Kindred has stressed confidence in its future prospects through the remainder of the year and beyond, as a series of hindrances ensured that the group endured a tough start to 2021.
Henrik Tjärnström, CEO of Kindred, asserted that “we are not satisfied with the current performance in North America,” as mixed performances across core markets, including the UK and France; cessation of Dutch operations; and tough casino comparatives are all cited as significant impacts encountered through Q1 2022.
Revenue, for B2B and B2B operations, through the period dropped 42.9 per cent year-on-year to £246.7m (2021: 352.6m), with Kindred reporting that it “continues to be impacted heavily by the decision to temporarily cease activity in the Dutch market on September 30, 2021”.
Additional impacts, said the firm, come from exceptionally strong comparatives, including highs across several markets, with short-term growth also affected by changes made to affordability processes in some regions.
Gross winnings revenue (B2C) decreased by 31 per cent to £242.4m (2020: £352.6m), with B2B revenue, solely contributed to by Relax Gaming, closing at slight drop quarter-on-quarter at £4.3m (Q4 2021: £4.4m).
“The cessation of activity in the Dutch market continued to have a short-term impact on our gross winnings revenue, which came in at £242.4m for the quarter, in line with the fourth quarter 2021 but significantly below the same period last year,” stated Tjärnström.
“While this temporary top-line pressure reduces our profitability in the short-term, we maintain a very positive long-term view on the return from investments in our tech platform and strategic projects.”
Underlying EBITDA through the quarter decreased by 77 per cent to £24.5m (2021: £106m), gross profit dropped 37 per cent to £133.5m (2021: £210.3m) with profit after tax slumping to £6.4m (2021: £72.6m). The number of active customers dropped to 1,377,317 (1,818,759).
Gross winnings revenue and active customers for the casino and games segment through Q1 are 32 per cent and 27 per cent down year-on-year, which is again aligned to Dutch impacts as well as “extremely strong” 2021 comparatives.
When excluding the Netherlands gross winnings revenue is flat and quarterly active customers are nine per cent lower YoY. The former is up 43 per cent, accounting for a Dutch exclusion, when contrasted with 2020’s first quarter.
Sports betting turnover saw a decline of 22 per cent in the first quarter of 2022, with poker and other products, including bingo, down 34 per cent to £11.3m.
Casino and games brought 49 per cent of total gross winnings revenue, followed by sport betting with 46 per cent, poker’s three per cent, and two per cent from other games.
On a regional basis, Western Europe, which occupied 52 per cent of total gross winnings revenue, decreased 47 per cent YoY to £127.1m (2021: £240.9m) driven by aforementioned Dutch impacts and changes made to affordability processes in some markets.
In the Nordics, where casino is said to be continuing to perform well, revenue increased nine per cent to £73.8m (2021: £67.8m) with Sweden and Denmark pinpointed as delivering a “particularly strong performance”.
Central, Eastern, and Southern Europe dropped slightly to £27.8m (2021: £29m) with Romania continuing to “make up a meaningful share”.
Kindred’s ‘Other Regions’ division dropped eight per cent through Q1 to £13.7m (2021: 14.9m), with a 34 per cent uptick in Australia offset by a 26 per cent drop to $5.6m (2021: $7.4m) in the North American region.
Tjärnström noted that Ontario, as well as an impending proprietary platform set to launch in New Jersey during Q3 2022, could bring upticks in the region after noting that the group is dissatisfied with its performance thus far.
He commented that this “has been partly impacted by our conscious decisions to optimise 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.”
Adding: “In the near term we will continue to experience some headwinds until we have been awarded a licence in the Netherlands and the effects of COVID-19 normalisation begin to tail off. We expect these headwinds to gradually ease over the year once we can launch our operations in the Netherlands.
“Looking ahead, we continue to focus on our strategic investments in both our platform and products, as well as the FIFA World Cup towards the end of the year.
“We embarked on our transformation journey more than ten years ago and it is very satisfying that we are nearing, in the coming months, one of the final major milestones.
“We have an exciting time ahead of us and I have great confidence in the direction we are taking through our long-term focus.”
