Kindred Q2 Results Up From 2019

Kindred estimates gross winning revenue for the second quarter of 2020 of about GBP 235 million (Q2-2019: GBP 226.2 million).

Even though cancelled sports events have affected the second quarter, solid growth in revenues from other products has partly compensated. Substantial growth has been delivered by Kindred’s cutting-edge technology, proprietary Racing platform as well as other events such as eSports, and other virtual sports alternatives (e.g. F1, FIFA events). Sports activities have gradually resumed during the latter part of the quarter. It is probable that Kindred and other online operators have received a temporary benefit from the fact that most offline betting outlets in many countries have been closed throughout the second quarter.

Underlying EBITDA for the second quarter of 2020 is estimated to be in the range GBP 48-53 million (Q2-2019: GBP 30.5 million).  The main driver in the expected increase in EBITDA compared to the prior year is the cost reduction actions that Kindred prudently took in connection with marketing, content and other direct costs. While these actions have protected profitability in the short term, now when sports are returning to more normal activity levels, we expect the marketing cost model of the business to normalise as well. It is natural that reducing marketing and related costs produce a short-term profit benefit, but if sustained over a long period then these actions could damage the long-term competitive position of the business.

Betting duties for the second quarter are significantly below the level of the first quarter because the impact of sports cancellations was strongest in France, where tax rates are highest and other betting types are very limited.

Although Kindred has continued to use its strong cash flow to reduce the amount outstanding under the credit facility, the movements in exchange rates have generated a FX loss on the loan balance of GBP 5.1 million in the second quarter of 2020 out of which GBP 0.6 million was realised.

Active customers for the quarter amounted to 1.3 million which was a decrease of 11 per cent compared to the same quarter last year. The decrease was expected as many recreational/occasional players are motivated by sports events.