Q&A: New Kindred CEO on FDJ bid, North America exit and the Kindred Sportsbook Platform

You can hear the happiness in Nils Andén’s voice as he dials in from Sweden. The interim CEO had, just moments before, been confirmed as the permanent boss of Kindred Group. Having taken the reins last May following the departure of Henrik Tjärnström, the former CCO has led the business through one of its most tumultuous periods.

The looming strategic review, which is set to complete thanks to a £2.1bn bid from FDJ, has taken up a significant amount of time and resources at the business. Cost-saving measures communicated in November will also see the operator exit North America by the end of Q2. But in leading the group, Andén has now been chosen to take Kindred ahead into its next iteration.

Speaking to EGR, the new CEO looks back on the past few months as he lifts the lid on the FDJ bid process, his thoughts on a difficult US market and how the Kindred Sportsbook Platform will be a gamechanger.

EGR: Will anything fundamentally change now you are permanent CEO? Have you got to build out a new C-suite?

Nils Andén (NA): We took some of the bigger strategic decisions in the middle of Q4 when it comes to refocusing the business. We want to take market share in our core markets and we are in the process of exiting North America.

We have a very strong strategic outlook for 2024 which is really focusing on taking market shares in core markets, continuing to see Relax Gaming grow and continue to develop and ensure we can roll out a very strong in-house sportsbook. So, those things were already on the trajectory and it is just continued focus on that as an organisation.

EGR: What is the plan for the other interim positions in the business, with CFO Patrick Kortman not being named as permanent financial chief as of yet?

NA: [My appointment] was the first step but in the near future we will look at how the rest of the senior team will be formed. Of course, it isn’t ideal to have interim positions for too long but that is the next step.

EGR: What is the overriding feeling following the bid from FDJ and near completion of the strategic review?

NA: I think it’s a real testament to the work Kindred has done, not only in the last eight months but really in the last 10 years to transform the business towards a locally regulated one.

We have been a leader within our segments around responsible gaming, but also managed to be in really strong positions in key European markets. Some of the strategic decisions we made last year were also called out by FDJ in their bid process.

I think we, as an organisation, are really proud of the fact that someone like FDJ sees a lot of value in Kindred.

EGR: What made the bid from FDJ stand out, given multiple conversations would have been held with other third parties?

NA: If the deal gets approved, FDJ is a very stable owner. They have a long-term perspective on this industry, but they’re also forward leaning.

They completed a big transformation themselves over the last five years. They were privatised and then had an IPO in 2019.

We have met a lot with the team in this process, and I think there’s a fairly good cultural overlap as well. I think, all in all, this is good, not only for Kindred shareholders but also for the staff here and our future outlook.

EGR: The exit of Kindred from Norway was communicated by FDJ as part of the bid but are there any other potential market exits given difficult regulatory headwinds such as in Belgium?

NA: I think it’s more of an owner question than a management question. If the transaction completes and we have a new owner, it will be their remit to decide which markets we should or shouldn’t be operating in.

We constantly evaluate the markets we operate in. Belgium is a very strong market for us, and it is one of our core markets. We are very committed to staying in the Belgian market and work with the regulator to ensure there’s a level playing field for all the operators in the market, and that there’s a sensible regulation.

At the end of the day, we as a company and the regulator have a combined end goal that channelisation in the market should be as high as possible, because that’s the only way you can protect the players and create a sustainable ecosystem.

EGR: One more European market to look at before talking about the US is the Netherlands as you have returned a market leader position there. Was the playbook the same for Unibet as the one used prior to regulation in 2021?

NA: We came back quite quickly and we were number one within a year. I think it was a combination of the things we know work well with our customers.

It’s ultimately about creating the best customer experience and building the strongest brand so I think it was a combination of utilising all the good customer insights across Europe and plus we have a very strong underlying platform.

But then I think it’s also fair to say that we definitely invested in the Netherlands in terms of product development, making sure we have the best localised offer for customers, and I think that playbook is something we are also copying across other territories now.

EGR: Looking at the US, a difficult decision was made to depart the market. Were you frustrated by the competitive nature there?

NA: When you enter new markets, you always want to be successful. Of course, it’s frustrating when you don’t achieve your goals but I think the North American market as it is today is fundamentally different to many of our European markets.

The underlying cost structure, even if you disregard the vast amount of marketing spend, is substantially higher. Payments costs, data feed costs and market-access costs are higher.

All of this combined into a pretty challenging underlying business outlook. I think it’s fair to say you can see it even with the operators that are successful in North America. The biggest ones are approaching breakeven or have made one or two positive quarters, and that shows the underlying business logistics in North America are very challenging.

I think it’s more frustrating than anything else. And I am convinced that we could have been successful in North America. The time horizon on that was longer than we could carry at the moment.

EGR: Coming out of North America will present some saved costs for the business. How do you expect these to manifest?

NA: We will start to see cost saving from Q1 but of course not the majority.

We have initiated a fairly wide-ranging cost-saving initiative already in November that touches the whole business, and I think it’s fair to say that roughly 65% to 70% of that we will realise during 2024 and some of it will fall over into 2025.

It’s not only a cost-saving exercise but also a way for us to be able to reallocate resources and marketing investment into our European markets. It’s not always going to be a direct cost saving but rather a reallocation.

We have done the majority of the restructuring, and we will continue to optimise our underlying cost base but we wanted to do as much as possible at the tail end of 2023. So, that means continued optimisation, but we don’t foresee any other major changes coming in.

EGR: How is the the Kindred Sportsbook Platform coming along and what will you be looking for from it when it fully launches?

NA: We have done a test launch in a small European market on an invite-only basis to begin with and then we will start rolling it out further.

There are about 150 different metrics we will look at for the performance. There are a few key components there. A real driver is the product control. We can, to a greater degree, dictate the roadmap, which means we can ensure it is right for our customers, and not a wider range of customers.

There are also reward strategies, product differentiation and pricing gains that are particularly important for us. Ultimately, it is about giving customers a great experience.

EGR: In terms of the financial report, Kindred posted flat revenue but a 45% jump in EBITDA for Q4. Are you happy with the performance? What are the focus areas to improve revenue moving forward?

NA: It was an exceptional year for us as an organisation.

We were under the setting of the strategic review for the majority of the year. But I think it’s a testament to delivering strong growth both on top line and bottom line.

I think having our two largest markets perform as well as they’ve done in both the Netherlands and the UK definitely drives a lot of the top-line growth, and then having a range of other markets that still are performing well like Romania, Denmark, etc.

Our focus for 2024 is to drive growth in these stronghold markets where we actually see pretty strong inherent underlying market growth. It’s also worth mentioning that Relax Gaming has had a stellar year in 2023 with a very strong top-line growth and an even stronger EBITDA growth as well.