Kindred Group revenue falls 5% in Q3 as underlying EBITDA plummets

Kindred Group has posted a 5.63% downturn in Q3 revenue year-on-year (YoY) as the operator recorded slips across its sports betting, casino and poker verticals. The Swedish operator recorded Q3 revenue of £277.8m, down from the £298.4m achieved in Q3 2021. Elsewhere, underlying EBITDA plummeted by 52% from £84.8m to £40.3m during the reporting period, with a corresponding underlying EBITDA margin of 15%. Kindred said the sharp decrease was due to “short-term pressures on the top line”, once again relating to rebuilding its presence in the Netherlands and the impact of betting duties. This rebuilding process has seen Kindred secure 136,543 active players in the Netherlands since its launch on 4 July. This figure amounts to 56% of the number of actives during Q3 2021, the final period before the group left the market. The group also noted the underlying EBITDA figure included a negative EBITDA contribution of £9m relating to its North American operations, namely increased marketing costs in Ontario. Breaking down operations down by vertical, sports betting suffered a 17% decline in turnover YoY, with Kindred citing its return to the Netherlands as a core reason for the dip. Kindred finally returned to the Dutch market during the period (4 July) with its Unibet.nl brand but is still trying to claw back its original market position before it vacated the market ahead of re-regulation last October. Sports betting margin increased from 8.7% in Q3 2021 to 9.9%, which Kindred noted was ahead of its long-term average sports betting margin target of 9.4%. Gross winnings revenue from its casino and games arm fell 11%, along with an 11% slip in active players. Kindred once again pointed to its Dutch yearly comparisons as a reason for the downturn but said Q4 should provide an uptick for casino as it aligns with the World Cup in Qatar. Looking at poker, gross winnings revenue fell by 5% while bingo gross winnings revenue dropped by 19%. Kindred’s B2B business, Relax Gaming, recorded a 13% jump in revenue to £5.9m compared to Q2 2022. Additionally, Western Europe continues to represent Kindred’s largest region, returning 56% of gross winnings revenue for the firm. The Nordics accounted for 29%, while Central, Eastern and Southern Europe (10%) and other (5%) took the remaining share. The group also noted a 3% downturn in North American gross winnings revenue YoY to £7.8m. Post-tax profit dipped slightly from £60.6m to £57.9m while active customer numbers fell from 1.7 million to 1.46m, representing a 16% decrease. Touching on the group’s performance, Kindred Group CEO Henrik Tjärnström said it would be a step-by-step process to arrest the decline, and argued the quarter-on-quarter growth showed the operator was on the right path. Tjärnström said: “As previously communicated and as expected during a re-regulation process, we will gradually absorb the margin pressures resulting from the Dutch re-regulation. “I am confident we have now passed the worst in terms of underlying EBITDA margin, with the third quarter already showing significant improvements compared to previous quarters. This is a step in the right direction towards our underlying EBITDA margin target of 21% to 22% in 2025. “We now look forward to a very exciting fourth quarter, with the World Cup taking place between 20 November and 18 December. The World Cup tournament is always a great opportunity for customer acquisition and reactivation, which normally means very high activity levels at the end of the tournament,” he added. Kindred’s share price was down 4.92% at the time of writing to SEK91.58.