Kindred focused on 2025 vision as Dutch KOA storm finally clears

Kindred Group Plc details “signs of improved profitability and scalability” against continued 2022 headwinds impacting its financial performance across Western European markets. 

Publishing its interim results for January-September and a trading update for Q3,  the Stockholm-listed online gambling group revealed that pan-European revenues were still struggling due to a long-term absence from the Netherlands.

Q3 trading saw Kindred register a consecutive quarterly revenue decline of £277m, down 7% on 2021 comparative results of £298m. On a yearly basis, the group’s headline revenues stand at £763m, failing to match the £1bn revenue achieved in YTD 2021.

Continued headline drags, saw Kindred register a 52% decline in Q3 EBITDA to £40m (Q32021: £84m), as the group’s YTD underlying EBITDA stands at £90m – down 70% on 2021 comparative EBITDA of £304m.   

Yet  Kindred cites positive developments during Q3, lauding its return to the Netherlands, having been forced to end its operations in the country under the KOA Act last year. The Group detailed a ‘strong start’ to its Dutch market return – though revenues have not yet caught up. 

With regards to gross winnings revenue, the B2C figure declined by 9% to £271.9m from £298.4m, whilst excluding the Netherlands the decline changed to an increase of 8%.

For the full year, B2C revenue dropped by over £1bn to £747.8m, a decrease of over 26%, with this figure shrinking heavily to 5% when the Netherlands is excluded. 

Group CEO Henrik Tjärnström, however, emphasised that the resumption of Dutch operations has had a substantial positive impact on the group’s underlying EBITDA and free cash flow.

“At the start of the third quarter, we were finally able to welcome Dutch residents to our Unibet.nl site, following a nine-month period of not accepting bets from the Netherlands,” he said.

“Thanks to our strong brand awareness, unique product offerings, and an excellent team, we are off to a flying start. Like the Netherlands, most of our markets are displaying solid performances. 

“This has significantly improved our underlying EBITDA margin and free cash flow when compared to the second quarter of 2022, which is a good indicator of our scalable business model.”

Kindred projects further growth in the Netherlands as the market continues to develop, noting that its active customer base in the country has grown to 137,000 since re-launching on 4 July, estimating a 15% market share in Q4.

On a wider scale, Tjärnström anticipates the upcoming World Cup to have a positive impact on revenue in November and December, potining to increases in activity post-July after a ‘seasonally tame sports calendar’.

However, despite the advances made in the Netherlands, Kindred’s total customer base has shrunk in comparison to Q3 2021 – the report outlined that the firm currently has 1.47m active customers, a decline of 16% on the year prior.

Additionally, the group is also looking to the UK for a sense of stability, with the Gambling Act review outcome still uncertain in the country, having been repeatedly delayed due to changes in government.

“While we expect increased affordability requirements, we remain positive on the clarity of future regulations and believe that enhanced sustainability measures will benefit our operations in the long term as risk levels will decrease,” the CEO explained.

Closing Q3 account, period profits stood at £60m (Q32021: £72m) a result that benefitted from a positive reassessment of the contingent value of the Relax Gaming acquired for £39m. On a yearly basis, Kindred tracks YTD profits of £75m (before tax), down 70% on 2021 results of £259m.

Maintaining a positive long-term outlook, Kindred reaffirmed the group’s Capital Markets target to achieve corporate revenues of  £1.6bn by 2025, alongside an underlying EBITDA margin of 21-22% and a distribution policy of 75-100% of free cash flow.

The long-term financial goals are to be achieved by Kindred focusing on proprietary technology to build its sportsbook and casino products, and by targeting podium places within ‘select’ regulated markets.