Q&A: Henrik Tjärnström on climbing US revenue as operators wage bonusing war

Kindred Group reported a Q3 revenue rise of 24% to £280.7m at the start of November after top-tier sport made a major comeback from Covid-19 cancellations and postponements.

Below, CEO Henrik Tjärnström discusses the key drivers behind the revenue increase and also looks ahead to future quarters.

EGR Intel: Kindred recorded a 254% revenue rise from “other” territories in Q3. Which markets are the key drivers behind that figure?

Henrik Tjärnström (HT): Australia and the US are the two big ones there. Australia was around 140% up year-on-year and in the US of course we generated several hundreds, if not thousands, because we were not live there last year.

EGR Intel: Sports betting operators are waging a bonus war in the US to attract customers. How do you see that panning out?

HT: It is a normal part of the growth phase of the market and we have chosen October and November to participate in that. We are giving it two months to see what kind of return we get and we are also testing out our brand awareness in the market. Then we will regroup and analyse our ROI and that will be used to shape our ongoing market initiatives.

EGR Intel: A big chunk of Q3 revenue came from the comeback of sports and you are unlikely to enjoy a bounce like that again. How will that affect performance in future quarters?

HT: You can look at the start of the fourth quarter now which is comparing to a decent period last year and we are up 38% in constant currency for the first month or so. To be fair, this is still held by an improved sports betting margin, but the underlying activity is up 18% on a strong quarter last year. The return of sport is still having an effect, but the remaining higher activity in the other product segments remains and we are working very hard to make sure that stays there for good. It could be perhaps that more offline customers have come online and are choosing to stay. We have also been able to promote other products to our more traditional sports betting customers and they are playing on more products now than they used to. That could be a long-term upside from Covid.

EGR Intel: Kindred has continued to focus on cost control. What is your reaction to suggestions that you are in danger of underinvesting in the business?

HT: We’re clearly very mindful about that and we need to make sure that we’re not sub optimising. We’re not, but I think this has been a good opportunity to regroup as an organisation and take stock from the current situation and challenges to come out even stronger while rebalancing resources in the right areas and then growing from there. That has been useful in the short term and will be beneficial for the long term as well.

EGR Intel: The cost control saw consultants being let go, but did the measures lead to wider staff redundancies as well?

HT: Yes. The initiatives that we started in the middle of last year are coming to fruition during this year and when Covid came in March we were already working on these plans. It meant we could just tweak them, rather than having to start from a standstill and that has also clearly helped us.

EGR Intel: There are regulatory changes forthcoming in the UK. What is your mid-term outlook on what has become a difficult market to navigate for many operators?

HT: We look very positively on the long-term opportunities for ourselves in the UK. We embarked on our UK venture in 2012 when we started our organic foray into the market, before adding Stan James in 2015 and 32Red in 2017. We’ve been growing those businesses really well and the UK is one of our fastest growing markets now and also one of our largest markets. These are really encouraging developments and it just shows the potential if you get things right. There has been strong work done by the team in the UK market.