Kindred, a prominent online gambling company, experienced a remarkable quarter with substantial growth in active customers and improved earnings. However, various factors, including regulatory changes and strategic focus on sustainability, influenced revenue.
Strong Growth and Marketing Expenditures:
During the quarter, Kindred witnessed impressive growth, reaching 1.83 million active customers, the second-highest recorded number. This represents a significant 25% increase compared to the previous quarter. The company attributed this growth to strategic marketing expenditures, both before and during the World Cup, which contributed to its success.
World Cup and Seasonal Factors:
Although the World Cup generated substantial turnover, an interesting trend emerged. The winter scheduling of the tournament proved to be a hindrance for Kindred, as fewer significant football league matches were played during the quarter compared to the same period in 2021. While the World Cup garnered significant popularity, its timing impacted Kindred’s performance.
Regional Growth and Regulatory Challenges:
Kindred experienced ongoing growth in several regions, notably the Netherlands, France, and Sweden. However, the company highlighted that regulatory changes and its sustainability focus in important markets like Belgium negatively affected revenue. Adapting to evolving regulations while maintaining sustainability goals presented challenges for Kindred during the quarter.
Underlying EBITDA and Gross Profit Margin:
The expected underlying EBITDA for the fourth quarter of 2022 is projected to be approximately £39 million, showcasing a substantial year-on-year improvement. However, the quarter’s underlying EBITDA was impacted by lower-than-expected sales. The gross profit margin for the quarter stood at around 53.9%.
Impact of the Houston Astros’ World Series Victory:
The Houston Astros’ triumph in the World Series had an adverse effect on Kindred’s EBITDA, resulting in a loss of £3.9 million. Excluding North America, the underlying EBITDA amounted to approximately £54 million, indicating a more favorable performance when this factor is excluded.
Full-Year Outlook and Long-Term Margins:
Kindred estimates its underlying EBITDA for the entire year to reach at least £200 million, assuming average long-term margins for sports betting. This projection reflects the company’s confidence in sustaining growth and aligning with industry standards.
Kindred’s strong performance in the quarter, marked by substantial growth in active customers and improved earnings, demonstrates the company’s effective marketing strategies and resilience. However, challenges stemming from regulatory changes, sustainability focus, and external factors such as the World Cup and sporting events impacted revenue and EBITDA. Despite these challenges, Kindred remains optimistic about its full-year outlook, striving to maintain growth and align with industry standards in the long term.