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Stockholm-listed Kindred Group has reported a 34% year-on-year decrease in revenue to £238.7m for Q2 2022.

B2C revenue – excluding the operator’s Relax Gaming subsidiary – dropped by 36% over the same period to £233.5m, as underlying EBITDA plummeted by 78% to £25.3m.

The underlying EBITDA includes a negative underlying EBITDA contribution from the North American market of £7.4m, down from £8.5m in Q1 2022.

Across the whole business, profit after tax came in at just £5.8m, down from £87.1m in the prior corresponding period, as earnings per share fell to just £0.03p from £0.38p in the same period of last year.

Free cash flow for Q2 was negative at -£5.1m compared to £82.1m, marking an annual decline of 106%.

There was also a 30% drop off in Q2 active customer numbers, which totalled 1,336,706.

The poor results were attributed to the operator’s withdrawal from the Netherlands market, as well as tough comparatives due to both Covid-19 and Euro 2020.

Kindred Group CEO Henrik Tjärnström: “When these regulation projects come, there is always going to be a bit of a rough period.”

Even with the Netherlands excluded however, overall Q2 revenue declined by 13% as sportsbook-specific revenue decreased by 28%. This was made worse by a sports betting margin of 9.3% after free bets for the quarter, compared to 10.7% last year.

One positive following the end of the period saw Kindred Group re-enter the newly regulated Netherlands market on 4 July.

For the period to 19 July, Kindred has reported average daily gross winnings revenue in the market of £150,000 via a non-recurring trading update.

iGaming NEXT asked how that number compared to its Dutch average daily revenue before it withdrew from the market last year in an exclusive interview with CEO Henrik Tjärnström.

He said: “We haven’t given that number in report, but it’s a not insignificant part of what we had already, especially for such an early stage in the calendar launch compared to back then when we were there for a long time.

“It is a good start, and above our expectations that we set ourselves,” he added.

Kindred has pledged to discuss its Dutch market re-entry in more granular detail during a Capital Markets Day in London on 14 September 2022.

Away from the Netherlands, Kindred’s UK revenue dropped by 17% in Q2, primarily driven by the cost of implementing affordability changes ahead of the Gambling Act review.

New customers in the UK are now assessed for financial vulnerability with limits imposed accordingly, although the operator has not implemented a pre-emptive cap on slot stakes.

These changes led to an estimated negative revenue impact of £12m for the quarter.

“We’re doing what we can to offset that and we have advantages of a broad portfolio market that can be very useful in these kinds of situations,” Tjärnström told iGaming NEXT.

“The UK is going through a rough patch but we have other markets that can chip in and contribute.

“The industry has voluntarily applied stricter affordability measures which has an effect but the benefit side of that coin is we create a more sustainable database for the business for the longer term,” he added.

The Netherlands and the UK both fall into Kindred’s most substantial operating market of Western Europe.

Revenue from this region accounted for 51% of the total at £119.5m, representing a year-on-year decline of 51%, or 22% when excluding the Netherlands.

There were further declines across Belgium (-7%), France (-34%), the Nordics (-2%) and Central, Eastern and Southern Europe (-7%).

Kindred Group’s Q2 downturn was exacerbated further when broken down by vertical or product segment. Sports betting revenue fell by 43% as casino and gaming revenue dropped by 30%. Meanwhile, revenue from poker and other products declined by 23%.

“After a period of short-term headwinds, I look to the future with confidence as we see good progress with the group’s key strategic priorities,” said Tjärnström in a press release.

“We have received our long-awaited Dutch licence, our Kindred Sportsbook Platform (KSP) remains firmly on track, and Relax Gaming continues to show strong numbers.

“We are also nearing the end of a period of very tough COVID-19 comparatives, which have been giving a skewed view of our performance.”

With the gift of hindsight, would Kindred prefer to have diversified outside of Western Europe following three consecutive tough quarters?

“No, I wouldn’t say that,” Tjärnström told iGaming NEXT. “We are very happy with our broad portfolio markets and I think we have one of the broadest in the sector to be honest.

“That is just the way it is, and when these regulation projects come, there is always going to be a bit of a rough period,” he added.

More to follow…

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