Kindred Group revenue plunges 30% in Q1 as Dutch absence continues to bite

Kindred Group has posted a 30% year-on-year (YoY) decline in Q1 2022 revenue as its absence from the Netherlands continues to severely impact operations.

The Malta-based firm left the market ahead of its regulation on 1 October 2021 and, as a result, has had its overall revenue stream dented, although management hopes to re-enter the market shortly and regain a strong position.

Total revenue fell from £352.6m in Q1 2021 to £246.7m in Q1 2022 as other markets failed to offset the losses from the Netherlands, while the UK proved to be particularly challenging due “further tightening of affordability measures”. Excluding the Dutch market, revenue was down 14%.

The business also suffered a dramatic 77% decline in underlying EBITDA for the quarter, falling from £106m in Q1 2021 to £24.5m in Q1 2022.

Kindred’s post-tax profit plummeted 91.2% in another blow to its latest financial report, with the figure falling from £72.6m in Q1 2021 to just £6.4m for the first three months of 2022.

The exit from the Netherlands was partly blamed for the 24% YoY decline in active customers to 1.38 million, while ARPU was down 10% compared with the same time last year.

Not having access to Dutch players meant revenue by region shifted, with Western Europe accounting for 52% and the Nordics 31% of total revenue.

In terms of verticals, casino and games provided the largest proportion of revenue at 49%, followed by sports betting on 46%. However, revenue for sports betting and casino and games was down 30% and 32% respectively compared with Q1 last year.

Meanwhile, the proportion revenue generated from locally regulated markets reached an all-time high of 77%, and will increase further once access to the Netherlands resumes.

Elsewhere, Kindred also provided an update on its performance in the early portion of Q2 2022. Average daily gross winnings revenue was down 37% compared to the daily average for the full second quarter of 2021.

Removing the Netherlands from the comparison, the daily average was still down 15% YoY.

Sports betting revenue in Q2 2022 has so far been negatively impacted by a weak sports betting margin of 7.8% compared to 10.7% in 2021. Yet margin for Q1 was 10.2%, notable higher than the long-term average of 9.3%.

Earlier this month Kindred announced its expected results for Q1 2022, pre-empting the severe declines which it has confirmed today.

With the market already aware of the potential declines across revenue, EBITDA and post-tax profit, the company’s share price was up slightly at 0.4% to SEK84.36.

Touching on the impact of leaving the Netherlands, Kindred CEO Henrik Tjärnström said the short-term pain would eventually be offset by long-term success in other parts of the business.

He said: “The cessation of activity in the Dutch market continued to have a short-term impact on our gross winnings revenue, which came in at £242.4m for the quarter, in line with the fourth quarter 2021 but significantly below the same period last year.

“While this temporary top-line pressure reduces our profitability in the short-term, we maintain a very positive long-term view on the return from investments in our tech platform and strategic projects, such as our US expansion and the recently announced Kindred Sportsbook Platform,” he added.

Kindred previously announced that 3.3% of its revenue generated in the first quarter of 2022 came from harmful gambling, down from 4% in the previous quarter.