Given the cancellation of live sporting events over the past few months, Kindred Group predicts a ‘substantial’ rise in gross sales during Q2, attributing progress to alternatives in technology, esports and virtual sports.
Kindred anticipates that Q2 gross sales would amount to about £235 million , up from £226.2 million in Q2 2019, before releasing its annual report on 24 July 2020.
Kindred explained in a media-release: “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.”
The underlying EBITDA is forecast at £48 million – £ 53 million, a substantial improvement from last year’s £30.5 million reported in the same period. Kindred credits its earnings increase to ‘the cost reduction actions that Kindred prudently took in connection with marketing, content and other direct costs.’
Kindred added: “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.”
The quarter’s active customers were 1.3 million, a drop of 11 percent compared to the same period last year, which Kindred explained was in line with expectations due to the cancellation of live sports events.