Kindred declares ‘solid start’ to 2024 ahead of possible sale to FDJ

Nils Anden Kindred
Image: Kindred

Kindred has stated that revenue in the first quarter of 2024 is in line with Q1 2023 comparisons ahead of the group’s possible sale to Groupe Française des Jeux later this year.

In addition, CEO Nils Andén noted that the group has achieved a “solid start” to 2024, while the company’s planned North America exit is set to conclude towards the end of Q2.

‘Solid start’ for Kindred

Publishing its Q1 results, Kindred declared a total revenue of £307.7m, which is in line with £306.4m earned during the same period the previous year. This figure includes the company’s B2C business and other revenue from B2B business Relax Gaming, which amounted to £10.1m, an 11 per cent increase YoY.

B2C gross winnings revenue improved slightly year-over-year to £297.6m (Q1 2023: £297.3m), with 84 per cent of the revenue coming from locally regulated markets, an all-time high. Active customers rose by three per cent to 1,667,564 (2023: 1,623,568).

Kindred noted that factors which contributed to B2C revenue included strong development in the UK and the Netherlands, growth across casino in other core markets, as well as active customers in casino rising by six per cent.

However, B2C revenue was also impacted by a “weak performance in non-locally regulated markets, with gross winnings revenue declining by 16 per cent” in comparison to the same period the previous year.

Gross profit was £172.6m (2023: £172m) with a gross profit margin of 56 per cent “driven by movements in revenue and cost of sales,” which was £135.1m (2023: £134.4m). Marketing costs amounted to £52.7m (2023: £54.8m).

“We have had a solid start to 2024 with the underlying business operations performing well and operational initiatives moving forward according to plan.”

Kindred CEO Nils Andén

Underlying EBITDA rose by 20 per cent to £59.3m (2023: £49.4m), driven by a “significant focus on cost optimisation across both marketing and administrative expenses and the reduced negative contribution from the North American market following its announced closure”.

Profit after tax was £31.4m (2023: £25.6m), earnings per share were £0.15 (2023: £0.12), free cash flow amounted to £23.7m (2023: £29m). Kindred added that its “cost reduction initiatives are effective and driving improvement in results”.

Andén commented: “We have had a solid start to 2024 with the underlying business operations performing well and operational initiatives moving forward according to plan.

“The headcount reduction plans announced at the end of last year are progressing as intended and the North America exit is set to conclude towards the end of the second quarter this year. Our growth plan that we launched during the fourth quarter last year, focusing on Europe and Australia, continues at pace with dedicated strategic growth projects across locally regulated markets.”

“Together with the encouraging performance of the B2B business, Relax Gaming, total revenue for the first quarter came in at £307.7m, in line with the same period last year. 

“Underlying EBITDA for the first quarter came in at £59.3m, which is a very encouraging increase of 20 per cent compared to the first quarter 2023 and shows the continued positive impact of our cost control focus.”

Regional performance

Per region, Western Europe operations amounted to £191.5m, up 10 per cent YoY (2023: £174.2m) and accounting for 64 per cent of the group’s gross winnings revenue, following growth in the Dutch market and a strong performance in the UK being softened by performances in France and Belgium.

Nordics operations achieved £65.2m revenue during Q1, down 15 per cent YoY (2023: £76.6m) while representing 22 per cent of the total gross winnings revenue. A decline was seen across casino and sports betting with “disappointing performance across markets”. In local currency, Sweden fell by 20 per cent YoY, while Denmark improved by one per cent.

Central, Eastern and Southern Europe operations amounted to 10 per cent of the group’s total gross winnings revenue during the quarter at £29.8m, down eight per cent YoY (2023: £32.3m).

In local currency, operations in Romania rose by 17 per cent, but declines were seen elsewhere in the region, with Italy and Estonia seeing weaker casino activity and product margins.

Other operations revenue fell by 22 per cent YoY to £11.1m (2023: £14.2m), representing four per cent of the quarter’s total gross winnings revenue.

In local currency, Australia fell by seven per cent, while North America dropped by 25 per cent as the group continued its exit from the market and the “only spend within the states is focused on retention of customers until the point of operational closure in the first half of 2024”.

Casino growth

Per product segment, casino & games amounted to 56 per cent of Kindred’s gross winnings revenue in Q1, followed by sports betting at 39 per cent, poker at three per cent and other products at two per cent.

Casino & games gross winnings revenue rose by three per cent YoY, with active customers increasing by six per cent.

Kindred noted that growth was “driven by strong performance in the Netherlands and the UK, with increased activity driving results as customers are benefiting from the wide selection of slots, tables and live casino games”.

Sports betting gross winnings revenue fell by three per cent in comparison to the same period the previous year, while the gross margin after free bets was 10.3 per cent, which was higher than the group’s long-term average of 9.8 per cent.

Poker and other products gross winnings revenue fell by eight per cent YoY to £13.8m (2023: £15m), but active customers in poker rose by three per cent.

The CEO continued: “During the quarter, we launched the Kindred Sportsbook Platform in a test market, and we are very pleased with the progress to date. KSP remains one of our most important strategic projects and will give us the flexibility and differentiation needed to improve growth in locally regulated markets.” 

“Our share of gross winnings revenue from locally regulated markets came in at a new all-time high of 84 per cent, indicating our continued focus to sustainable revenue and our commitment to a positive contribution to societies.”

“Following a solid start to the year we now have our eyes firmly set on a much sought after summer of sports with the UEFA Euros, the Copa America and the Paris Olympics.”

Q2 so far

Kindred also provided a trading update for Q2, up to and including April 21, stating that average daily gross winnings revenue was £3.48m, up six per cent when compared to the daily average for Q2 2023 (eight per cent higher in constant currency).

Excluding North America, gross winnings revenue has improved by eight per cent (nine per cent in constant currency).

Sports betting margin after free bets is 11.3 per cent, ahead of the group’s 9.8 per cent long-term average and in line with the 11.3 per cent across Q2 2023.

During the quarter, Kindred also launched a new brand in Sweden, Otto Casino, which was soft-launched on April 2, before being fully launched on April 22.