Kindred Group has reported that Q4 has shown a ‘weaker than anticipated’ performance resulting in operational changes, including the reduction of marketing spend in North America moving forward.
Offering investors a trading update for Q4, Kindred noted that whilst total group revenue increased by 24% year-over-year to $371.4m, performance ‘did not meet expectations’ due to several factors.
One of these factors was the Houston Astros winning the World Series on Nov 5, which resulted in a $6.5m payout to Mattress Mack and ensuring a negative revenue contribution of $5.4m.
Aside from this anomaly, the group noted that North America delivered a ‘solid underlying growth’ during the quarter.
Still, this has not stopped the firm from strengthening its presence in the US, as it revealed plans to reduce its North American losses by decreasing its marketing spend in the region.
Further, Kindred removed its Unibet brand from the Iowa sports betting market at the end of December, with the US racking up sustained losses.
Kindred’s total EBITDA was approximately $47.5m, yet North American EBITDA was negative $18.3m, as the group disclosed that excluding the region, profitability would stand at $65.8m.
In a further critique of period trading, the group noted that its gross profit margin was ‘historically low’ thanks to high marketing spend.
The Swedish firm also noted that it plans to ‘further optimize’ its operating costs to improve its profitability which was depleted in Q4.
On a more general basis, Kindred stated that the World Cup hindered its operations due to a ‘25% reduction in top football league fixtures’ that World Cup betting was unable to offset.
Despite a disappointing period of trading, the management of Kindred noted that it ‘remains fully confident’ in its long-term outlook and its financial targets.
Management said that by the end of 2023 it expects EBITDA of around $243.5m with the anticipation that long-term average sports betting margins improve.