Kindred Group is anticipating a 3.89 per cent increase in gross revenue for the second quarter of the year despite a plethora of cancelled and postponed sporting events having a continued significant impact across the industry.
Publishing a trading update for the period, ahead of its interim Q2 report on July 24, the gambling operator estimates that revenue for the period will be approximately £235m, up from 2019’s £226.2m.
Underlying EBITDA for the quarter is predicted to reach a bracket of £48m-£53m (2019: £30.5m), driven by cost reduction actions undertaken in connection with marketing, content and other direct costs.
In spite of the protected short-term profitability, as sports resume the group is expecting the marketing cost model of the business to normalise.
“It is natural that reducing marketing and related costs produce a short-term profit benefit, but if sustained over a long period then these actions could damage the long-term competitive position of the business,” it was stated.
Asserting that the group will continue to implement a number of operational efficiency initiatives throughout 2020, Kindred comments that “solid growth in revenues from other products” has partly compensated for the sporting downfall.
In a media release it was explained: “Substantial growth has been delivered by Kindred’s cutting-edge technology, proprietary Racing platform as well as other events such as eSports, and other virtual sports alternatives (e.g. F1, FIFA events).
“Sports activities have gradually resumed during the latter part of the quarter. It is probable that Kindred and other online operators have received a temporary benefit from the fact that most offline betting outlets in many countries have been closed throughout the second quarter.”
Betting duties for the second quarter are significantly below the level of the first due to the impact of sports cancellations in France, where tax rates are high and other betting types are very limited.
Active customers for the quarter amounted to 1.3 million, representing a decrease of 11 per cent year-on-year, which was an expected outcome “as many recreational/occasional players are motivated by sports events”.