- Group Revenue: Up 7% year-over-year, reaching GBP327.6 million.
- Gross Winnings Revenue (Locally Regulated Markets): GBP267.1 million, a 12% increase excluding North America.
- Underlying EBITDA: GBP73.6 million, a 32% increase year-over-year, with a margin of 22%.
- Free Cash Flow: Just over GBP41 million.
- Net Cash: GBP63.7 million at the end of Q2.
- Active Customers: Increased by 12% year-over-year.
- Sports Betting Gross Winnings Revenue: Increased by 18%.
- Casino and Games Gross Winnings Revenue: Decreased by 2%, but increased by 1% excluding North America.
- Poker and Other Products Revenue: Increased by 7%.
- Western Europe Gross Winnings Revenue: Increased by 16%, driven by strong performance in the Netherlands and France.
- Nordics Gross Winnings Revenue: Flat year-over-year.
- CES Gross Winnings Revenue: Declined by 9%, with Romania showing positive growth.
- Other Segment Revenue: Decreased by 49% due to the closure of North American operations.
- Relax Gaming Revenue: Grew by 10%, with B2B revenue at GBP10.4 million, a 16% increase year-over-year.
- Gross Profit: GBP10.8 million from Relax Gaming.
- Relax Gaming EBITDA Contribution: GBP4.5 million, representing a 41% margin.
- Cost of Sales: 12.9% of revenues, down from 14.1% last year.
- Marketing Spend: 18.5% of revenues, down from 20.3% last year.
- Salaries and Other OpEx: GBP4 million decline year-over-year.
- Q3 Start: Average daily revenue of GBP3.28 million, 10% higher year-over-year.
Release Date: July 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kindred Group PLC (STU:UNBA, Financial) reported a 7% increase in group revenues for Q2 2024.
- The company achieved an all-time high in locally regulated gross winnings revenue at GBP267.1 million, a 12% growth excluding North America.
- Underlying EBITDA grew by 32% year-over-year, reaching GBP73.6 million with a margin of 22%.
- Free cash flow increased significantly, coming in at just over GBP41 million.
- Active customers increased by 12%, driven by strong sports betting activity during the Euros.
Negative Points
- Gross winnings revenue from casino and games decreased by 2%, despite a 1% increase excluding North America.
- The company experienced a 9% decline in gross winnings revenue in the CES region.
- The North American operations closure led to a significant revenue decline, with Q2 gross winnings revenue at GBP2.2 million.
- ARPU decreased by 6% compared to Q2 2023, attributed to the influx of leisure punters during major tournaments.
- The company faced headwinds from currency fluctuations, resulting in a GBP5.7 million negative impact on revenues and a GBP1.4 million negative impact on underlying EBITDA.
Q & A Highlights
Q: The casino numbers have been declining for the second quarter in a row, even excluding the US exit. Is there anything impacting this, like a strong Sportsbook margin in Q2?
A: (Patrick Kortman, Interim CFO) The strong Sportsbook margin does impact casino volumes as we have many multiproduct players. However, we still saw year-over-year growth excluding North America. The final of the Euros had a significant negative impact on Sportsbook revenues, affecting the daily average revenue.
Q: Can you quantify the impact from the Netherlands deposit limits?
A: (Patrick Kortman, Interim CFO) We won't give specific market guidance. It's too early to say as the limits kick in on October 1. However, we reaffirm our full-year guidance for the group.
Q: How does the Netherlands deposit limit compare to the Belgium deposit limit?
A: (Nils Anden, CEO) The Belgium deposit limits were not uniformly adopted by all operators. In the Netherlands, all operators will adopt the new limit. We are confident in our strong market leader position in the Netherlands.
Q: Is there a structural change in the marketing to sales ratio?
A: (Patrick Kortman, Interim CFO) We don't see a structural shift that would take us back to past levels. Marketing restrictions in several markets and a focus on strong ROI on marketing spend are impacting the percentages.
Q: How many of your actives are multiproduct players?
A: (Patrick Kortman, Interim CFO) We haven't shared that number, but it's a fair amount. In markets like France and Australia, the percentage of multiproduct players is high.
Q: Why was marketing spend lower despite the Euros?
A: (Patrick Kortman, Interim CFO) We increased marketing spend by GBP2 million excluding North America. Regulatory restrictions and a thorough analysis on payback ratios indicate we won't see similar spikes around tournaments as in the past.
Q: Why is the implied guidance for the second half lower?
A: (Patrick Kortman, Interim CFO) Q2 was strong with high activity and a high sports betting margin. Q3 is a slower period with less sports to bet on, and we expect the Sportsbook margin to normalize.
Q: What was the uplift from the Euros for Q2 revenues?
A: (Patrick Kortman, Interim CFO) The gross win numbers before bonuses indicate around a 9% uplift. We won't speculate on cannibalization of other events.
Q: Can you provide color on UK performance?
A: (Patrick Kortman, Interim CFO) UK performance saw a 4% growth year-over-year.
Q: Did you gain market share in France during Q2?
A: (Nils Anden, CEO) We believe we have taken market shares in Q2. Strong trends in customer intake and activity levels in France have culminated in positive results.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
