Kindred Announces Complete Exit from North America Gaming Market
LISTEN TO THIS ARTICLE:In a strategic move aimed at streamlining operations and focusing on markets with greater profit margins, Kindred Group has revealed plans to exit the North American gaming market. The comprehensive review of its business strategy includes the anticipated full withdrawal from North American operations by the end of Q2 2024, pending regulatory approvals.
Saying Good-Bye to the US
As part of this exit strategy, the Unibet sportsbook, a flagship offering from Kindred Group, will be discontinued in multiple states, namely Arizona, Indiana, New Jersey, Pennsylvania and Virginia. The platform had already bid farewell to the Iowa market in December 2022. Furthermore, Unibet Casino is set to exit the New Jersey market after just seven months as part of the broader restructuring effort.
This strategic decision is accompanied by a series of initiatives aimed at driving growth in core markets and implementing cost-reduction measures. Among these actions is a significant workforce reduction, with plans to cut over 300 employees and consultants throughout 2024. The overall objective is to achieve annualized gross cost savings of approximately £40 million (US$50.74 million).
Despite previously reporting a North American margin of 18%, which was 3% higher than other markets, Kindred Group is shifting its focus to markets that promise even greater profitability. The decision to exit certain North American states aligns with a broader vision to optimize the company's portfolio and concentrate efforts on regions that offer enhanced financial returns.
The withdrawal from the North American gaming market represents a strategic pivot for Kindred Group. The company remains attentive to the regulatory process governing its exit and anticipates completing the withdrawal from the specified North American states by the end of the second quarter of 2024. This move reflects Kindred Group's dedication to adapting to market dynamics and ensuring a more robust and focused presence in key operational areas.
Mixed Financial Performance
The financial performance of the company in the reporting period demonstrated positive trends, with total revenue reaching £283.9 million (US$360.18 million), reflecting a 2% increase compared to the previous period's £277.8 million (US$352.44 million). The growth in gross winnings revenue (B2C) was notable, witnessing a 1% uptick to £274.7 million (US$348.51 million), compared to the previous figure of £271.9 million (US$344.96 million).
Underlying EBITDA (earnings before interest, taxes, depreciation and amortization) also showcased a positive trajectory, experiencing a 6% increase to £42.6 million (US$54.04 million), up from the previous period's £40.3 million (US$51.12 million). The company's focus on operational efficiency and strategic initiatives contributed to this growth in earnings.
However, the profit before tax saw a decrease, amounting to £15.1 million (US$19.15 million) compared to the previous period's £60.3 million (US$76.5 million). Similarly, profit after tax experienced a decline, with the current period registering £12.6 million (US$15.98 million), down from £57.9 million (US$73.45 million). Earnings per share were also affected, decreasing to £0.06 (US$0.076) from the previous figure of £0.26 (US$0.33).
In terms of financial liquidity, the company reported free cash flow of £24.5 million (US$31 million), showcasing a decrease from the previous period's £49.3 million (US$62.54 million). While the decrease may warrant attention, a comprehensive analysis of the company's financial activities would provide insights into the factors influencing this change.
Despite the fluctuations in financial figures, the company observed a positive trend in its customer base, with the number of active customers increasing by 7% to 1,563,762 from the previous count of 1,466,986. This growth in the customer base underscores the company's ability to attract and retain a substantial market share.
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