Marketing drive helps Kindred to 25% Q1 revenue rise
A 36% increase in marketing spend helps operator record double-digit growth across all core verticals
Kindred Group has recorded a 25% year-on-year rise in Q1 gross winnings revenues (GWR), with growth boosted by a substantial increase in marketing expenditure.
The Stockholm-listed firm posted GWR of £153.2m in the three-months ended 31 March 2017, up from £122.4m last year, with double-digit growth across all core verticals. The overall revenue growth equated to 12% in constant currency.
Casino & games was one of its fastest-growing business segments with a 26% increase in GWR to £77.4m, while sports betting GWR were up 23% to £66.4m.
Meanwhile, poker continued its positive momentum with GWR increasing from £3.5m in Q1 2016 to £3.7m this year. ‘Other’ revenues increased 50% year-on-year and accounted for £5.7m of total revenues.
Kindred’s revenue growth was helped by a 36% year-on-year rise in marketing spend to £34.9m – 29% of GWR, although resulted in a more modest 6% rise in underlying EBITDA to £30.3m.
“In line with the fundamentals of our growth strategy, we have continued to invest heavily in marketing for both new customer acquisition and reactivation of existing customers,” Kindred CEO, Henrik Tjärnström, said.
“While this may reduce profits in the short term, we are confident that, as we have previously proven, this will drive sustained growth in gross winnings revenue and profit.”
Tjärnström added that Kindred expects marketing as a percentage of gross winnings revenue to be a few percentage points below 30% for the full-year.
Kindred Group announced earlier this year that it had reached an agreement with 32Red to acquire the operator for approximately £175.6m, a deal which is expected to be completed in the coming weeks.
The acquisition, which builds on its £19m deal for Stan James’s online business in 2015, will boost its presence in the UK online casino market, worth approximately £2.6bn, according to the Gambling Commission.
“Our cash offer for the UK operator 32Red will, from the second quarter of 2017, instantaneously increase both revenue and profit from the very significant UK market,” Tjärnström added.
“This acquisition will supplement our current strong organic growth and will significantly increase the Group’s overall growth in the future, especially during the first 12 months.”
Kindred Group’s share price was down 5.79% to 89.50 SEK at the time of writing.