Kindred: 2023 results show profitable growth can be achieved

Nils Anden Kindred
Image: Kindred

Kindred CEO Nils Andén has stated that the revenue growth across the fourth quarter and 2023 is a sign that the company can “grow profitably within highly regulated markets”.

In addition to describing Groupe Française des Jeux’s recent public cash offer for Kindred as “good news”, Andén has also been appointed as permanent CEO of the group after holding the position on an interim basis since May 2023.

Kindred sees revenue growth

Publishing its Q4 and full year 2023 financial report, Kindred declared a Q4 total revenue of £312.9m, a two per cent increase year-over-year (Q4 2022: £305.5m). 

For the full year, revenue grew by 13 per cent to £1.21bn (2022: £1.07bn). 97 per cent of the revenue was generated from B2C operations, while three per cent came from their B2B Relax Gaming operations.

Q4’s gross winnings revenue improved by two per cent YoY to £301.6m (Q4 2022: £295.1m), while for the full 2023, revenue rose by 12 per cent to £1.17bn (2022: £1.04bn).

Kindred noted that growth in the Dutch and UK markets, as well as a strong performance in casino operations, helped B2C revenue in Q4 in comparison to the previous year. However, regulatory measures in Belgium and Norway continue to impact overall growth, while Sweden also came in below expectations.

While revenue went up, the number of active customers in Q4 decreased by eight per cent YoY to 1,686,662 (Q4 2022: 1,827,881). However, this figure was eight per cent higher than what was recorded in Q3 2023.

Casino active customers in Q4 grew by seven per cent YoY, while sports betting active customers declined by 18 per cent YoY, which Kindred attributes to the FIFA World Cup taking place during the same period of the previous year.

“Our performance demonstrates that Kindred is able to grow profitably within highly regulated markets.”

Kindred CEO Nils Andén

Underlying EBITDA in Q4 increased by 45 per cent to £56.8m (Q4 2022: £39.1m). For the full year, underlying EBITDA increased by 58 per cent to £204.5m (2022: £129.2m) which was in line with the group’s financial guidance.

Primarily as a result of the closure of North American operations, items affecting comparability amount to a negative contribution of £57.6m in Q4 (Q4 2022: positive contribution of £28.5m), and a negative contribution of £72.7m for the full year (2022: positive contribution of £58.3m).

Kindred reported a loss after tax of £18.7m in Q4 (Q4 2022: £50m profit). For the full year, the group declared a profit after tax of £47.2m (2022: £120.1m profit).

Free cash flow amounted to £46.8m in Q4 (Q4 2022: £30.9m) and £103.3m for the full year (2022: £69.6m).

Following the announced public cash offer from FDJ, and the way the offer is structured, where any dividends before settlement of the offer would reduce the offer price accordingly, Kindred’s Board of Directors do not propose a dividend in respect of the 2023 financial year.

Andén commented: “The final quarter of 2023 saw a sustained above-market performance in the Netherlands, UK, and Romania, which combined with continued growth in our B2B segment (Relax Gaming) generated total revenue of £312.9m and underlying EBITDA of £56.8m for the period, an increase of 45 per cent compared to the same period last year.

“During 2023, we provided guidance of £200m in underlying EBITDA, and I am very pleased that we have delivered on that target. Our performance demonstrates that Kindred is able to grow profitably within highly regulated markets. During 2023, 82 per cent of gross winnings revenue was generated from locally regulated markets.”

Strong casino growth

Per product segment, casino & games generated 57 per cent of gross winnings revenue during Q4, followed by sports betting at 38 per cent, poker at three per cent and other at two per cent.

Casino revenue rose by seven per cent YoY during the quarter, poker and other products revenue rose by 17 per cent, but sports betting revenue dropped by six per cent in comparison to the same period the previous year due to lower sports betting margins.

Meanwhile, Relax Gaming operations generated £11.3m in revenue in Q4 (Q4 2022: £10.4m), which Kindred attributes to a broader distribution of content and game launches, as well as the success of the Dream Drop jackpot feature.

“The casino & games segment continues to grow well, contributing 57 per cent of gross winnings revenue during the quarter – up seven per cent versus the same period last year,” added Andén.

“The strong performance is a testament to our strategic focus on enhancing the customer offering through exclusive games, improved supplier partnerships, and personalising the casino & games experience. As previously mentioned, accelerating growth across the segment within multi-product markets will continue to be a major delivery area during 2024.

“Relax Gaming continues to perform well with total revenue for the quarter increasing 33 per cent versus the same period last year. The underlying EBITDA contribution was also up 72 per cent, demonstrating the scalability of the Relax business.”

Regional performance

During Q4, Kindred announced that it would be fully exiting the North American market by the end of Q2 2024, subject to the regulatory process, as well as reducing its employees and consultants headcount by over 300.

Per region, operations in Western Europe generated 62 per cent of gross winnings revenue during Q4 with £185.4m (Q4 2022: £175.6m), followed by Nordics at 24 per cent with £72.3m (Q4 2022: £77.7m), Central, Eastern and Southern Europe at 10 per cent with £31m (Q4 2022: £29.6m), and other regions at four per cent with £12.9m (Q4 2022: £12.2m).

In Western Europe, revenue from Dutch operations rose by 19 per cent YoY, UK operations grew by 17 per cent, French operations fell by three per cent and Belgium operations dropped by 29 per cent YoY.

In the Nordics, revenue from Swedish operations decreased by 10 per cent YoY, while Danish operations improved by four per cent. CES operations improved by five per cent YoY, while other regions’ operations rose by six per cent in comparison to the previous year.

“I remain confident that Kindred can deliver above-market growth across our portfolio during 2024.”

Kindred CEO Nils Andén

Revenue improved in North American operations by 83 per cent YoY to £7.7m (Q4 2022: £4.4m). However, Kindred noted that last year’s figure was impacted by a large MLB World Series win. Australian operations saw their revenue decline by 35 per cent YoY.

Apart from exiting the Norwegian market and “other non-regulated markets with no ongoing path to regulation”, FDJ doesn’t intend to materially alter Kindred’s operations following the implementation of the offer.

“Following the cost optimisation initiatives announced at the end of 2023, we continue to reallocate resources and marketing investments into areas that will deliver improved growth,” said Andén.

“Specifically, this includes increasing focus on the profitable casino segment and concentrating our marketing efforts within markets where we see significant opportunity to outgrow the market.”

Kindred also published a trading update for up to and including February 4, 2024, stating that the average daily gross winnings revenue for the group was £3.21m, three per cent lower than Q1 2023.

The sports betting margin after free bets for the above period was 9.5 per cent, lower than both the group’s long-term average margin of 9.7 per cent and the 9.9 per cent margin for Q1 2023.

For the full year 2024, the group is still committed to its underlying EBITDA target of £250m.

Andén concluded: “I remain confident that Kindred can deliver above-market growth across our portfolio during 2024. We see robust performance in select core markets, and I expect this momentum to continue going forward.”

Andén becomes permanent CEO

As previously mentioned, Kindred’s board of directors have also appointed Andén as permanent CEO with immediate effect, a position he has held on an interim basis since May last year.

“The board is very pleased to be able to appoint Nils as permanent CEO and that he is willing to take on the job,” noted Kindred Chair Evert Carlsson.

“Nils has done an excellent job as interim CEO and is an appreciated leader with a vast knowledge of both Kindred and the online gambling industry. We look forward to working with Nils and his team as he continues to lead the company on its strategic direction.”

Andén added: “I am grateful and proud to have received the board’s confidence to continue in the role as CEO of Kindred Group. We have a great team who are working hard to deliver on an exciting strategy that will strengthen Kindred’s position in locally regulated markets, and I look forward to continuing to execute on our plan.”