Kindred set for revenue rise in Q1 despite Covid-19 disruption
Kindred Group has forecast a year-on-year rise in revenue for the first quarter, despite its business being disrupted in the latter part of the period due to the novel coronavirus (Covid-19) pandemic.
The operator said gross winnings revenue for the three months through to 31 March is likely to amount to between £247m (€280.8m/$303.3m) and £257m, which would represent an increase on the £224.4m posted in the same period last year.
Kindred said revenue was positively impacted by strong sports betting margins in the quarter, up to the disruption of sporting events in the middle of March, with all major competitions postponed or cancelled as a result of coronavirus. Margin before free bets was 12.2% for the period, compared to 9.7% in the first quarter of 2019.
However, Kindred noted that the lack of sporting events from mid-March pushed sportsbook turnover down, though this was partially compensated by growth in revenue from other verticals.
As a short-term indication, Kindred said that for the period from 16-31 March, its daily average gross winnings revenue was £2.2m, down 10% from the average for the full year in 2019.
Though Kindred said that it has a good financial position with strong liquidity and low leverage, due to uncertainty over the coronavirus and to ensure it is well capitalised for future investment opportunities, its board has recommended that the previously announced 2019 dividend not be paid.
“We expect the impact of the coronavirus on our business to be temporary, with sports activities gradually resuming during or after the summer,” Kindred’s chief executive Henrik Tjärnström said.
“In order to reduce the earnings impact of temporarily lower sports revenues, we will adapt our cost base through reduced levels of marketing spend, lower operating costs and delaying certain investments.”
Tjärnström added that while the current situation presents several challenges to the business, he said it could also accelerate the migration of customers from land-based gambling to online channels.
“I believe that the social and behavioural changes that are already happening will accelerate the migration from offline to online, which will benefit digital operators like Kindred,” Tjärnström said.
“Kindred will continue to benefit from a wide geographical reach and a broad product mix as well as a business model which has been resilient during previous times of economic downturns.”
Publication of the update comes after Kindred last month set out plans to ensure that it does not generate any revenue from customers gambling in a harmful and unsustainable manner by 2023, after reporting a steady increase in uptake of its responsible gaming tools and safeguards for 2019.
The number of customers using non-mandatory control tools increased from 11% to 11.5%, the operator's annual sustainability report revealed. However, this increase was below Kindred’s target, set in 2018, for a 50% rise in the rate of adoption for these tools.
Kindred plans to publish its full results for the first quarter on 24 April.