Quarterly revenue increases for Kindred as harmful gambling revenue drops to 3 percent
Author:
Muhammad Gregory
One of the global leaders of iGaming and sports betting, Kindred, recently published its first quarterly report of the new year. The Malta-based operator reported a small 0.3 percent quarter-on-quarter increase in its total revenue, including the revenue from B2B and B2C segments. Additionally, despite an increase in the number of active users, the revenue from harmful gambling dropped to 3 percent.
Kindred, recently published its first quarterly report of the new year.
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Kindred has B2B and B2C operations in several regulated European jurisdictions. The operator is also present in the regulated gambling markets of Australia and the United States. The Malta-based entity is growing in the gambling markets of Belgium, Estonia, France, Italy, Malta, Sweden, and the United Kingdom. In the near future, Kindred will certainly look to expand its operations by entering a few more European countries. At present, the operator caters to its B2C segment with nine brands. The most renowned one is Unibet, which mainly offers players sports betting and online casino services. Some of the other popular brands include 32Red, Maria Casino, and Bingo.com. Due to the variety of brands, Kindred has a customer base of over 30 million. The operator is listed on the Nasdaq Stockholm Large Cap. It is also an active member of the European Gaming and Betting Association (EGBA) and the founding member of the International Betting Integrity Association (IBIA).
EGBA represents the world’s biggest iGaming operators and sets the standard for gambling operations with an intent to make the gambling markets well-regulated and well-channelled. It also helps in deriving and implementing measures to boost player safety. IBIA is an entity that is battling the illicit issue of match-fixing to protect the integrity of sports betting that is offered by all licensed operators. Kindred has its own goals that highlight the operator’s intent to promote responsible gambling and increase player safety. Apart from using all necessary measures, the Maltese operator has set a bar for itself. By the end of this year, Kindred intends to bring all revenue coming in from harmful gambling down to zero. The initiative is known as ” Journey to Zero” and was launched in 2018. Since then, year after year, constant dips in revenue from harmful gambling have been noted by the entity. While it may not be able to bring it down to zero by the end of the year, the harmful gambling revenue has dropped significantly.
After analyzing the first quarter of this year, Kindred confirmed that the revenue from harmful gambling dropped to 3 percent. The Maltese operator also explained the reason behind the decrease. There are measures in place to identify harmful gambling traits in players that gamble on the platforms of Kindred-owned brands. Interventions were made for the players who were detected, and the operator claims that 83 percent of the identified players showcased improved gambling behavior post-intervention. This positive statistic was recorded in a quarter that delivered promising numbers to the entity. The total quarterly revenue stayed above the ￡300-million-mark and recorded a 0.3 percent quarter-on-quarter (QoQ) increase. The gross winnings revenue reeled in from the B2C segment recorded a 0.7 percent QoQ increase, while the underlying EBITDA shot up to ￡49.4 million, highlighting a significant 26 percent QoQ increase.
The CEO of Kindred, Henrik Tj?rnstr?m, spoke about the dip in harmful gambling revenue and disclosed upcoming plans for the operator’s Journey to Zero initiative.
“We have continuously emphasized the importance of detecting and engaging with our customers who are showing markers of harm. To prevent harmful behaviour, early intervention is critical, and I am glad that we can see the result of the rollout of automated interventions that we have done in some of our markets. Going forward, I look forward to following the holistic approach and collaboration across different teams within Kindred. Responsible gambling is not a factor only for one team, but it is something that every single employee contributes to through their knowledge and commitment to reducing harmful revenue. By our tech teams working hand in hand with the responsible gambling and customer-facing teams, we can swiftly release improved interventions across different markets. All in line with our Journey towards Zero road map.”
Detailed analysis of Kindred’s Q1 2023 report
Last year, Kindred recuperated from the effects of the Covid-19 pandemic and other challenges. In the first quarter of 2022, the operator’s total revenue from B2C and B2B segments topped 30 percent from ￡352.6 million to ￡246.7 million. However, steady growth from there brought the revenue up to ￡305.5 million in the fourth quarter of 2022. The total revenue numbers have still not surpassed the ￡350-million-mark but are rising steadily as Q1 2023 has recorded a total revenue of ￡306.4 million. The gross winnings revenue recorded a 0.7 percent QoQ spike and was 23 percent higher than the gross winnings revenue of ￡242.4 million in Q1 2022.
In the first quarter of last year, the underlying EBITDA fell 77 percent from ￡106 million to ￡24.5 million. However, a slow and steady rise was noted throughout the year as the underlying EBITDA in the quarter quarter of 2022 was ￡39.1 million, marking an almost 60 percent increase compared to the EBITDA of Q1 2022. In the current quarter, the same segment recorded a 26 percent QoQ spike and was 102 percent higher than the EBITDA of the corresponding quarter last year. Pre-taxation profit was up 75 percent at ￡30.4 million compared to the bleak figure of ￡7.6 million recorded in the first quarter last year.
However, it also marked a 41 percent QoQ decrease as the pre-taxation profit in Q4 2022 was ￡51.9 million. After taxation, the Q1 2023 profit (￡25.6 million) was almost half of what was generated in the previous quarter (￡50 million). But it was significantly higher than the profit of last year’s corresponding quarter (￡6.4 million). A total of 2,286,000 shares were purchased for ￡20.1 million in the year’s opening quarter. This was 47 percent higher than the previous quarter, during which only 1,199,000 shares were purchased for ￡10 million. It was also 16 percent higher than the number of shares purchased in Q1 2022 (1,927,590 for ￡15.4 million).
Detailed Analysis of the decrease in harmful gambling revenue
In 2018, Kindred embarked on a promising voyage to bring harmful gambling revenue down to zero in five years. That five-year period is coming to an end this year. While the harmful gambling revenue figures are dropping consistently, they may not reach zero when the year 2023 ends. Hence, Kindred may be forced to extend the duration of its initiative in the fourth and final quarter of this year.
In the first quarter of 2023, the operator confirmed that 3 percent of the gross winnings revenue came via harmful gambling. This was the lowest rate recorded over the last four quarters. In Q2 2022, 3.3 percent of the gross winnings revenue came from harmful gambling. During the same quarter, interventions by Kindred helped 84.7 percent of the detected players improve their gambling behaviour.
In Q3 2022, harmful gambling revenue increased to 3.8 percent. The rate of improved gambling behaviour amongst detected players also dropped to 82.6 percent. In last year’s fourth and final quarter, the revenue was back to 3.3 percent, while the player behaviour improvement rate remained almost the same at 82.1 percent. That rate rose to 83 percent in the current quarter, when revenue dropped to its lowest at 3 percent.
