Kindred revenues up 32%, targets 2Q18 migration for 32Red
Unibet and 32Red owner Kindred Group posted a 32% increase in gross winnings revenue (GWR) to a record £166.6m in Q2, driven by growth across all products and regions, the Nordic powerhouse announced this morning.
Adjusted for the currency tailwind the company has enjoyed since the Brexit referendum in June of last year and the 23-day contribution from 32Red, the £175.6m acquisition of which completed on 7 June, organic GWR was up 18%, “significantly higher than what we anticipated the market to grow by”, CEO Henrik Tjarnstrom told analysts in Stockholm this morning.
Underlying EBITDA was up 52% to £33.4m, with this up 28% on an organic and constant currency basis. “So the 18% increase in gross winnings revenue is actually a 28% like-for-like increase in EBITDA. Again very improved conversion down the P&L that we are very happy with”, said Tjarnstrom.
Kindred’s largest product segment of casino and games, accounting for 51% of GWR in the quarter, grew by 30%, as did the second largest segment of sportsbook (accounting for 44% of the total) with the other verticals of poker and bingo growing 50% and 68% respectively.
Sportsbook margin was 7.3% before free bets, 6.4% after free bets, the latter below the historical average of 7%. However, the impact in the quarter was offset by a 28% uplift in turnover to an all-time high of £1.2bn. “Considering that we are comparing with the start of a European [football] tournament last year, it’s very strong”, said Tjarnstrom.
Mobile continued to drive an increasingly large volume of the Kindred business, up 52% year on year to 73% of total revenues.
On the 32Red acquisition, the Gambling Commission approval of which on June 7 Tjarnstrom called “the single most important event of the quarter” for Kindred, he revealed they had targeted a date of Q2 2018 to migrate 32Red onto their own group platform from “the Microgaming platform that has served them really well”.
The group’s largest region of Western Europe, representing exactly half of GWR in the quarter, was up 41% to £83.8m and 31% on a constant currency basis. The regional contribution was still up 24% with the 23-day contribution from 32Red stripped out, revealed Tjarnstrom.
The Nordics, generating 41% of revenues in the quarter, also grew contribution by 26% to £67.8m. Tjarnstrom said this growth showed Kindred was “continuing to take market share across the board”.
In Kindred’s home market of Sweden, Tjarnstrom said he was “very encouraged” by the strong political consensus behind the proposed re-regulation being voted through parliament early next year and the market being open for business by 1 January 2019.
However, he cautioned: “That means there can’t be any changes to what is on the table today from what was presented by the inquiry. So it will not be about tweaking something but taking it as it is and working towards implementation.”
Related articles: Swedish review calls for 18% online gambling tax
Kindred completes 32Red deal