Henrik Tjärnström, CEO of Kindred, has stated that the group knows “the value of putting the fundamentals in place and then scaling”, when planning for the US and Canadian markets, adding that Kindred is approaching the region “in a focused way”.
As for competition in North America, the CEO noted that while competition is “fierce”, the group is “encouraged” to see that quite a few operators believe some past behaviors exhibited in the market are unsustainable.
Last week, Kindred reported its financial results for the second quarter and half-year of 2022, declaring notable year-over-year slides in total revenue and profit after tax in both measuring periods.
For Q2, the group registered total revenue of $284.7m, a 34.4% decrease compared to Q2 2021’s $433.8m. For year-to-date, total revenue tumbled as well compared to 2021 by 32.3% to $578.9m (2021: $854.3m).
Plan of action
In the Q&A section of Kindred’s Q2 earnings presentation, Tjärnström was asked about the group’s plan for the US and Canadian markets, as well as his thoughts on the competition in North America.
Regarding Kindred’s plan for developing the US and Canadian markets, the CEO commented that the group knows “the value of putting the fundamentals in place and then scaling”, and the region must be approached “in a focused way”.
Tjärnström said: “As we highlighted during this presentation, We’ve had a long-term view on the North American market and that remains firmly in place. We know the value of putting the fundamentals in place and then scaling.
“We’re also not going for all the states across North America – we’re doing a select focus on states to start with, especially focusing on the multi-product states as we highlighted, with the platform launch now in New Jersey being a key milestone for us, and then gradually increasing the presence there from Q3 onwards, also with Pennsylvania and Ontario being the two other states/provinces that we’re focused on.
“We’re doing it our way, in a focused way, going for those, and then when we see igaming regulation developing in other states, we’ll be increasing pressure in those states also. We’re really keeping our focus on long-term profitable growth.”
Concerning the “fierce” competition in the North American markets, Tjärnström stated it is encouraging to see quite a few operators bring an end to past unsustainable behaviors.
“The competition is, of course, fierce like it is in most of our markets. This is nothing unusual for us, we’re used to this and the US is no different,” the CEO communicated.
“At the same time, we’ve seen some behaviors normalizing. We’re encouraged to see quite a few operators are starting to talk the same language as we started to talk about the unsustainability of some of the behaviors that have been seen.
“We can also see that, from a marketing point of view that, as the pressure seems to be easing off a little bit, that again plays to our advantage that now we can put our platform in place and then we can scale and have the fundamentals in place to have a good return on the investments that we will be doing. We’re really looking forward to the long-term opportunity in the US.”
North American developments
In North America, Kindred’s gross winnings revenue in Q2 amounted to $8.59m (2021: $8.35m), a drop of 8% in constant currency compared to Q2 2021. The group remarked that the region’s sports wagering development has been healthy, with growth in sports betting turnover of 10% in constant currency in Q2 compared to Q2 2021.
During the measuring period, Ontario was added to Kindred’s portfolio of licensed provinces and states in North America, as Unibet received a sports betting and igaming license in the Canadian province. Relax Gaming also earned an operating license in the newly regulated region.
However, 2022 growth was negatively impacted by the closure of the 32Red business in Ontario, and some customers were lost upon the migration of Unibet to the licensed domain.
For US states only, the group saw an increase in gross winnings revenue of 1% in local currency in Q2 compared to Q2 2021. It continues to invest for the long term in the market.