Kindred sees revenue down in Q1 amid Netherlands exit, mixed performance in core markets

Kindred Group plc has shared its unaudited interim report for the first quarter of the year. Financial results were impacted by what the business expects to be short-term headwinds, while the Unibet owner is optimistic about long-term prospects. Total revenue (B2C and B2B) was £246.7 million ($307 million), down from £352.6 million ($438.7 million).

The online gambling operator saw gross winnings revenue (B2C) decrease by 31% to £242.4 million ($301.5 million) from £352.6 million ($438.7 million) the comparable period last year. Excluding the Netherlands, where regulatory headwinds forced some operators to withdraw until a new license is secured- gross winnings revenue declined by 7%.

"While the start of 2022 has seen societies returning to normal after two years of COVID-19 impacting our lives, we are today witnessing worrying geopolitical development in Europe, bringing both uncertainty and tragedy that will leave its mark for the foreseeable future,” commented CEO Henrik Tjärnström.

“Whilst these developments have had a limited impact on Kindred's performance for the first quarter of 2022, we continue to notice an impact from post-COVID-19 normalization across markets, as well as the decision to cease activity in the Dutch market in Q3 2021,” he added.

Underlying EBITDA for the quarter decreased by 77% to £24.5 million, compared to £106 million ($131.9 million) the past year. Profit before tax amounted to £7.6 million ($9.5 million), down from £85.3 million ($106.2 million) in Q1 2021. Aside from financial results, the company also announced a decrease in the number of active customers to 1.4 million, down from 1.8 million.

"Our diversified product and market mix provide us with a relative degree of stability across the group. We have seen this on several occasions, not least during the pandemic when sports virtually disappeared for a period,” said Tjärnström.

The executive remarks that, excluding the Netherlands, the company’s diversified portfolio has seen “solid casino performance” across markets during the quarter, with growth of 1% from the same period year, despite tough comparatives. This helped balance out the slightly more volatile sportsbook, which started out strong but had a weaker second half of the quarter.

Sportsbook operations resulted in gross winnings revenue which was negatively impacted by a weak betting margin of only 7.8% after free bets, compared to 10.7% in the second quarter of 2021; whereas the daily average gross winnings revenue for casino and other products remained at the same level as the full first quarter of 2022.

The cessation of activity in the Dutch market had a notable impact on gross winnings revenue, which although significantly below the same period last year was in line with the fourth quarter of 2021. These headwinds are expected to continue until a license in the Netherlands is received and the effects of Covid-19 normalization begin to tail off.

“While this temporary top-line pressure reduces our profitability in the short-term, we maintain a very positive long-term view on the return from investments in our tech platform and strategic projects, such as our US expansion and the recently announced Kindred Sportsbook Platform,” Kindred’s CEO said. The company hopes to launch in the Netherlands “over the year.”

Additional impacts came from mixed performance in core markets such as UK and France, strong comparatives that include highs across several markets, and changes made to affordability processes in some regions. Casino represented 49% of total gross winnings revenue, followed by sports betting at 46%. Poker posted 3% and other games 2%.

Breaking down revenue by region sees Western Europe delivering 52% of total gross winnings revenue -decreased by 47%, driven by the Dutch market exit-, while the Nordics found revenue up 9%. Central, Eastern and Southern Europe all dropped slightly; while other regions saw mixed results: a 34% increase in Australia, offset by a 26% drop in North America.

The latter region could provide new opportunities going forward, Tjärnström said, given an expansion into Ontario’s new regulated market earlier this month. Additionally, the company intends to launch its sports betting platform in New Jersey in Q3 this year, further diversifying its offerings for the North American public.