Ahead of its press conference on Capital Markets Day, Kindred has released updated financial targets for the next three years, including fiscal and market expansion objectives.
In terms of headline monetary goals, Kindred is aiming to achieve revenue of £1.6bn by 2025, alongside an underlying EBITDA margin of 21-22% and a distribution policy of 75-100% of free cash flow.
From a markets perspective, the group seeks to further consolidate its position and gain further market share in its ‘core’ sectors of Europe and Australia, particularly eyeing up a stronger foothold in the Netherlands in the former.
Kindred noted that the Compound Annual Growth Rate (CAGR in Europe and Australia is expected to increase by 7% between 2021 and 2026, whilst H2 Gambling Capital predicts the Netherlands to ‘grow significantly in the coming years’.
Henrik Tjärnström, Kindred Group CEO, said: “We have been a driving force in the transformation of the industry and understood early on the requirements to succeed in a locally regulated and complex environment. We now have critical building blocks in place, and I am fully confident in the direction we are taking.”
These ‘solid building blocks’ Tjärnström referred to include a market foundation in North America, where the company has identified a need to focus on customer experience, having secured a presence in the US as well as Canada’s newly regulated Ontario province via Unibet.
The group’s North American journey has not been entirely smooth, however, as the Unibet brand was hit with a financial penalty of $48,000 from the Alcohol and Gaming Commission of Ontario (AGCO) for advertising infractions.
Meanwhile, Kindred’s wider North American performance has encountered further financial difficulties, as its Q2 revenue remained steady despite the acceleration of the regional market at $8.59m (2021: $8.35m).
Back in Europe, a strengthening of the group’s Dutch operations is a key objective after securing market re-entry on 4 July – the group’s absence from the Netherlands since October following the KOA Act implementation was apparent in its Q2 trading results.
The group reported a fourth consecutive quarter of sports betting declines to £98m (Q22021: €170m), although this was not exclusive to the Netherlands, as it noted that sports betting turnover dropped off by 20% across other European markets.
Looking ahead, Kindred has set a strategic objective to generate ‘sustainability and profitable growth in locally regulated markets’ by 2025, having recorded 78% revenue share from these markets and predicting this to reach 90% by 2025.
Regarding its £1.6bn revenue ambitions, Kindred explained that this was based on its ‘focused strategy’ and ability to leverage opportunities in existing markets, again identifying the Netherlands as an ‘important contributor’ over the next three years alongside improved product differentiation and unique content supply.
This predicted revenue increase, as well as increased product control and scalability in driving profitability in locally regulated markets, is central to the group’s 21-22% EBITDA targets, whilst the firm is also targeting a 30% reduction in sports betting business costs.
Tjärnström continued: “It is also very encouraging to see the progress being made in the development of our Kindred Sportsbook Platform, with key milestones already achieved, towards a selected market launch around year-end 2023.
“The entry into the Netherlands has also exceeded our expectations and we are well under way to reach our ambition of a 15% market share by the end of the year.”
Concluding its statement, Kindred provided a snapshot into potential Q3 financial results, detailing average daily gross winnings revenue of £2.9m as of 11 September – a 12% reduction on Q3 2021.
Revenue of between £270m and £280m is predicted for the full Q3 2022, with underlying EBITDA in the range of £37m to £42m (2021: $84.8m), although detailing progress in the Netherlands were daily gross winnings revenue stands at $317,000 after ‘increasing gradually’.
Excluding the tricky Dutch market, the firm’s average daily gross winnings revenue as of 11 September was £2.6m, 6% higher than the daily average for the full third quarter of 2021.