Kindred ‘not satisfied’ with Q1 North America performance

Kindred has published its financial results for the first quarter of 2022, reporting a drop in total group revenue year-over-year to $309.6m.
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Kindred has published its financial results for the first quarter of 2022, reporting a drop in total group revenue year-over-year to $309.6m (Q1 2021: $442.5m).

However, CEO Henrik Tjärnström remains optimistic about the future of the group, as he believes Kindred’s “diversified product and market mix” provides it with a “relative degree of stability”.

Particularly in North America, Tjärnström noted that the group was “not satisfied” with its current performance in the region, but it will continue its investments in the market as it is seen as a long-term growth opportunity.

Kindred’s gross winnings revenue during Q1 decreased by 31% (29% in constant currency) to $303.8m (Q1 2021: $442m). Excluding the Netherlands, gross winnings revenue declined by 7% (3% in constant currency).

The group’s underlying EBITDA during the quarter fell by 77% to $30.7m (Q1 2021: $132.8m), including a negative underlying EBITDA contribution from the North American market of $11.4m (Q1 2021: $7.9m).

North America’s EBITDA result was due to several new state launches since Q1 2021, as well as the impact of Relax Gaming on the group’s consolidated underlying EBITDA of $2.1m.

Commenting on the Q1 results, Tjärnström stated: “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.

“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.”

Reflecting on North America, Tjärnström said Kindred was “not satisfied” with its current performance in the region, stating it has been impacted by its “conscious decisions to optimize marketing investments and focus on our platform in order to drive longer-term benefit”.

Kindred’s gross winnings in North America declined to $7.03m (Q1 2021: $9.29m) as competition remains tough due to the ‘unsustainable marketing and customer incentives’ offered by US competitors.

The group’s sports betting and casino product margins were lower in Q1 2022 than what they were in the same period during the previous year, impacting overall revenues. Yet, the quarter also saw a significant increase in new depositing players and total activity levels within Kindred’s operational states.

Despite the market being competitive, Tjärnström noted North America’s importance for Kindred and the optimism it has for the region.

He said: “Even though competition remains tough, due to unsustainable marketing and customer incentives at the initial market entry phase, the North American market remains an important long-term growth opportunity for Kindred.

“A key enabler for accelerated growth in North America is our proprietary platform set to launch in New Jersey in the third quarter of 2022.”

During the quarter in North America, Kindred continued its expansion across Arizona, partnering with Turf Paradise and obtaining nine retail licenses to operate sports betting in the state. Under its Unibet brand, the group also began operating igaming and sports betting products in the Canadian province of Ontario following the end of Q1.

Earlier this week, Kindred also announced that, as part of its efforts to reduce its harmful gambling revenue share, it had entered into a collaboration with RecoverMe, an app that supports users in regaining control of their gambling habits, offering the service for free to users in the US and UK initially.

Looking ahead, the Kindred CEO is confident in the direction that the group is going in, and that it would be able to navigate any headwinds it faces in the short term.

“In the near term, we will continue to experience some headwinds until we have been awarded a license in the Netherlands and the effects of COVID-19 normalization begin to tail off. We expect these headwinds to gradually ease over the year once we can launch our operations in the Netherlands,” Tjärnström concluded.

“Looking ahead, we continue to focus on our strategic investments in both our platform and products, as well as the FIFA World Cup towards the end of the year.

“We embarked on our transformation journey more than ten years ago and it is very satisfying that we are nearing, in the coming months, one of the final major milestones. We have an exciting time ahead of us and I have great confidence in the direction we are taking through our long-term focus.”