The Netherlands continues to be an issue for Kindred after it revealed a decline in gross winning revenue and a sharp drop in underlying EBITDA.
Publishing its unaudited Interim report: January – September 2022, Kindred noted that its total revenue stands at £277.8m with its GWR witnessing a nine per cent decline to £271.9m (2021: £298.4m).
However, when Kindred excluded the Netherlands operations from its account, the company’s gross winnings revenues actually witnessed an increase by eight per cent during the third quarter.
Furthermore, Q3 saw the firm’s underlying EBITDA take a sharp nose dive as it decreased by 52 per cent from the previous year, standing at £40.3m compared to £84.8m.
Looking into Kindred’s operations commencing from January to September this year, its total revenue came in below the same period last year at £763.2m (2021: £1,104.7bn).
Including the Netherlands, the company’s GWR during this period also witnessed a 26 per cent decrease to £747.8m (2021: £1,014.7bn), with its underlying EBITDA also dropping by 70 per cent to £90m (£304.5m).
Similar to its Q3 reportings though, when Kindred removed its Netherlands operations from its January to September figures, its gross winnings revenues only witnessed a five per cent decline.
However, despite the facts provided by Kindred, the firm’s CEO, Henrik Tjärnström, believes the company is off to a “flying start” in the Netherlands.
He stated: “At the start of the third quarter, we were finally able to welcome Dutch residents to our Unibet.nl site, following a nine-month period of not accepting bets from the Netherlands. Thanks to our strong brand awareness, unique product offerings, and an excellent team, we are off to a flying start.
“Like the Netherlands, most of our markets are displaying solid performances. This has significantly improved our underlying EBITDA margin and free cash flow when compared to the second quarter of 2022, which is a good indicator of our scalable business model.”
“Following a slow start to the quarter, due to a seasonally tame sports calendar in July, activity increased rapidly as football leagues resumed in early August. This is encouraging as we have the World Cup in Qatar taking place in November and December. Activity has been high across markets with gross winnings revenue excluding the Netherlands increasing by eight per cent compared to the same period last year.
“The sports betting margin came in at 9.9 per cent after free bets, higher than the same period last year and above the long-term average margin.”
“Since launching in the Netherlands on July 4 until the quarter end, active customers for the Dutch market have grown to 137,000. Based on this momentum, we estimate to achieve a 15 per cent market share in the Netherlands in the fourth quarter.
“As previously communicated and as expected during a re-regulation process, we will gradually absorb the margin pressures resulting from the Dutch re-regulation. For the third quarter of 2022 we achieved underlying EBITDA of £40.3m and an underlying EBITDA margin of 15 per cent.
“I am confident we have now passed the worst in terms of underlying EBITDA margin, with the third quarter already showing significant improvements compared to previous quarters. This is a step in the right direction towards our underlying EBITDA margin target of 21 to 22 per cent in 2025.”
Figures relating to Kindred’s subsidiary Relax Gaming were also down in the third quarter when compared to the previous year, amounting to £60.3m (2021: £71.8m), however, Kindred stressed that it impacted positively by the reassessment of the fair value of Relax Gaming contingent consideration of £39.6m.
Looking into the same figures for the period between January and September of this year when compared to last, profit dropped from £259.6m in 2021 to £74.9m in 2022.
Looking ahead, Tjärnström concluded: “We continue to await the UK Gambling Act Review, which is delayed due to the governmental changes in the UK. While we expect increased affordability requirements, we remain positive on the clarity of future regulations and believe that enhanced sustainability measures will benefit our operations in the long term as risk levels will decrease.
“We now look forward to a very exciting fourth quarter, with the Football World Cup taking place between November 20 and December 18. The World Cup tournament is always a great opportunity for customer acquisition and reactivation, which normally means very high activity levels at the end of the tournament.”