Kindred Q3 US revenue slumps 15% amid “tough” competition and high marketing spend
Operator behind Unibet brand reports double-digit decline as marketing and bonus spend drives active customer increase but diminishes bottom line
Kindred Group’s US business has reported a gross winnings revenue decrease of 15% year on year for Q3 2021 to £5.8m.
In a third-quarter update, the Unibet operator attributed the downturn to high spend on bonuses and marketing.
“While high bonus spend has a detrimental impact on gross winnings revenue in the short term, it is an investment for longer-term growth, with the number of active customers currently trending well within new states,” Kindred said.
Kindred’s active customer numbers increased by 13% year on year, with the operator’s existing states reporting 2% growth in customer numbers and significant upticks in Iowa and Arizona, where Kindred launched in September.
Continued expansion in the US, combined with a new Unibet marketing campaign, led to a strong uplift in activity associated with US sports, both from US and European customers.
This was also supported by an improved ‘Bet Builder’ offering on the NFL.
Kindred CEO Henrik Tjärnström referenced a rise in free bet offers in Arizona, suggesting that some offers from competitors were “extremely aggressive”.
He said: “We’re trying to stay very much on a more sensible level and focusing more on long term value creation and getting the right customers into our business, but we’re still affected by the overall market.
“It’s not just a question of screaming the loudest, we believe that it’s more difficult to break through the in the clutter. We have tried to do a little bit alternative concept in the US compared to some of our competitors.
“We’ve played on our heritage in the sense that we’re bringing our European sportsbook to the US and positioning it in such a way that says we’re unaware as to what the US market is really about, and that our offering is perhaps too good to be true in the US.
“We had very good customer feedback on those concepts and that’s something that we will be building on now for the coming months as well,” Tjärnström added.
Despite the rise in active customers, Kindred’s EBITDA contribution from the US dropped to a negative figure of £7.6m during Q3 due to heavy investment in bonuses and marketing, particularly in newly launched states.
Delivering his assessment of Kindred’s US performance during the quarter, Tjärnström cited the “significant future potential” for the firm in Iowa and Arizona, but suggested there would be challenges ahead.
“Competition in the US remains tough, but we see excellent opportunity in states where we can offer customers a more diversified product offering of both sports betting and casino,” the Swede explained.
“In line with the start of the NFL season, we strengthened our marketing mix with a fresh creative concept and work on our proprietary platform also continues at pace.
“We look forward to having greater control over the product experience for our growing US customer base,” he added.
Elaborating on this control, Tjärnström highlighted the firm’s desire to pivot away from third-party suppliers, particularly in the US as it seeks to introduce its proprietary player account management platform (PAM).
The firm intends to transition to its own in-house PAM and has been working “very hard” to achieve this long held aim, according to the CEO.
“We took a decision to go on third-party platforms originally to shorten the time to market and also as a consequence of us having other locally regulated projects like Sweden and the Netherlands that we needed to work on with priority at that time,” Tjärnström explained.
“But it’s always been our ambition to bring our own technology to support the local team in the US, and that’s what we’ve been working on for many years now.
“That is coming to fruition now in the coming quarters, getting the platform ready for regulatory certification during the first quarter of next year, a process which could take around six months.”
It is understood this in-house-developed platform could be live by the third quarter of 2022, with Kindred targeting its first rollout in New York if the company gains access to the state.