Analysis: What’s going on at Kindred following the exit of CEO Henrik Tjärnstrom?

Following the second headline exit of the week for Kindred, are big changes brewing behind the scenes at the gambling operator?

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As Gambling Insider reported earlier this week, Henrik Tjärnstrom, long-term Kindred Group CEO, announced that he would be leaving the company after 13 years with immediate effect.

This isn’t the only high-profile change in the company this week, after Kindred notified the market on Monday that Johan Wilsby would also be leaving his position as CFO.

Kindred wouldn’t find itself without a leader, though, with Nils Andén stepping up from his position as Chief Commercial Officer to become Interim CEO with immediate effect.

Statements from the parties involved gave no real clue as to what happened over at Kindred either, with Tjärnström himself even praising his successor: “I am very pleased with the Board of Directors’ choice of Nils Andén as the Interim CEO, guaranteeing a smooth handover."

So, who is Andén and what made him the most qualified person to take the position?

As one of the industry titans, a merger involving Kindred could have major implications

No stranger to the company, Andén originally joined Unibet in 2006, before transferring to Head of Sales and Marketing, Head of Poker, Head of Nordics & Benelux and CMO all in due time.

However, he didn’t stay at Kindred forever. In 2017, Andén joined GVC Group (now known as Entain) as its Director of Digital Marketing and was present at the company during two major business moves.

During 2018, GVC Group acquired Ladbrokes Coral, praising its strong position in the UK, Italy, Ireland, Spain, Belgian and Australian markets.

In the FY2019 report, GVC attributed “excellent operational execution” and “effective marketing” as the key points that helped with the acquisition of Ladbrokes Coral.

The European market wasn’t the only one to be targeted, however, considering GVC also entered into a joint-venture with MGM resorts for the newly regulated US online sports betting and gaming markets.

How does any of this relate to changes in Kindred senior leadership four years later? Well, luckily Kindred's full-year fiscal results for 2022 may have some clues too.

Tjärnström’s quote in the FY2022 report says it all: “Immediate actions being taken to improve profitability following weaker than expected performance in the quarter.”

Following a “historically low gross profit margin,” Kindred reported that its gross winnings revenue decreased by 17% and the underlying EBITDA decreased by 61%.

That’s not all, the company also announced that its profit before tax dropped by 62% and free cash flow decreased by 69%.

All of this occurred after Kindred announced that it had achieved its second-highest active customer base ever recorded in the company.

Kindred reported that its gross winnings revenue decreased by 17% and the underlying EBITDA decreased by 61%

In the most recent Q1 2023 report, the company did announce that its profit before tax was up 300%.

Despite a busy year customer-wise, Kindred also had to pay out a historic $6.3m after taking a $1.1m wager on Houston Astros to take the World Series victory.

Less than 20 days later, the Swedish Gambling Authority (SGA) issued a warning and sanction fee of SEK 10.9m ($1.0m) against Kindred, following failures in money laundering and financing of terrorism.

It would be easy, then, to imagine that a lot of pressure could have been building within Kindred following a disappointing year. What about looking forward; what clues can we find there?

Well, looking to the future, we first briefly need to look to the past one last time.

Kindred’s acquisition of Relax Gaming closed in 2021, but the European games studio has been making a number of statements recently about how it’s going to expand into the US market over the coming months.

Not only does Relax Gaming expect to launch its proprietary platform and sportsbook in the US, but this also follows Kindred’s own proprietary launch in New Jersey.

So, given how obviously Kindred wants to expand into the US markets, how can it explain its withdrawal from Iowa in the fourth quarter of 2022 thus reducing its presence to six states?

Under the leadership of Andén, operators in the past have made major acquisitions and expanded into new territories, so it’s possible that Kindred could undergo a similar transformation in the near future

This may not be the only point that pushed pressure onto Tjärnström over the past few months, with the final point coming from Kindred’s contentious problem-gambling revenue amount of 3.3%.

During the Sustainable Gambling Conference, hosted by Kindred in Amsterdam on 19 October 2022, the company announced that it had dropped its revenue from high-risk customers from 3.8% in Q3 down to 3.3% Q4.

However, Kindred does make a significant emphasis on its motto, “journey towards zero”, but just how attainable is this?

In a report from 2018, the State of Minnesota found that a number of jurisdictions estimated their revenue from individuals with problem gambling sat between 15% and 33%.

Across the Atlantic, the UK Parliament released a statement on how 60% of the gambling industry’s profits came from the 5% who were either already problem gamblers or at risk of becoming so.

So, what could this mean for Kindred going forward? Under the leadership of Andén, operators in the past have made major acquisitions and expanded into new territories, so it’s possible that Kindred could undergo a similar transformation in the near future.

As one of the industry titans, a merger involving Kindred could have major implications; yet its FY2022 results indicate that it may need some help reaching North American markets all the same.

Considering the emphasis the company placed on reducing revenue obtained through problem gambling, it will be interesting to see how much further the percentage can drop under the guidance of the new CEO and CFO.


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