Hello, everyone, and welcome to today's presentation of Kambi's agreement with Allwyn. In the room here with me today, I have our CEO, Werner Becher, and CFO, David Kenyon, that are here to answer your questions following a brief introduction about the agreement. If you wish to ask a question, please use the Q&A button to the right on the screen to post a question, and we will do our best to get through as many questions as possible in this session. With that, I would like to hand over to you, Werner, to start the presentation.
Hello, everyone, and thank you for joining us at short notice. As you will have seen, earlier today, we signed a major new partnership agreement with Allwyn, a tier 1 lottery and gaming entertainment group among the top 20 operators in the industry. The agreement sees us leverage the powerful assets we have created over the past 15 years to form a new long-term partnership with a global gaming giant and extract additional value from the technology and capability we have developed. The standout element of the deal is the licensing of our sportsbook platform source code. As part of its long-term strategy, Allwyn seeks to migrate and consolidate its sportsbook brands into a single in-house platform, which currently sit on multiple tech stacks.
In addition, we have agreed a separate trading service partnership with Allwyn, where we will deliver our AI-driven odds and trading services into their sportsbook until at least 2031. Taken together, we expect what we have announced today will contribute EUR 45 million-EUR 50 million in operating profit across 2027- 2031, subject to achieving the agreed delivery milestones, which I am confident we will deliver on time. David will give more detail on the financial impact shortly. While this source code deal is the first of its kind for Kambi, the strategic rationale for us was clear. Firstly, it is a validation of what we have created over many years with an operator of the stature of Allwyn trusting us to consolidate its sportsbook brands. It also highlights the maturity of our technology and organization to be able to deliver such a complex deployment project across multiple brands, multiple channels, and multiple regulations.
The long-term trading partnership is key for us, providing recurring revenue while also strengthening our network with betting data from a tier 1 operator. And we believe a successful delivery with Allwyn could create a compelling opportunity for other tier 1 operators in the future. We have spoken before about where we see the industry heading, the innovation that is coming. This will only place the sportsbook technology of internal operators under further strain. We have built a platform ready for this new paradigm, and along with our AI trading system, we are very confident in our future. While operators can, of course, access this and more thorough alternative sportsbook, this source code model could potentially provide an attractive alternative solution to the largest operators. Handing over to you, David.
Before I hand over to you, talking a little bit about the financials, I want to speak a bit more about what this deal includes and what it doesn't. Here you can see a visual representation of what this partnership entails. As explained before, what we have announced today is made up of two parts. Firstly, Kambi's AI trading system sits outside of the Kambi sportsbook platform and the scope of this deal. The source code element Allwyn is licensing is related to sportsbook platform only. Over the coming years, this sportsbook source code will be developed for Allwyn and launched in various markets, after which they'll assume full control. At that point, the team we will establish over the next years will be also transferred to them. In parallel, Allwyn will take an odds and trading service from us, powered by our AI trading system.
All bet tickets and data generated by this will be fed back into our trading system, further increasing our liquidity and making our data even richer than it is today. The fact that our trading system and sportsbook platform have been developed to work seamlessly together means this will transfer well to the Allwyn environment and also act as proof of concept for the future. Now really handing over to you, David.
Thanks, Werner. I'm delighted to talk through the financial impact of today's deal, because I really do think it's a really attractive proposition for Kambi. Based on our current assumptions, we expect the agreement to contribute EUR 45 million-EUR 50 million approximately to our operating profit over the five years 2027- 2031. As Werner sets out, the deal has got a number of different revenue streams for us. The licensing of the source code, milestone payments linked to deliveries and launches, and the trading services agreement. The contribution to operating profit that I mentioned is weighted towards the beginning of this five-year period. Around 40%, or approximately EUR 18 million-EUR 20 million, is expected in 2027, and that includes the upfront payment, which we expect to receive in H1 next year. There's a significant financial benefit to us from the outset.
In 2028, we expect a further roughly 20%, or EUR 9 million-EUR 10 million, in operating profit, and that amount principally reflects milestone payments linked to deliveries for Allwyn's various brands. The remaining 40%, approximately EUR 18 million-EUR 20 million, is expected across 2029 to 2031, and this comprises the remaining milestone payments and the trading services income. As part of delivering the agreement, Kambi will build and train a dedicated team, which will ultimately transfer to Allwyn. As a result, we'll carry the associated operating expenses just during this implementation period between 2027 and 2029. These costs are reflected in the operating profit contribution I've just described. Taken together, we have a clear path to that EUR 45 million-EUR 50 million of expected operating profit contribution, albeit with the timing naturally dependent on delivery and the assumptions we've set out. Finally, our capital allocation priorities remain unchanged.
We intend to return the majority of the net proceeds to shareholders while retaining sufficient flexibility to continue investing in Kambi's long-term growth. Overall, we see this as a landmark transaction for Kambi that delivers meaningful financial value and attractive cash generation. Thank you, Werner.
Thanks, David. To summarize, before I hand over to Mattias for questions, in addition to the attractive financial agreement, this deal is a strong endorsement of what we have built over the last 15 years and the capabilities we created at Kambi. This deal clearly shows from my point of view, we are one of very few who can deliver a premium sportsbook at scale across brands, channels, and regulations. The agreed long-term trading service deal is an important element of this setup for us, providing ongoing revenue and adding the data from a tier 1 partner into our network. Finally, this could open the door for future opportunities. While clearly turnkey remains our bread-and-butter business, in addition to Odds Feed+, we now have another option for large tier 1s they can explore with us.
Thank you, Werner. Now moving over to questions and answers, and I will read the questions out loud to you. First question, you mentioned risk management capabilities as part of the deal. This sounds like your new MTS-style product, which hasn't launched yet. Is that correct?
That's correct. Part of the deal is our Odds Feed+ product, and as discussed, we are working also on other products sitting on top of this product. With Allwyn agreed is to deliver also these new products coming next year, not having been launched yet.
Thanks. Do you see more potential for similar deals?
Yes, but not short term. Deals like this come with a relatively complex setup internally. We need to build a team for Allwyn. Yes, this should open doors for more deals in the future. It could be seen as an additional TAM, if you want, for Kambi going forward. Please don't expect us to sign such deals every other month now.
Thank you. Kambi's stock has soared after the deal, but where does it leave all of Kambi's other operator partnerships?
I have been in contact with many of our operators in the last few hours already. I've only received congratulations so far. I think they understand the rationale of our team. As this team working on Allwyn will be a dedicated ring-fenced team building these things for them, there will be zero impact on all our existing customers. This only adds additional bet tickets, additional data to our network, where all our partners will benefit from.
Thanks. This for you, David. In what form do you plan to return cash to shareholders? Special dividend or a buyback?
No decision made yet. As I said in my, when I spoke, the money will. The first lump sum will come in first half of next year, so that's the kind of timeframe we'll be making decisions on how to return the money. As I said, most of it will go back to shareholders and, you know, in conjunction with the board, we'll take a view on that and announce that as soon as we can.
Thank you. Can you elaborate how this contract will develop or look beyond 2030? What will the product be for them in the longer term?
They get a copy of our source code of the platform. They will use our AI trading services to fuel this platform going forward. The trading service contract runs until 2031. More to the end of 2029, we'll hand over also the dedicated team for them. They will be, if you want, almost completely independent from end of 2029 to us, other than taking our trading service from us. Of course, we will continue to develop our product further for existing partners, but the source code for them will be during this project hard forked and then being separately developed for them going forward.
Thanks. Can you elaborate a bit on what this will do to Kambi's organization in terms of additional costs and personnel?
Yeah, I mean, from my side, our ability to build a team and transfer that across to Allwyn has been a key pillar of this deal from the start. So, you know, it's both using our experience in building that team and managing that team and then handing it over. We haven't split out the cost and the revenues, you know, for commercial sensitivity reasons, but I think going forward, we will obviously have to report those costs and revenues separately so people will be able to see, you know, this temporary increase in operating costs for this deal.
I would like to add that this is a typically insourcing model, a BOT project, where you build, own, operate, and transfer for insourcing assets. So, when it comes to the dedicated team, we will hand over more to end of 2029. To Allwyn, this team will consist of some internal experienced employees and some employees who we'll also hire specifically for this project. So we'll offer also to some of our employees the opportunity to join this team. With AI productivity gains we're already seeing right now, we don't think this should have any impact on the capabilities for our organization.
Thanks. Why do you think Allwyn choose Kambi over main competitors?
That is a question probably we should ask Allwyn to answer. What they told us is that they ran a thorough process, and they talked to many in the industry. They looked into B2C options. They have looked into one already before, which did not complete. They looked to all B2B options available on the market, but decided very quickly after, I think, discussing and evaluating the product quality that we are the best option for them. Mainly, I think because we are very strong in regulated markets, which they are also very focused on. We can do retail, online, and mobile. We have thousands of retail deployments out there, and we can also do multiple jurisdictions. Running all that on one tech stack, there are not many options on the quality level for a premium sportsbook.
Thanks. Based on the revenue breakdown, should we assume that revenues from trading services will not start until 2029?
I mean, obviously, a few years out, so there is some uncertainty in our estimations here. All things being equal, I think they should start sometime during late 2028, and then run from there, but contribute maybe more meaningfully for a full year in 2029 onwards.
It is the first deployments of our source code for the launch of the first brands. This service will start and also contribute revenues.
Good. Which existing sportsbook solutions does Allwyn have today, and what does their roadmap look like with Kambi?
It's a mix of in-house developed sportsbook. I think they use OpenBet today in some locations. They have the Kaizen platform for Stoiximan, so far as I know, in Greece. That's what publicly known knowledge is. The plan, of course, is to consolidate everything into the new one single in-house platform.
Thanks. Actually, it looks like to be the last question. Is the EUR 45 million-EUR 50 million operating profit contribution stated before or after incremental implementation costs in 2027-2029, including the cost of the team transferring to Allwyn?
Yes, that EUR 45 million-EUR 50 million is after all costs included with this deal. That really is a true bottom line for us. So, yeah, really material financial impact.
Thank you. And then we have one more question. Is the license constructed only on milestones or royalties as well?
It's a combination. That big upfront payment is more royalty-based, whereas some of the ongoing revenue streams are milestone-based. That's why there's a large lump sum, which I talked about in H1 next year.
Great. Thanks. I think that concludes the questions we had. Thank you, everyone, for listening in. Thank you, David and Werner, for being here today. If you have any additional questions, please do not hesitate to reach out, and we'll be happy to answer. With that, we conclude today's presentation. Thank you, everyone, for listening in.