Kindred crosses £1bn GGR mark thanks to growth in all sectors

| By Daniel O'Boyle
Unibet operator Kindred saw full-year revenue pass the £1bn mark for the first time in 2020, thanks to new highs in active customers and major growth in new markets.

Full year revenue grew 23.9% to £1.13bn (€1.29bn/$1.56bn) for the year.

Kindred chief executive Henrik Tjärnström said successful navigation of the novel coronavirus (Covid-19) pandemic helped guide the business to break records in almost all key metrics.

“It’s the strongest financial results we’ve ever delivered at the Kindred Group, by some margin,” Tjärnström (pictured) said.

Casino, poker and other gaming made up the majority of revenue, as this segment grew 34.6% to £642.1m. Sports betting revenue, despite the suspension of almost all global sports for much of the year, also grew, by 12.1% to £488.1m.

Henrik Tjärnström

This sports betting revenue came on stakes worth a total of £5.17bn, which was down very slightly from 2020, as the revenue growth came from increased margins in both live and pre-game bets. Live betting revenue was up slightly at £253.0m and pre-game betting revenue was up 16.4% to £307.4m, with £72.3m in free bets then eliminated from the overall revenue total.

Breaking the combined £642.1m in casino and gaming down further, casino revenue was up 35.0% to £579.0m, while poker revenue grew 54.5% to £32.9m and other gaming revenue increased 13.1% to £30.2m.

Kindred’s overall margin between sports betting and casino was 4.9%. As these verticals combined for revenue to £1.07bn, this meant players staked a total of £21.78bn, 28.4% more than in 2019.

Breaking down revenue by region, Western Europe made up the majority of Kindred’s revenue at £705.4m, a 27% increase, with betting revenue up 10% to £330.1m and casino and gaming revenue growing 47% to £375.3m. Within this region, Kindred said the UK saw particularly strong growth thanks to strong cross-sell, as did Belgium through good acquisition.

The Nordics followed in both segments with a combined £262.2m following 4.0% growth, but while betting revenue grew 10.1% to £95.8m, gaming revenue remained level at £172.4m. This lack of growth may have been in part due to restrictions on online casino in Sweden, including a SEK5000 (£435/€497/$602) mandatory deposit cap for the vertical.

Central, Eastern and Southern European revenue grew to £62.7m in gaming and £39.1m in sports betting for a combined £101.8m, up 28.9%. The rest of the world, with markets including the US, saw betting revenue almost double to £23.1m while gaming revenue grew more than 300% to £31.7m, meaning the region combined for £54.8m, a 177.8% increase.

“The sector also firmly established itself in the US market during 2020, and our Unibet brand continues to deliver here according to plan with a gross winnings revenue contribution of £23.8 million for the full year,” Tjärnström said. “Being one of the largest operators in the world, I look forward to our continued journey in the US as Unibet projects to launch in both Illinois and Iowa during 2021.”

Kindred paid £231.0m in betting duties and £53.6m in revenue sharing payments to affiliates. Direct cost of sales came to £465.0m, and £180.4m in other costs of sales for a gross profit of £665.2m, up 30.8%.

Kindred paid an additional £203.6m in other marketing costs, down 3.5%. Tjärnström said that this was largely because some other sectors had withdrawn from marketing activity due to the effects of the pandemic, driving down demand and therefore prices, but he noted that this effect was short-lived and marketing costs were up again in Q4.

Administrative costs were up 2.3% to £224.1m, with just under half of this total being salaries and the remainder mostly depreciation and amortisation, resulting in an underlying profit before one-off items of £237.5m.

Other costs included £17.7m in amortisation of intangible assets, as well as an £8m (SEK100m) penalty fee from Swedish regulator Spelinspektionen for offering unauthorised bonuses and lotteries without a licence to players, which Kindred said it disputed, and £4.2m in restructuring costs.

This led to an operating profit of £205.8m, up 190.3%. After £5.8m in net financial costs, £8.7m in foreign exchange losses and £1.8m in the share of profits of associates in which Kindred holds a stake, the operator’s pre-tax profit totalled £193.1m, up 187.8%.

Kindred paid £27.1m in tax, for a final profit of £165.2m, 191.8% more than in 2019.

Looking just at the fourth quarter, Kindred revenue was up 54.4% to £364.7m. High margins meant sports betting made up almost half of this at £177.2m.

Its gross profit came to £221.6m, up 70.5%, while its operating profit grew more than seven times over to £99.7m.

After tax, Kindred’s profit for the quarter was up 678% to £84.9m.

Earlier this week, Kindred published its first report on its share of revenue that came from high-risk customers as part of its efforts to reduce this figure to zero by 2023. For the fourth quarter of 2020 this was 4.3%.

The business also announced a partnership with the Quechan Tribe of the Fort Yuma Indian Reservation to secure market access to California and Arizona this week.

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