Kindred Group posts 26% Q1 decline in North American revenue
CEO bemoans “unsustainable marketing and customer incentives” across industry as EBITDA losses in the US widen
Kindred Group has recorded a 26% year-on-year (YOY) decline in North American revenue for Q1 2022, with the Swedish operator blaming increased competition in the market.
Revenue for the region fell from £7.4m ($9.3m) in Q1 2021 to £5.6m in the first three months of 2022.
Kindred said product margins across sports betting and casino were lower compared to 2022, which had an impact on overall revenue.
With respect to the North American market, Kindred said competition was tough due to “unsustainable marketing and customer incentives” but was positive with an increase in newly depositing players YoY.
North American EBITDA was also severely impacted, with the region returning a negative £9.1m in Q1 2022 compared to a negative £6.3m in 2021.
Kindred, which is currently live in six online US states, said this was as a result of increasing the number of new state launches since the same period in the prior year.
CEO Henrik Tjärnström said despite the difficulties the operator was facing in North America, the market remained a “long-term growth opportunity.”
He said: “We are not satisfied with the current performance in North America, which has been partly impacted by our conscious decisions to optimize marketing investments and focus on our platform in order to drive longer-term benefit.
“Even though competition remains tough, due to unsustainable marketing and customer incentives at the initial market entry phase, the North American market remains an important long-term growth opportunity for Kindred,” he added.
Tjärnström went on to detail how launches in New Jersey and Ontario are set to bring a welcome boost to the firm’s operations.
He continued: “A key enabler for accelerated growth in North America is our proprietary platform set to launch in New Jersey in the third quarter of 2022.
At the beginning of April, we went live in Ontario, Canada. The Canadian province is one of the largest markets for online gambling in North America and our Unibet brand is already known in the market.”
The disappointing results in North America were compounded by the operator’s absence from the Netherlands, which significantly impacted its bottom line.
Overall, total group revenue fell from £352.6m in Q1 2021 to £246.7m in Q1 2022 as other markets failed to offset the losses from the Netherlands, while the UK proved to be particularly challenging due to “further tightening of affordability measures.” Excluding the Dutch market, revenue was down 14%.
The business also suffered a dramatic 77% decline in underlying EBITDA for the quarter, falling from £106m in Q1 2021 to £24.5m in Q1 2022.
Kindred’s post-tax profit plummeted 91.2% in another blow to its latest financial report, with the figure falling from £72.6m in Q1 2021 to just £6.4m for the first three months of 2022.
The exit from the Netherlands was partly blamed for the 24% YOY decline in active customers to 1.38 million, while ARPU was down 10% compared with the same time last year.
Kindred’s shares are down 42% compared with 12 months ago.