Kindred has highlighted progress across its key figures in its financial results for the second quarter of 2024, but its casino product had a slight decline in revenue year-over-year, only showing an improvement when excluding North American operations.
With its exit from the North American market operationally complete, CEO Nils Andén described the Q2 results as “very positive” and reaffirmed the operator’s full 2024 underlying EBITDA guidance of reaching £250m.
However, Kindred did not provide an update regarding the group’s possible sale to Groupe Française des Jeux later this year.
Revenue growth
Publishing its Q2 financials, Kindred declared a total revenue growth of seven per cent YoY to £327.6m (Q2 2023: £307.3m) with improvements seen in B2C and B2B operations in comparison to the same period the previous year. Excluding North America, total revenue improved by nine per cent YoY.
Gross winnings revenue from the B2C business rose by six per cent YoY to £317.2m (2023: £298.3m) thanks to continued growth in the Netherlands and a return to growth in France and Belgium, as well as sports betting operations being the main driver.
The number of active customers for the operator increased by 12 per cent YoY to 1.75 million (2023: 1.56 million).
The operator also noted that 84 per cent of its B2C revenue (£267.1m) came from locally regulated markets. When excluding North America, revenue from locally regulated markets has risen by 12 per cent YoY.
Other revenue from its Relax Gaming B2B business improved by 16 per cent YoY to £10.4m (2023: £9m). Total Relax Gaming revenue before the elimination of Kindred Group revenues stood at £13.4m, up 10 per cent from the same period last year (2023: £12.2m).
“We continue to demonstrate our resilience and strategic execution, which is reflected in our strong performance across our market portfolio. The vast majority of our top markets have grown year-on-year, which is very encouraging.”
Kindred CEO Nils Andén
Underlying EBITDA increased by 32 per cent YoY £73.6m (2023: £55.7m) with its margin rising by four percentage points to 22 per cent (2023: 18 per cent), driven by revenue increase and cost optimisation focuses across marketing and administrative expenses, in addition to reduced negative contribution from North America following its announced market exit.
Excluding North America, Kindred’s underlying EBITDA margin was 23 per cent, three percentage points higher YoY (2023: 20 per cent).
The company’s profit after tax at the end of the quarter stood at £44.5m (2023: £27.7m), which includes a loss from discontinued operations of £1.7m (2023: £6.9m) and a profit from continuing operations of £46.2m (2023: £34.6m).
Net cash at the end of the quarter stood at £58.4m (2023: £17m), while free cash flow was £41.6m (2023: £3m), “predominantly the result of movements in net cash generated from operating activities and capital investments”.
“Building on our solid start to 2024, I am pleased to present a very positive set of second quarter results for Kindred,” commented Andén.
“We continue to demonstrate our resilience and strategic execution, which is reflected in our strong performance across our market portfolio. The vast majority of our top markets have grown year-on-year, which is very encouraging.”
Slight dip in casino
Per product segment, casino & games had the biggest share of Kindred’s gross winnings revenue with 53 per cent, followed by sports betting at 43 per cent, poker at three per cent and its other product segment at one per cent.
Casino & games underwent a two per cent YoY decline in Q2 revenue comparison to the same period last year, but active customers rose by six per cent YoY. When excluding North American operations, casino revenue rose by one per cent YoY.
Kindred noted that for casino, strong performance for Western markets was offset by weaker performances across Nordics, Central, Eastern and Southern Europe and other regions. During the quarter, the operator also launched its Otto Casino brand in the Swedish market.
For poker and other products, revenue rose by seven per cent YoY, “supported by good development in the number of poker active customers driven by growth in France”.
For sports betting, revenue increased by 18 per cent YoY, with turnover rising by 11 per cent YoY following good activity for the Euros football tournament, as well as France, Netherlands and Belgium delivering strong performances.
“The second quarter contained strong sportsbook activity throughout, with Euro 2024 boosting customer engagement towards the end of the period.”
Kindred CEO Nils Andén
Sports betting margin after free bets stood at 12.1 per cent (2023: 11.3 per cent). The operator added that its sportsbook platform project remains on track.
Kindred’s proprietary racing product declined by three per cent YoY “with lower results linked to key racing events in June competing for activity with major football tournaments”.
Andén noted: “The second quarter contained strong sportsbook activity throughout, with Euro 2024 boosting customer engagement towards the end of the period.
“Favourable results, in combination with a record share of Bet Builder activity, delivered a historic high sportsbook margin of 12.1 per cent. This is considerably higher than the long-term average margin of 9.9 per cent and we expect to see some normalisation in the second half of 2024.”
The CEO added: “The KSP project remains firmly on track, with key features and functionality being released ahead of our planned market rollout, starting later this year.
“Live customers from selected test markets are already using the platform and providing valuable feedback and insight for the Product and Development teams.”
Regional performance
Regionally, Kindred stated that 65 per cent of its gross winnings revenue during the quarter came from Western Europe, followed by the Nordics at 23 per cent, CES at 10 per cent and other regions at two per cent.
Western Europe revenue improved by 16 per cent YoY to £208.4m (2023: £180.1m) thanks to strong performance in the Netherlands and a return to growth in France and Belgium.
Additionally, the operator mentioned that the UK market has continued to report growth with a four per cent increase YoY. Yet, there has been a “slow-down” in YoY performance when compared to Q1 2024 due to additional affordability measures being implemented at the end of the previous quarter.
Nordics revenue in Q2 stayed consistent YoY at £71.6m (2023: £71.5m), as sports betting operations were partially offset by a “weaker casino performance”.
Sweden’s revenue fell by three per cent YoY as additional safer gambling and affordability measures being implemented placed pressure on “revenue from customers in higher value segments”. Denmark’s revenue improved by 14 per cent following “a 30 per cent increase in casino activity and 39 per cent increase in sports betting activity”.
CES revenue fell by nine per cent YoY to £30.2m (2023: £33.1m) with sports betting revenue declining at a faster rate than casino revenue due to the former having a lower margin.
Romania’s revenue rose by 14 per cent YoY, but elsewhere, Italy’s revenue fell by 51 per cent YoY due to “lower player values across both sports and casino”, while Estonia’s revenue dropped by 21 per cent due to weak casino performance.
Other regions’ revenue fell by 49 per cent YoY to £7m (2023: £13.6m). Australia’s revenue dropped by nine per cent YoY due to weak sports betting margins, while North America’s revenue decreased by 73 per cent to £2.2m (2023: £8.4m).
However, North America’s decline was “aligned to internal expectations given the closure of operations”.
Outlook
As previously mentioned, Andén reaffirmed the operator’s full 2024 underlying EBITDA guidance of reaching £250m.
The CEO concluded: “We reaffirm our full year 2024 underlying EBITDA guidance of reaching £250m. Our very strong second-quarter performance was supported by a packed sports calendar throughout the quarter and by a historically high sports betting margin.
“While we expect the sports betting margin and activity to normalise after the Euros, our disciplined execution and strategic market focus positions us well for continued success. Our exit from the North American market is now operationally complete, allowing us to fully concentrate on our core markets.
“Looking ahead, we are excited about the ongoing summer of sport which includes the Paris Olympics and the restart of major domestic football leagues. We remain dedicated to delivering sustainable growth and creating long-term value.”