Kindred reports Q3 revenue growth amid FDJ acquisition, shifts focus to regulated markets

Kindred Group, recently acquired by France’s La Française des Jeux (FDJ), has reported Q3 revenue growth of 3.7% year-on-year, reaching £294.5 million ($381.8 million). CEO Nils Andén confirmed that the growth was primarily driven by performance in locally regulated markets and despite the complexities of the FDJ takeover. 

However, Andén cautioned that Kindred’s shift to focus exclusively on regulated or soon-to-be-regulated markets could impact its goal of reaching an underlying EBITDA target of £250 million ($324 million) for 2024. The acquisition by FDJ, completed in early October for €2.45 billion ($3.18 billion), marks the last quarter of Kindred’s standalone earnings before integration into FDJ’s operations.

Kindred’s Q3 results revealed a focus on sustainable growth in local markets, with regulated markets accounting for 83% of the company’s gross winnings revenue. “Following the expected completion of Kindred’s acquisition by FDJ, Kindred will exit dotcom markets, including Norway, that don’t have a clear path to local regulation in the near future,” Andén stated. 

As for revenue by region, Western Europe saw the most substantial growth, up by 7.5% from the previous year. The Nordics were level, while Central, Eastern and Southern Europe saw 5.4% growth.

Kindred’s exit from North America notably influenced the quarter's performance. The company’s total revenue rose by 6% when excluding North America from year-over-year comparisons.

In its business segments, B2C operations, which cover online gaming in Europe and Australia, grew by 3.1% year-on-year, totaling £283.1 million ($367.39 million). 

Within B2C, sports betting revenue amounted to £105.2 million ($136.49 million), while casino, poker, and other gaming segments contributed £177.9 million ($230.87 million). Active customers across these services increased by 8.8%, reaching 1.7 million, with sportsbook customer numbers climbing 14% and casino customers up by 6%.

Additionally, Kindred’s B2B segment, led by Relax Gaming, delivered notable growth, with revenue up 23.9% year-over-year to £11.4 million ($14.79 million). Relax Gaming, which Kindred acquired in 2021, continues to serve as a key asset within Kindred’s portfolio and a driver of B2B growth.

The acquisition by FDJ also brings structural changes to Kindred, including an application to delist from Nasdaq Stockholm, which Kindred filed on October 24. CEO Andén reflected on the company's two-decade journey as a publicly listed company, expressing appreciation for Kindred’s investors and employees. 

Moving forward, Kindred is focused on launching its proprietary sportsbook in a "major market" by the end of Q4, aiming to strengthen its foothold in competitive regulated markets. 

However, costs associated with Kindred’s strategic review, primarily tied to the FDJ transaction, impacted Q3 profitability. Strategic review expenses totaled £30.9 million ($40.1 million), leading to a 53.1% decline in operating profit, which closed at £14.4 million.

After accounting for financial costs, pre-tax profit stood at £12.9 million ($18.69 million), marking a 54.3% decrease from Q3 2023. Despite these challenges, the group saw a jump in underlying EBITDA, which increased by 48.8% year-over-year to £63.4 million ($82.28 million).

The group’s year-to-date results show continued growth across B2B and B2C, with total revenue for the first nine months reaching £929.8 million ($1206.63 million), up 3.4% from the prior year. Year-to-date EBITDA rose by 32.9% to £196.3 million ($254.74 million), while net profit improved by 29.7% to £85.5 million ($110.96 million).