Kindred’s Diversified Model Helped Shrug off Disruptions

Nasdaq Stockholm-traded gaming operator Kindred Group released an interim report today, informing investors about its third quarter and January-September financial performances, outlining it managed to shrug off the ongoing disruption in the industry for the third quarter due to its diversified model.

Gross Winning Revenues Rise

Kindred Group issued a trading update in October, ahead of the interim report, in which the company said its quarter revenue would be at an all-time high. The report today posted gross winning revenue of £280.7 million for the third quarter of 2020, an increase of 24% compared to the same period last year. For the period January – September gross winnings revenue amounted to £765.5 million, an increase of 13% year-on-year.

“Reflecting on the past six months, it is evident that societies across the world continue to struggle as a result of the COVID-19 pandemic. Despite these challenges, and thanks to our diverse business model, I am pleased that we can report sustained momentum across our markets…”

Henrik Tjärnström, CEO, Kindred Group

Underlying earnings before interest, tax, depreciation and amortization (EBITDA) for the three months ended September 30 was £74.6 million, while for the 9 months since the beginning of 2020 underlying EBITDA was £168.8 million.

Consequently, profit before tax for the third quarter was £60.7 million, going down to £52.5 million after paying tax, or a £0.231 in earnings per share. Cumulatively, profit before and after tax was £94.4 million and £80.3 million respectively, reflected in a £0.354 in earnings per share.

Kindred Group reported free cash flow of £59.7 million for the third quarter of 2020 and £156.3 million for the nine-month period. The net debt position of the company on a sequential basis improved, from £61 million for the second quarter to £2.2 million at the end of the third quarter.

Sports Book Performance

Kindred Group had a strong sports book performance, helped by the finalization of previous seasons for sports leagues, combined with the start of the new seasons within shorter periods of time, despite the slightly lower profit margin of just over 8% for the third quarter.

The ongoing shift from offline to online gaming contributed to the growth in Kindred’s customer base by 19%, compared to the same period in 2019. The growth was also boosted by the continuous efforts from the operator to enhance customer experience and achieve high customer satisfaction scores. The total number of active customers reached 1,650,153.

Operations in the US

In the US, Kindred achieved a market entry into its third state during the quarter, Indiana, and current efforts are focused on launching in Illinois and Iowa next year, as well as other states in the pipeline. The operator managed to grow its market share in Pennsylvania to above 5% during the third quarter, with markets in New Jersey and Indiana also showing signs of sustained growth.

Revenues grew by 22% despite the big bonus campaigns aimed at growing the company’s customer base for a market that is expected to become the largest for the group.

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