Kindred breaks revenue and profit records in H1

| By Daniel O'Boyle
Unibet operator Kindred broke its revenue and profit records in the first half of 2021, bringing in gross gambling revenue of £716.3m (€836.2m/$984.1m), up 47.9%, as sports betting experienced major growth while expenses remained low.
Kindred Group office

Casino and games continued to make up the largest share of revenue, up 33.4% to £351.3m, but its share was no longer a majority.

This was due to faster growth in sports betting, which was up 74.0% to £330.2m. Of this total, £219.4m came on pre-game bets, up 76.6%, while live betting revenue increased 75.2% to £161.4m and £50.6m was deducted for free bets.

This revenue came on betting turnover of £3.30bn. 

Poker revenue declined, however, after having boomed during lockdowns in 2020, coming to £16.7m, down 3.3%. 

Other revenue was 14.1% above 2020 to £16.3m.

Looking at revenue by region, Western Europe revenue grew 67.9% to £485.9m. Nordics revenue grew 20.0% to £143.2m, while revenue from the rest of Europe was up 8.1% to £57.3m and other revenue grew 4.0% to £29.9m.

Western Europe made up the majority of revenue in both sports betting and casino, but its share and growth was higher in sports betting, in which it brought in £233.6m.

Kindred’s number of customers also hit a record high, at 1.9 million.

“I’m pleased to see yet another great quarter for Kindred with continued growth across both the sports and casino product segments,” Kindred chief executive Henrik Tjärnström said. “During the quarter, our business has performed exceptionally well.”

The business then paid £285.1m in costs of sales, up but more slowly than revenue at 39.4%. This was made up of £146.3m, up 49.1%, £29.0m in revenue shares to affiliates, a 16.2% increase, and £109.8m in other costs of sales, 35.8% higher than 2020.

This led to gross profit of £431.2m, up 53.7%.

Despite the growth in revenue, Kindred was able to reduce its administrative costs, by 12.0% to £113.7m. This included salaries, which grew slightly to £58.0m, and depreciation and amortisation costs, which declined.

This meant that underlying profit before items affecting comparability was £197.0m, up 264.8% from 2020. After extraordinary items – including fees related to the acquisition of Casino Blankeberge in Belgium from the Rank Group, regulatory sanctions and foreign currency changes – operating profit was £189.4m, more than three times 2020’s operating profit.

After income and expenses from financial items such as investments, Kindred’s pre-tax profit was £187.8m, up 457.7%. 

The business paid £28.1m in tax for a final profit of £159.7m, a growth of 474.4%. This fell only slightly short of Kindred’s profit for all of 2020, which came to £165.2m, and was higher than ever year in the operator’s history.

Looking only at the second quarter of 2020, Kindred’s revenue was £363.7m, up 54.4%. 

After £142.8m in costs of sales, gross profit was £220.9m, a 57.8% growth.

After marketing costs of £61.6m and administrative costs of £57.0m,profit before extraordinary items was £102.3m, almost three times Q2 of 2020’s profit.

Following costs of financial items, profit before tax more than tripled year-on-year to £102.5m.
KIndred paid £15.4m in tax for a final profit for the quarter of £87.4m, up 225.0%. 

However, while Kindred’s performance was generally strong, results from the US were less impressive. Tjärnström said the business was taking steps to improve its status in the US market.

“We see clear benefits of a diverse product offering with sports and casino both providing a

foundation for future growth,” he said. “Competition remains strong, however, and we are taking short-term actions to strengthen our position. 

“This includes an update to our creative platform and marketing mix, and improving our campaign tracking capabilities, ahead of the start of the NFL season in the third quarter.”

Just after the quarter ended, Kindred announced plans to acquire the remaining share of B2B provider Relax Gaming for £295m. Kindred has been the largest shareholder in Relax since 2013, with a 33.4% holding in the supplier.

“The acquisition is an important part of our long-term strategy and further increases our focus on product differentiation,” Tjärnström said. “I see great potential in this deal, granting us the ability to provide customers with more unique content, increasing our flexibility and improving our end

to end customer experience.”

The business also announced the latest update on its “journey towards zero” campaign earlier this week. The operator said it classed 4.3% of its revenue during the second quarter of 2021 as coming from harmful gambling, growing slightly from 3.9% in Q1 and level with the portion from 2020.

“Despite the low values, we know more work needs to be done and are aware of the challenges around safer gambling that the industry needs to continue addressing,” Tjärnström said.

The operator said it also appears to be well set for Q3, after a strong start driven by Euro 2020. The competition – which spanned the end of Q2 and start of Q3 – attracted turnover of £245.4m, with £194.3m in June and £51.1m in July and included seven of Kindred’s 14 leading events by betting turnover. This led to revenue of £33.9m, of which £25.0m was in June and £8.9m in July.

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