Kindred mulling potential company sale, posts 24% revenue hike in Q1

Online gambling heavyweight Kindred Group has announced a strategic review, opening the firm up for merger and takeover opportunities. The move was unveiled by the company’s Board of Directors on Wednesday, following the publication of Kindred’s first quarter report. The strategic alternatives are being explored despite a sharp revenue rise to $381.5 million.

The Unibet operator said the review aims to maximize shareholder value, and the Board of Directors is set to consider “all potential alternatives” that can further deliver value for them. “Such alternatives could include a merger or sale of the company (in whole or in part) or other possible strategic transactions,” noted Kindred.

“Kindred Group has assembled a world-class portfolio of online gaming and sports wagering assets in key jurisdictions around the world,” said the firm in a statement. The company operates across Europe, US and Australia with 9 brands, including Unibet, 32Red, and more.

The Board of Directors has retained PJT Partners, Morgan Stanley & Co. International and Canaccord Genuity as financial advisors and to assist in its review of strategic alternatives. White & Case has been appointed as legal advisor in connection with the review process. No timeline has been set for the completion of the review.

Cost optimization delivers results

The company has concurrently shared its financial results for the first quarter of the year. The group experienced growth across revenue and net profit, with the underlying EBITDA margin increasing to 16% and CEO Henrik Tjärnström praising the impact of cost optimization initiatives previously launched.

“As we have mentioned in earlier reports and presentations, 2023 is an investment year as we continue to recruit key talent to build our proprietary sportsbook platform,” Tjärnström added. “This investment in our in-house sportsbook, a key value creation driver, continues to drive growth in operating expenditure.” 

Successful recruitment and strong retention of staff in the second half of 2022, combined with the annual salary review process, have also resulted in higher year-on-year growth in salary costs for the quarter, he further pointed out. Meanwhile, the World Cup, held at the end of 2022, proved to be a strong customer acquisition event as the company managed to keep customers engaged into the first quarter of this year.

“Growth in operating expenditure has also been impacted by approximately £3 million of non-recurring items,” Tjärnström noted. “We remain fully focused on cost optimization across our operations and expect our operating expenses to remain stable in the coming quarters.”

Revenue up in Q1

Revenue for the three-month period ended March 31 amounted to £306.4 million ($381.5 million), up 24.2% from the previous year. Most of this was attributed to B2C gross winning revenue, which hiked by 22.7%, aided by the group’s re-entrance into the Dutch regulated market.

Casino and Games was responsible for 55% of all B2B revenue in Q1, with sports betting’s share at 40%, poker at 3% and other games at 2%. In terms of revenue by geographical performance, 58% of gross winnings was generated in the Western Europe region, while 26% came from the Nordics, 11% from Central and Eastern Europe and 5% from other markets.

As for B2B, which comes from the Relax Gaming business, acquired in 2021, revenue here amounted to £9.1 million ($11.3 million), an increase of 111.6% on the previous year. This jump was driven by the broader distribution of Relax Gaming’s own content and new game launches, in addition to the release of the dream drop jackpot feature across all Relax Gaming operators. 

“As our industry transitions to local licenses, we will continue to experience temporary challenges across individual markets,” Tjärnström concluded. “This is part of being a global business, however in a locally regulated environment market leaders like Kindred will benefit from a more stable business model.”

See Kindred’s full Q1 report here.