Kindred Group Leaving More U.S. States Because of Decreased Revenue
Henrik Tjärnström, CEO of Kindred Group, announced the company’s plans for the US markets. He stated that the company might not be capable of keeping up with the high costs of the market after releasing its sportsbook platform.
A decrease in revenue:
The company’s revenue in Q4 last year hasn’t met expectations in many markets worldwide, but in North America, the loss was the most significant. EBITDA losses were about $18 million during the quarter, and marketing costs alone were $11.1 million. The gross win revenue was $5.3 million, which is 38 percent less than the last year’s. However, one of the reasons for that was the record payout – Jim “Mattress Mack” McIngvale has won $5.3m with the Unibet brand sportsbook. So, if that didn’t happen, the company would increase by 24%, with the revenue reaching $10.6m.
The company has already left Iowa’s market. It was the first one to leave because of the high marketing costs and lack of regulation of the iGaming market in the state. Tjärnström said that more markets are about to be left, but the company wanted to give its new sportsbook a chance to try and increase the profit before making any final decision.
He spoke with the investors and said: “We have always been clear that we are looking at things on an ongoing basis. As we said before, we have refocused our investments from across all states in our footprint to focus on the multiproduct states.
“We exited Iowa in December, and we have chosen not to pick up one of the unnamed market access opportunities we had in our portfolio, and for sure, (more exits) could be an outcome going forward as well that we do further refinements on that.”
The new platform will be released in New Jersey, Pennsylvania, and Ontario later this year, and after careful analysis, the next steps will be determined. The company will continue to analyze the various markets and reduce its costs. The goal is to focus on multiproduct markets where they can be among the top ten operators.
The tough year for the company:
Last year’s revenue was $1.2 billion, 16.7% less than in 2021. The fourth quarter did note an increase of 20%, but it wasn’t unexpected since that’s when the FIFA World Cup was held. However, even from this quarter, the company expected more, and the results haven’t met the expectations.
There is still hope – in some markets, the increase has been recorded. E.g. in the Netherlands, the increase was 12% compared to the previous year.
Closing his remarks, Tjärnström concluded: “2022 has been a difficult year in many ways, not only for Kindred. However, while the geopolitical uncertainty and cost-of-living challenges remain, the actions now taken and a large customer database from the fourth quarter will strengthen our path towards our 2025 financial targets.”
