together again, because for us, it's so important to really try and explain why we think the turnkey can generate more sales, more revenues for us in the future. Firstly, we think operators using Kambi, their revenue grows faster than the market. With our best-in-class technology and our kind of immediate access to new regulated markets, we have a clear track record of operators growing faster than the market.
Secondly, with our cutting-edge technology, we think operators will need to spend less on free bets and bonusing to drive their revenues, which they would otherwise have to do if they had a product deficiency gap. It's an important part of their P&L, and with us, we think that can be smaller. Using Kambi removes the major upfront costs of buying or building, the risks of delayed market launches, and the risks of the complete project failure, which we've seen over the years. Our pricing, as Kristian mentioned earlier, is, it's done on a flexible basis, and we'll always flex it depending on the size and the prospects of the operator.
As he said, we can assure you that, and any operator, that we will always be able to offer pricing that is much lower than any cost they will have to run the sportsbook in-house. Again, moving to Kambi, it's a move away from a fixed cost base to a variable cost, depending on the level of profits. This, in this time of high inflation and economic uncertainty, we think that move away from a fixed cost base makes all the sense in the world for operators. When you pull all these factors together, we have a really strong conviction that using the Kambi turnkey will increase the profitability and the competitiveness of any partner using us and takes away the risk of running a sportsbook.
To summarize everything you've heard today in terms of the turnkey, we see huge growth opportunities ahead of us. Operators will grow faster than the market with our best-in-class technology and speed to new markets. There will be new markets. We see key regulations coming in the next five years, and we think our business model is perfectly suited to today's economic environment and makes all the sense in the world for operators to sign up to. I wanna touch quickly on some of our, the two recent acquisitions we've made as well because these are kind of new to you potentially and it's worth explaining how the revenue, what the revenue model is on each one and why it's gonna grow in the future. Firstly with Shape Games.
The majority of their revenue comes from the work they do on the front end, so their platform and the bespoke development they do for operators. With that there, the fees are really driven by the level of work they're doing for their operators. Today, this is driving the majority of their revenues. They also work in the field of marketing and customer engagement. They offer marketing services and data and analytics, and this is a part of the business that we see quite strong growth prospects for in the future.
They have an exciting portfolio of clients, amongst them Danske Spil, Norsk Tipping, BetCity, which was our first cross-sell from a Kambi portfolio to a Shape opportunity, and betJACK, where they've been offering a free-to-play solution, as Cecilia mentioned, for a long time, pre-regulation, and now they've launched real money service for betJACK in the Ohio market. They posted around EUR 9 million of revenue for the first nine months of 2022. We see some real strong levers for growth in the future for Shape. As Cecilia mentioned, we've got a big portfolio of customers that we're looking to cross-sell Shape into. The native front end remains so important.
We've heard today about why it's important from Erik, you know, mobile is driving such a big part of turnover for operators that having that cutting-edge front end is critical for them, especially in today's economic environment, where instead of throwing marketing money at attracting and retaining customers, a strong UI, user interface can really help the operators in that regard. New regulations, they also demand strong customer engagement tools to really build and retain a customer base when customers enter a market. Very exciting prospects for Shape. Abios we've heard about. It's in the esports space. Today, all their revenue is coming from the services in relation to data visualizations and compliance in relation to esports on fixed fee, recurring fixed fee basis.
Going forward and looking at Q1, they're about to launch, as Erik mentioned, their odds and trading service for the first time, which will be on a revenue share, as you've seen previous historically with Kambi. Again, there's reasons for belief in the growth of Abios going forward. They've secured data rights long term, which is completely critical to their business model. They're about to launch odds, and they have a signed contract for that, the first one, and hopefully there'll be many more to come. As Cecilia talked about, there's huge interest globally in esports.
It's growing rapidly, you know, especially if Asia regulates sports betting, we think there's a serious growth potential there on the odds and trading for Abios. The new one, which Erik talked a lot about, but the algorithmic trading, the last part I'll talk about, the last division I'll talk about. This will drive kind of two revenue streams for us, both on the existing turnkey. We heard all about how this exciting new venture will drive more markets, faster markets, more interesting markets, a wider range of markets, all happening at much greater pace. That will increase our turnkey revenues and the revenues of our partners. We'll also look to sell this externally as a module, so standalone.
creates a separate whole new target segment we can attract with this algo trading. That will be on a revenue share basis, quite likely. These are next generation products built from artificial intelligence and richer sports data. We can target new revenues with them and a wider customer base. They'll enhance our already market-leading pricing capabilities, as you heard from Erik, and increase the profitability of our operators with better and more interesting odds. That will obviously feed through to us through a revenue share. All in all, when I pull all these factors together, it's a very exciting time, and there's a lot of reasons to believe in strong growth in our revenues. Our partners will grow faster than the market. We will enter new regulations, and we heard about some key ones earlier in the presentation.
We believe in new signings. We think our business model is really well suited, outsourcing is definitely the future for sports betting. With Shape, user experience, I talked about being key for operators, Abios is also in a rapidly growing esports market. Algo trading is the new part of this jigsaw for us, but it's, it can drive both drive our turnkey revenues and become a new revenue stream in its own right. On that basis, we set an ambition level today in the press release this morning of growing our revenue from the 2022 levels to 2-3x those levels by 2027. Of course, while delivering on this financial ambition, it's really important that we optimize our cost base and control our costs carefully and get our money's worth from those costs.
I want to talk a little bit about what we're doing on costs. The really strong news we have here is that we're now in a position to benefit from the years of investments we've been making since we started the company, really. This will enable us to slow down our rate of underlying cost growth, especially in the turnkey product. We'll see increased automation in trading processes, and the reduced focus we have on building trading systems for humans will free up resource for other development areas. The scalability principle we've had in Kambi since day one will continue to apply. I'll talk shortly around significant cost efficiencies we expect to make through our modules. There will, of course, be some drivers of cost growth, and I will talk about them.
Really, the main message is our underlying cost growth can slow down, and we can focus our new investments on areas targeting commercial growth. I wanna talk through a little bit by division because obviously our business is getting more complex. We've gone from one product being the turnkey to being a multi-product group. I'll talk through a little bit the different parts of the business. Firstly, the turnkey, again, it's what we've been doing for many years. The biggest part of our cost base here is our staff. Around 60% of our cost is related to our staff. We have 1,000 employees.
I'll talk more in a minute, we spent a lot of time in the past and a lot of money on automation, and that and other investments we've made historically will enable us to slow down our headcount growth. So that 10%-20% headcount growth we've seen in previous years will slow right down, and we'll give more detail on that as we go on this journey in the coming years. The important point there is we'll be able to slow down that headcount growth rate, but still whilst continuing to deliver on our revenue ambitions. 10% of our cost is in relation to our infrastructure, and this is our cloud-based services we pay for and the data centers we need, and these are driven by the regulations.
When we go into a regulation with a new customer, this part of the cost base is affected. The rest of our cost, all the other parts of our business, so our sales and marketing efforts, the cost of applying for and maintaining licenses, the offices we have for our 1,100 staff for the group, the data costs which we have to incur and then recharge out to operators, and amortization on the acquisitions we've made in the last couple of years. Say all this 30% bucket of cost is really driven by development of the business, new customers, new jurisdictions, and acquisitions when we make them. A little bit more on cost.
I can say we've been growing cost historically in the turnkey by around 15%-20% a year, and actually even slightly higher over the last couple of years as we emerged from the quiet years of COVID and then have made two acquisitions as well in the last two years which have added to our cost base. We've been running slightly higher than 20% a year the last couple of years. When at that level of growth, we were focusing on some key areas in our technical development in our business, reinvesting into the product, building out our channel expansion, so working on the retail channel, moving to new jurisdictions, new markets, integrating new customers, scaling up our internal infrastructure. These were all projects that enabled us to drive revenues.
At the same time, we've also been focusing a lot on automation. I'd say it's these initiatives all together that today enable us to announce that we can slow down the cost growth rate on the turnkey product. Scalability, I've mentioned it before, it remains a key principle for us as it's been there since day one. We do things once. It's for the whole portfolio of operators. We build one product. In trading, we set the probabilities on the matches once. Then give our operators tools to adjust the payback. We have one technical infrastructure globally that again, works for the whole portfolio of operators. We do regulatory compliance once. It's for the benefit of all operators who want to work in a given jurisdiction.
This effectively decouples our cost base from our revenue base. When revenues go up, we don't need to grow our cost base at the same rate. This principle will continue to apply, and if we can grow our revenues at the ambition level that we talked about, then, you know, our profits can go up significantly. In addition to the turnkey and the cost growth elements we see there, the different modules are gonna deliver different kinds of savings and synergies. The first thing to say is we're gonna share central functions across all these different modules you see before you and the others that come up in the future journey. We share central functions to save on central costs and make sure there's no overlap and kind of wasted costs there.
In terms of then of additional synergies, with Shape, we're gonna move to one front-end platform and one front-end organization and make synergies there. With Abios, we'll be able to move to one single esports trading team. Currently, we have two. We'll move to ultimately also to an automated esports trading platform. On algo trading, there will be a 2023 ramp-up in costs when we kind of build up this capacity. Ultimately, we think that the savings we can make in the group are gonna exceed that cost base as we free up development capacity and we need less resource in trading. I'd say all these three blocks of synergies, in particular, the savings delivered by algo trading, they are key parts of our planned cost growth in the coming years.
When I look at that cost growth from where we are in 2022, we will reinvest into the turnkey, as I said, it's going to be at a lower than the historical run rate. Of course, there are some pushes and growth factors in our costs, inflation, development of the support services we need to grow the business. Amortization will increase as we flow through the amortization on the acquisitions we've made. With Shape, of course, it's a new element to our cost base, in general, any cost growth with Shape is linked to any revenue opportunities. On Abios, we'll make an initial scalable investment into a trading platform for them. Again, the cost growth on that part of the business should be relatively stable.
In algo trading, there will be a growth in costs in 2023, which we'll probably talk about at the Q4 report, and we'll give more color to that. Ultimately, the costs in that part of the business will be more than offset by the savings we can realize. This forms our path to 2027 OpEx, which feeds into our financial development and the targets we set today in the press release, which was sent out this morning. It covered two points. We believe revenue can grow 2- 3x from the 2022 levels, and we believe that EBIT will be in excess of EUR 150 million, given all the assumptions you've heard today.
We recognize, of course, there have been some bumps in the road in our financials in the last few years. There have been some customer losses. The targets we set out here are based on our conviction in the business model you've heard today. We're excited to be able to take active steps to grow our revenue generation capacity. We believe we'll continue to show scalability, and the synergies and savings I talked about will suppress our OpEx growth and lead to a significant increase in profitability. One of the reasons we have confidence in this plan is a strong financial base with our strong balance sheet. We're structurally cash generative, and we can convert typically 60% - 80% of our operating profit over longer-term periods into cash.
We have a strong cash balance despite having made two recent acquisitions entirely using our cash reserves. We have the ability to repay the convertible bond with Kindred, and we have no other debt in the business. We also have a bank of repurchased shares that can fund future M&A. All in all, we think it's an extremely stable base for our future plans. It's really important that we keep a strong balance sheet. Of course, we're in the sports betting business, and there can be runs of bad results which impact our results, especially on the revenue share part of the business. It's really important that we have a strong balance sheet for our future for our partners and future partners to know that we're there for the long term, we're financially secure.
Above that, it enables growth opportunities, whether it's the reinvestment into the business I've talked about, future share repurchases or M&A in certain areas which we could potentially still enhance our business further. I want to summarize the investment case as I see it. We've got a unique strategic asset here, clearly recognized as the number one supplier in the industry, the supplier of choice with kind of market-leading know-how and technology, as you've heard today. I think it's a really unique asset in this industry. The flexibility we've introduced with our new business model increases our sales opportunities, and that business model will remain highly scalable. This growth potential, as we enter this new phase, I think it can lead to significant growth and profitability, as we saw in the targets we delivered.
Yeah, that's the investment case, and I hand you back to Kristian on that note.
Thank you, David. I think two analysts, Oscar and one more this morning said had a line ambitious targets, and I fully agree it is quite ambitious targets. I will just go through a few things that really has to happen for these targets to be realistic. First of all, we need to retain our key partners, and I'm very confident with the platform we are building, giving operators slightly more flexibility. We are in a great position to retain our key operators. Secondly, we need to roll out the third-generation trading that Erik has been talking so much about today. Obviously the most important with it is that it will increase our opportunities to sell more services and have an even greater product.
It also, of course, will make us being much more cost efficient in the future. Thirdly, we need to extend our lead as a number one supplier in the Americas. I'm not worried at all about that, as David just mentioned, in Americas, there are a few key markets not opened yet that is really important for us. I think we're greatly positioned, but we need the regulator to act as well. What I'm talking about is of course Brazil, Texas, and California. They're really important for our strategy and our targets to be feasible. We need to sign tier one operators across our product portfolio. Again, I feel we have a really good opportunity.
Finally, we need to be able to launch in one major regulated market in Asia before 2027. Either Japan or India or hopefully both of them. If it happens, I think it's very, very feasible. What do I want you to remember? What do I hope that we have conveyed talking to you today? Firstly, of course, we are the number one sports betting supplier in the world undoubtedly at this point. Further market regulation will grow the business significantly as it is. On top of that, with more modernized services, we can increase our addressable market to well more than twice the size it is at the moment. With the cutting-edge third-generation trading, we can take a leap and become the clear number one even considering the leading B2Cs.
If we can do all of this, I'm sure that we can reach an EBIT in excess of EUR 150 million by 2027. Thank you very much. Over to Mia in Q&A.
Yes. Thank you, Kristian. Thank you, Erik. Thank you, Cecilia, and thank you, David. Now it's time for questions, and as I said in the beginning, you can turn a stool.
As I said in the beginning, there, if you are here, in our office, there are microphones. If you just raise your hand, we will get you a microphone, or if you are watching through the web, you can send them in to me, and I will read them out here. I give you a few more minutes. Shall we start with questions from the room then? Yeah. Oh, there you are.
All right. Thank you. It's Oscar Engkvist from ABG. First of all, I just had a question for Kristian, on the pipeline that you've been talking about the last 12 months, mainly I would say. You talked about a nice pipeline, and we have seen 10 signings over the last year. Are you satisfied with the delivery of the 10 signings in terms of size and also on the number, or should we expect that the pipeline is still very strong in looking into 20 23?
I think pipeline is still very strong. Having said that, I'm really happy with especially the last couple of signings we have done with Rei do Pitaco that I talked about a little bit and of course the Great Canadian. None of them has really started delivering yet, but they will, I'm sure of. I just need Brazil to open up as well. Yeah, very pleased with the signings and I reiterate that the pipeline still looks very, very strong.
All right. Thank you. Next one just on more of the product side. The three solutions obviously sounds fantastic, I would say. Just looking at the other suppliers in the market currently, let's say DraftKings and Genius Sports, who powers the Bet Builder product at the moment, doesn't really seem to be seamless. How are you going to solve the problem just integrating your modules into all the different legacy technologies? Are you confident in reaching that?
I think we have a much, much better chance than the solutions out there. I think we know what it takes. We are operating in all the different areas from the trading to the front end. We understand how to support operators into doing that. I would say that, I mean, I'm more confident with some operators than others. I'm sure that we will have a best solution on the market for the operators who are interested.
Just to follow up, maybe a dumb question, but have you tried with anyone other than Kindred, for example, with an older technology to try to integrate one of your modules?
Not yet.
All right. Next one, just on automation. You are very optimistic about the automation and the AI, the algo trading, I would say. Just, Kindred, for example, when they are announcing that they're building an own sportsbook with, well, 160 traders, approximately, versus your more than 400 traders. If you can, like, automate it with AI, why do you need so much traders, from your side?
First of all, I think it was quite clear the message that, we believe that there is cost efficiencies to be done in the future here. We more or less just started. I think another comparison, Flutter talked about having 1,200 traders last week or couple of weeks ago. We are in a quite good position already, I would say. You mentioned Kindred, they have also talked about pricing feeds from other sources. It's not a comparable figure. At the moment, we do all the pricing in-house on quite a low number of people, I would say. We expect that number to be lower in the future.
All right. Just also on the third-generation trading. Aren't you worried that you are doing the groundwork and other suppliers or operators are just scraping your odds?
Yeah, I can take that. No, not at all. I think the products they're getting so much more complex with the Bet Builder, for instance. There is just no way to scrape that because it becomes more on demand. The player asks for a specific price, the only true answer there is within your algorithm. It's impossible to scrape. Similar on the player props products. If you don't know what your odds is, you're gonna need to set those limits very low. Then, yeah, your entertainment value is just really bad. I think scraping is not much of an issue here.
Okay. Just one final one on the financial targets. Maybe you're expecting some of your current clients rolling out from the platform, maybe Penn, Kindred, and BetCity. What are your assumption? Because you're emphasizing the retention of your current clients in the financial targets. Also just on to be clear on Brazil, Japan and India, for example, you are not going to enter that as long as they are not regulated. Is that correct?
Do you want to-
I mean, that is correct. We will look at waiting for regulation in those countries. That's the driver for us entering. I mean, of course we factored in any known any expected losses, you know, or customer transitions. That's, it's in all our modeling, of course. Really the focus is on where can we grow the business and, you know, you've heard all these different areas which I think will drive growth in the coming years. That's really been the focus but...
Okay. Thank you very much.
Hi there. I'm Martin Arnell with DNB Markets. My first question is like in a bigger perspective, what do you think is the main lessons that you've learned from the loss of customers in the past years?
Well, how fast it can go. I think, especially with the success in share price DraftKings had when they did the SPAC with SBTech. I think a lot of the industry changed and it became so fashionable overnight more or less to have an vertically integrated sportsbook. I think, yeah, we need to be more humble about it in the future and really make sure that we have a service that fits all kind of customers in all kind of environments.
When you look at these companies today, do you feel that they are struggling or that they would have been much better in your portfolio, or how do you think about that?
I feel obviously that they would have been much better off in having us as a supplier still. I leave it to you guys to look yourself. I think it's quite evident.
today you've touched upon a lot of new things in the product. And when you do your own analysis of competition, how far do you think they have come in these areas and what's your view on the competitive landscape and the progress?
Yeah. I think we shared sort of mostly our view how where we are now. We are in the, I would say, shared lead with the Flutter and the bet365, the two biggest B2C books. They beat us on some KPIs. We beat them certainly on some others, both when it comes to the American market and the European market. We do believe that the steps we have taken now with the third-gen trading, others have not yet. Have they started? I don't know. We think we are ahead.
On that topic, the limitless sportsbook and third-gen trading, how will it be visible for me as a player? What will the opportunities?
That's the million-dollar question. yeah, I don't know if you saw that video, but it's something we're exploring right now. One thing of course is how do you offer this choice to the players? I think it may not necessarily be that, well, now we present 500 markets, let's give them 5,000 in a more clever way. I think personalization will come in, for instance. Someone, probably other type of algorithms now has a much bigger library to pull from to that individual experience. I think that's one likely direction it will take.
Mm. And-
Yeah. I think it is a lot about these quality KPIs, rejecting fewer and fewer bets, being more sure about probabilities to take higher stakes and so on, to publish earlier. These algorithms, for instance, already now they can publish the full season. They comprise the last game of the Premier League season, and that's quite cool what you can do with that.
My final question from me is when you onboard a new big customer, how does the integration work today? How, you know, what's the average time to expect if you announce a new big, tier one, you know, how quickly could you be fully up and running with that customer?
It depends a lot on I mean, for instance, do they carry their own front end or are we using our front end? Is it a new regulation or is it existing regulations? I mean, as a benchmark, yeah, I would say if there is no bespoke work more than a platform integration, 8- 10 weeks.
I think in the case of someone with an existing sportsbook, we're often more gonna be on their side. They probably want to have quite a bit of time there to plan a project like that, more so than whether we can deliver.
Thanks a lot, guys.
Hi. James Thompson from St. George Capital. Maybe first to David, just sort of trying to break down that revenue growth target to 27. If we look at the slide you put up in terms of the addressable, full turnkey B2B, that's obviously doubling on your estimates between now and then. Could you perhaps break down, in terms of that doubling, how much is organic growth, how much is kind of new market growth, and then perhaps any kind of share assumptions you might have made within that?
I can't get into specifics, but I mean, a big part is the new territories that you saw driving on both the turnkey and open platform, but also on the modularization. I guess the open platform is included in that almost doubling flow on the turnkey. We're now adding in the open platform. When we look at that's a new feature that we're, you know, that significantly drives that 11 to mid-20s. On top of that, we're adding the modularization. It's a combination of all these different things, but certainly the regulations are a massive part to it.
just on the California legalization assumption.
Yeah.
Is that online or would retail be enough to get you up to those numbers?
To be honest, Yeah, I think it wouldn't be very bad for Kambi per se with a only retail solution to start with. I think we're extremely well-positioned, with the casinos in California. Without having the competition of the big online brands, I wouldn't mind to see that as a start.
Perhaps one last one on the balance sheet for David and Kristian would be, obviously you've spoken about the benefits of being net cash, but does that kind of absolute balance grow in line with revenues in terms of where you're comfortable holding it? Kind of second of all, once you breach that level, where is that? You obviously disclose M&A repurchases, reinvestment. Where do those kind of rank on a 12-24 month view?
I think it does go up slightly, and we've never put a public number on it, but, you know, we internally, we just have a kind of a level that we always want to keep on that cash balance, and I think that probably would go up a little as we get bigger and, you know, you obviously then I mentioned the possible run of adverse sports results. The bigger you are, the more slightly susceptible you are to that. In terms of ranking of use of cash, I think top priority will always be reinvest into the business 'cause that's, you know, that's what really drive those revenue ambitions. After that, really, I mean, M&A is on an opportunistic basis if we need it and it can really contribute to our revenue journey.
Otherwise, you know, share repurchase is absolutely something we've done before, and we could for sure look at doing again.
Okay. Hi, Victor. What is in your hands in terms of reaching these targets? How much is new regulations, these new markets, how big is that in the delta between here and 2027?
I mean, you saw the impact it has just with those five markets I pulled out, you know, between them, they're kind of $15 billion or so in terms of addressable market, just those five markets alone. Clearly it's a material part of our revenue ambition. We haven't said exactly how much. I mean, it's quite hard to put a specific number on it 'cause it's such an amazing target.
maybe it's the largest driver, individual driver when 'cause you haven't shared the individual stepping stones to each.
I'd turn it the other way. If those regulations don't happen, it's gonna be very hard to hit that revenue range, I think is,
Do you have any idea on timing for this? Of course, I won't hold you to.
I think of all of the ones we said, Brazil's most likely to be first in the line and probably the Asian opportunity, Japan, India, probably at the back end and the American one somewhere in the middle.
Yeah. That's another thing. The phasing of these targets, is it to be seen as very back-end loaded, last two years or something like that with exponential growth from new markets? Are you implying you will be able to grow revenues also in 2025, 2026 with Kindred phasing out? Is that how we should read the, your ambitions?
It's so heavily tilted by the regulation, you know, those Asian ones, I don't think we expect them to happen until I don't know really, but 2025, 2026. You know, it's towards the back end of this period we're talking about. We have to a little bit wait and see with that regulation.
I think it's very important. I mean, we are not trying to do forecasts over the next year by year here. We have one target and that is 2027 and it's very much driven, as you say, by the market opportunities here with Asia and Americas. Yeah, it's probably not linear. That's...
Would it make sense to maybe have 'cause we never know when regulations happen and sometimes they don't at all. Would it make sense to have a dual target or a figure, which is the revenue you could reach with existing markets and existing product roadmap, things that you can control yourselves? 'Cause it seems like a lot is up to regulators and politicians in other countries.
I mean, we have for the first time giving one target. I think you should be happy with that at the moment.
Yeah, fair enough. On Bet Builder is the first product out, could you share anything about pricing? How will you structure that? When will you start to sell it? What kinda revenue opportunities that alone? Anything that you could help us with understanding the modularization in terms of revenues in order for us to have some faith in the 2027 targets?
I will not give any range of where we're looking at selling it. It's helping the competitors too much. Obviously, where we're looking to sell this is to tier 1 operators. I mean, with the sheer size of them, I mean, it would contribute quite significantly if we could get a few of them. It's also very binary. I mean, it's hard for me to give a number on it.
Okay. Final question from me. The third-generation trading, when should we expect that to be fully implemented, up and running, generating revenues and cost savings, of course?
Right now we're running pretty much soccer. We're gradually rolling out more and more leagues. Our goal for this year is to run all of soccer, including live betting on it, and also add one second big sport, which will start on the iteration on a new sport. You can probably expect that we roll out in order of priority 2-3 sports during the coming couple of years. I think we cover a big part of our turnover that way, well before 2027. There will be many sports as well where this is not necessarily the priority, where the data is not rich. We're not necessarily gonna go.
I think we'll go deeper into these sports, instead, probably the top sports.
Hi, Georg Attling with Pareto Securities. Just two questions from me. Does the revenue target include M&A?
Is the-- Doesn't.
No additional M&A sort we've done historically, no.
All right. Okay. You talked about, let's say, the tier one operators, probably 10% of their GGR being derived from third-party suppliers. How much of those 10% do you think that you could capture with your current toolbox, so to speak?
Well, I think we have a fair, a good chance, because we, as we have described, we believe that we have really competitive products to offer. Exactly how much, I mean, it's very difficult to say. It probably will depend on. This was an average figure also. It probably will depend on which operator we're approaching and how much that could be of interest to that operator. We do believe that really that we have very, very compelling offerings to offer them, and we see that there is a need out there.
Okay. Have you start showing these different offerings to potential customers, or is that something you will start to act more actively sell now?
No. I forgot to say that in my presentation. Yes, we've had active discussions with several of these operators and It's been received very, very positively. We hope to be able to update further later in the year.
Any more questions from the room? Yep.
Bill Odar with Kiel Capital. I think the press release this morning stated that the board is looking into formulating an incentive program that aligns with the vision that you just announced. Could you provide some context or more flavor on that?
Not really. We are working on incentive programs as we speak. I think so far, we're quite clear that, I mean, this will be a big part of that work, but can't elaborate more about it yet.
Any more questions from the room? No? Okay. A few from the web here. I will start with you, Cecilia. You have explained what we need to attract tier one operators, to actually buy from us. But do you see that, we will see a price pressure from them?
Well, I think it all boils down to, as I mentioned several times in my presentation, that we believe that it will be more and more paramount for operators to have high quality in order to compete in the market. That is going to weigh more than, of course, there's always a price tag to it. Since we think that we have edge products and also that high quality is going to be rewarded, I don't foresee too much price pressure.
Do you think we can sign any of the big operators that have left us?
That's obviously an opportunity and a wish. Of course we are going to address those.
David, this is for you. You actually touched on that you probably can't really answer it, but with the new financial targets, how big it will come from the modularization?
we haven't split out. We set out the kind of the stepping stones. That growth, potential growth, I'm not gonna quantify each of them.
I can't really go there, sadly.
Yeah.
You know, it's definitely an addition to where we are today, so it's part of that growth journey.
Yeah. Important, it's. Yep. Yeah. Then, probably for you, Cecilia, again here. How will the pricing be for the models? Is it revenue share?
That's a high likelihood, but we haven't really put or finalized our, like, complete pricing strategy yet for these modules.
I think it's fair to say as well that it depends a little bit on the modules.
Yes. Exactly.
I mean, Shape, for instance, that is, probably not, fully based on rev share, at least.
No.
Yeah. This is probably for you, Erik. When will you start delivering on Flex or Select? Are you ready from a product perspective to do this? Cecilia can go and sell it.
I think I went through where we are. We're absolutely not done. But we have done this modularization around the platform. We have these interfaces. If you talk about own trading, for instance, there will be some solutions that are pretty close to out of the box. I think when we talk to bigger operators, I think we can expect that they might have quite specific requirements if they were to move over with us, and that certainly will require us to evolve those solutions and develop as we go. We will partly be a bit led by the market here, in terms of what flexibility they prioritize and how they wanna operate on the platform.
Thank you. Here is probably for you, Erik. How does Shape Games native app rank compare to other native apps from competitors? Have you seen any service that you can refer to?
I would say you can't really say that it is a Shape native app. They have many apps, and they will be very different, and they build apps even on different sportsbook. They build apps on Kambi. They build apps on OpenBet for Danske Spil, for instance. I'd say they've been working for longer with the Danske Spil than they have with us. Probably if you wanna see Shape at its really best, you would look at that type of app. But of course, now when they are together with us, they're quickly catching up.
Okay. Thank you. I think this is the last one. Again, if we have a few more minutes, so if you have any questions, you can... Oh, okay. Yeah. We'll come back to you. If you have questions from the web, please send them to me. This one is for you, Kristian. You said that you need to sign a tier one operator. Is it enough to sign a few models, or do you need to sign on turnkey?
Yeah. I didn't say one tier one operator. I think we need to. Yeah. I'm thinking about modules here, rather than signing a turnkey tier one operator. Yeah. We need to be successful. We're ruling out the modules for sure. Having said that, I mean, the long-term view from me is, that it's nice to get tier ones on modules. The game changer, which I'm not sure will happen within 2027, is when these relationships gets to where we get to Kambi Flex and more of a full solution.
Yeah. The smorgasbord that you used to refer to.
Exactly.
Yeah. Okay. Yes, we have more questions from the audience.
I just had a final question on betting margins, actually. I remember, like, 15 years ago, I think Kindred guided for stability in these margins, and we've actually seen a structural uplift over time. What's your view on the next 5-10 years with all these changes you're doing? Could be interesting to hear your views on this.
Yeah. I mean, it's so many different things that goes into what the betting margin operator has. I can tell you that within our network, I mean, between the lowest and the highest, it's probably twice the margin. It depends on where you're operating, what kind of customer base you have. If you take, for instance, the Latin American customers we have, it's mainly pre-match. It's huge combos or Bet Builders, you have enormous margin. Whereas here in Scandinavia, it's more tilted to singles and live betting. Yeah, you're right. I mean, the margins has gone up quite significantly since 15, 20 years ago. I think the first step was that we actually became so much better on risk management.
We stopped losing money from smart punters in the fashion we did back in the days. The last couple of years, what has really happened is more exotic products, like Bet Builder, which is really driving margin upwards.
Okay. Thanks.
Okay. I have one more question from the web here. I think it's for you, Cecilia. Do you see an increased competition in the U.S. market for suppliers right now?
I mean, no, we don't really see increased competition. In all honesty, those customers that we are addressing, they also value to have a high-quality product. Of course, there are competitors, but we are aiming for market leaders within these, the markets where we are targeting. Those customers also tend to value a high-quality product. Yeah. We are the clear and undisputed leader. Of course there are competition, but normally the value of what we can bring to the table outpaces that competition.
David, do you see an opportunity to acquire additional services modules? Would you consider expanding your TAM to other online gaming markets outside sports? Probably for you. We take the first one for you, David. When it comes to M&A, would you like to acquire any other modules or services?
Modules. I mean, there are certain areas that we've always looked at historically that could improve our product, you know, whether it's a complementary product that sits neatly alongside sports betting, you know, virtual sports, for example, or something that enhance, you know, some additional AI capability. You know, now at the moment, we're running with an in-house project. You know, who knows. It's definitely not off the cards. The other, you know, player account management system could be something that sits quite neatly along our existing portfolio. Yeah, there are certain opportunities, but I feel like we have plugged a few gaps with our recent acquisitions, so it's nothing burning right now.
Mm-hmm. Kristian, could you consider to go out the, the gaming market? I assume the sports betting market, I mean.
I assume we're talking about the iGaming, casino.
Yeah.
Yeah.
Yeah.
I would say at the moment, no. I You should never say never, but I think what has made us great is that we have been very focused on what we're doing good. If I look at many of companies in the industry who has trying to have a, like, a full suite portfolio, like, let's say, IGT or Playtech, I mean, they become average on everything and I really don't want to get into that trap.
Okay. Any more questions from the audience here? Okay. I want to thank you so much, Kristian, David, Erik, Cecilia, for great presentations. If you have any questions after this, please feel free to reach out to me and Chris Stutzman. Stutzman, we're always happy to help you with questions and explaining this fantastic opportunity. Thanks again, and I hope I speak and see you soon.
Thank you.
For us in here, we're gonna mingle.