29.11.2023

by Mateusz Mazur

Kindred Group’s Financial Performance: Q3 2023 and Forward-Looking Strategies

Kindred Group plc, in its interim report for January to September 2023, showcases a steady increase in revenue and customer engagement.

The third quarter of 2023 saw total revenue climb to GBP 283.9 million, a 2% increase from the previous year. This growth is supported by a 1% rise in gross winnings revenue in the B2C segment, reaching GBP 274.7 million. Notably, the number of active customers surged by 7%, indicating a strong market presence.

Financial Highlights and Projections

In the third quarter, the company’s underlying EBITDA increased by 6% to reach GBP 42.6 million. The profits before and after tax were GBP 15.1 million and GBP 12.6 million, respectively. The earnings per share decreased to GBP 0.06 from GBP 0.26.

The company reported a free cash flow of GBP 24.5 million. Over the first nine months of 2023, total revenue rose by 18% to GBP 897.6 million, with an underlying EBITDA jump of 64%.

The company also bought back 3,833,000 shares/SDRs for a total of GBP 34.2 million. Kindred has predicted a full-year 2024 underlying EBITDA of GBP 250 million, which reaffirms its 2023 guidance of at least GBP 200 million.

Interim CEO Nils Andén’s Insights

Nils Andén, Interim CEO, acknowledged the company’s growth in casino segments and strength in key markets like the Netherlands and the UK.

However, he noted challenges including regulatory hurdles and lower-than-expected sports betting performance. Despite these challenges, Andén remains positive, citing operational initiatives aimed at optimizing costs, which have mitigated revenue shortfalls.

Strategic Moves for Future Growth

Kindred is currently undergoing a strategic review, which includes plans for a controlled cessation of its operations in North America, a reduction in headcount and operational costs, and a focus on profitable growth in core markets.

These measures are expected to result in an approximate annual savings of GBP 40 million. In terms of the market outlook, Kindred is confident in its ability to achieve above-market growth in its core markets.

These markets have an estimated size of GBP 25.3 billion and a predicted compound annual growth rate of 6% over the next five years.

Trading Update as of 26 November 2023

The average daily Gross winnings revenue for the Group up to 26 November 2023 was GBP 3.08 million, a 4% decrease from the same period in 2022.

The sports betting Gross winning revenue was affected by a lower margin, which is below the long-term average.

Our Comment on the Article

Kindred Group’s interim report reveals a resilient performance in a challenging environment, with strategic adaptations to ensure continued growth. The focus on cost optimization and operational efficiency, particularly in the face of reduced sports betting margins, demonstrates a proactive approach to maintaining profitability.

The decision to exit North American operations and streamline operations underscores a pragmatic approach to focusing on core markets with high growth potential.

Kindred’s adaptability and forward-thinking strategies position it well to capitalize on emerging opportunities in the dynamic iGaming industry. This strategic focus, combined with a strong customer base, sets the stage for Kindred to continue as a key player in the sector.

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