Kindred shares dip despite 36% revenue rise
Stockholm-listed operator reports an EBITDA increase of 56.7% but growth appears to have slowed in the Nordics
Kindred Group today reported Q1 revenue growth of 36% to £207.8m, although the firm’s share price dipped over fears of slowing growth in both sports and gaming.
Sportsbook revenues climbed 43% year-on-year to 45% of group revenues, in part thanks to favourable sporting results.
Sports margins “normalised” at 8.2% after the Stockholm-listed operator experienced exceptional margins of 10.5% in Q4.
However, the new mark still represented a 2.2pp increase from Q117, suggesting underlying growth is “far less attractive than the headlines”, according to Regulus Partners, with turnover growth up 6%,
Group EBITDA increased by 56.7% to £47.5m for the quarter leading to business cash generation of £35m.
Mobile revenues were up 34% compared to the corresponding period 12 months ago, and made up 72% of total revenues.
Kindred CEO Henrik Tjärnström
CEO Henrik Tjärnström provided a regulatory update on each of Kindred’s active markets and said the operator was willing to explore potential sports betting opportunities in the US.
“In Europe, the development of local licensing systems has continued and in Sweden the parliament will vote for a new modern licensing system on 7 June 2018.
“Outside Europe, during the year we are investigating if and how we can launch any of our brands in the USA,” he added.
Despite the impressive headline results, shares in Kindred dropped by 7% this morning as growth in the gaming vertical appears to have slowed.
Without the acquisition of 32Red, organic growth in gaming stands at 10% while only 2% of the operator’s 7% growth in Nordic markets was through its gaming brands.
Regulus Partners analyst Paul Leyland said: “Kindred continues to deliver attractive levels of headline growth and has benefited from a high quality acquisition in 32Red.
“However, suggestions that these results have been achieved on ‘normalised sports margins’ provides a useful reference point to quarter-on-quarter decline and long-term trends but somewhat masks a very significant margin swing annually.
“Underlying organic growth seems to be slowing dramatically in Nordic markets, especially in gaming, and while Kindred has the ability to offset this with growth elsewhere, it is likely to be an important trend for the group, particularly as Sweden regulates,” he added.