Kindred Group revenue jumps 29% as Netherlands rises to the fore

Kindred Group has posted a 29% year-on-year (YoY) increase in Q2 revenue to £307.3m as its return to the Netherlands 12 months ago continues to pay dividends.

The Stockholm-listed company, which had a year to forget in 2022, sealed a more positive H1 with revenue for the first six months amounting to £613.7m compared to £485.4m in the same period last year.

Looking at other key metrics, underlying EBITDA soared 120% from £25.3m to £55.7m, with a corresponding margin of 18%, compared to 11% in Q2 2022.

Underlying EBITDA also includes a negative contribution from Kindred’s North American operations of £5.1m, down from a Q2 2022 loss of £7.4m.

B2C revenue for Q2 landed at £298.3m, a 28% YoY increase for the operator, with the Netherlands driving the bulk of the business.

Kindred returned to the Dutch market in July 2022 after serving a cooling-off period, with the firm noting it is on track to retake its leadership position.

Excluding the Netherlands, B2C revenue remained flat at 1% due to regulatory headwinds in Belgium and Norway. Excluding these two markets, B2C revenue increased 41% YoY.

Breaking revenue down by region, Western Europe accounted for 60% of all B2C revenue during the quarter as it jumped from £119.5m to £180.1m.

However, excluding the Netherlands, Western European revenue dipped 2% YoY.

The Dutch market saw daily average revenue at 83% of the levels achieved before Kindred exited the market in Q3 2021, before the Netherlands launched its regulated market.

Elsewhere, the UK reported an 8% YoY increase in B2C revenue as Kindred staved off challenges borne out of the white paper into the Gambling Act 2005 review.

Looking at Belgium, B2C revenue fell 28% due to regulations in the market, including a weekly deposit limit of €200. Kindred said it expects Belgium to return to growth in the medium term, despite the incoming changes to gambling advertising.

Revenue from the Nordics slipped 4% YoY to £71.5m as the region accounted for 24% of total B2C revenue during Q2.

Changes made to the group’s Norwegian offering around targeting customers and advertising had an impact, while Sweden experienced a 1% dip in revenue.

Denmark bucked the trend in the region, with revenue up 19% YoY driven by a strong sports betting performance.

Central, Eastern and Southern Europe (CES) revenue increased 26% YoY to £33.1m with strong growth in Italy and Romania. The segment accounted for 11% of total B2C revenue.

The group’s ‘Other’ regions, including North America and Australia, returned revenue of £13.6m.

Looking at North America, where Kindred has struggled to achieve cut through in the competitive US market, revenue rose £7.2m to £8.4m.

Kindred noted an increase in player activity in the US, while during the quarter it launched its proprietary sportsbook tech platform in New Jersey. Post-Q2 the group also launched the same tech in Pennsylvania.

B2C revenue was dominated by online casino (57% share), with sports betting in second place (39%).

Poker accounted for 3% of group B2C revenue, with the remaining 1% made up of the operator’s “other” offerings.

Elsewhere, Kindred’s B2B revenue rose 50% YoY as the Relax Gaming subsidiary continues to go from “strength to strength”.

Gross profit increased from £131.8m to £172.8m, while post-tax profit leapt from £5.8m to £27.7m during the quarter.

Active customers during Q2 jumped 17% YoY to 1,561,444, with actives in the Dutch market increasing 7% quarter-on-quarter to 218,460.

Operationally, Kindred did not disclose any further details on the ongoing strategic review into the business, which could result in the whole or partial sale of the company.

Management did note costs arising from the review of £1.9m during the quarter.

Reflecting on the group’s performance, interim CEO Nils Andén said it was a testament to the company given the upheaval at the top of the business.

He said: “The ability to maintain the positive business momentum in a time of change is a testament to the strong talent, leadership and commitment across the organisation as well as the proven business model put in place over the years.”

On the group’s geographic spread, Andén added: “The diversity of our market portfolio provides stability across the group with particularly strong performance in several markets including the UK, Denmark, the Netherlands and Romania.

“While the challenges experienced in Belgium and Norway during the first quarter remain, signs of improvement are seen in Belgium. As previously mentioned, we have focused on improving our dialogue with the Belgian regulator to ensure a level playing field and we are seeing early positive signs in this direction.”

Kindred’s stock was down 2.4% to SEK122 (£9.14) at the time of writing.