Sky Bet and BetEasy push revenue up at Stars Group in Q1
The Stars Group (TSG) has put a 47.7% year-on-year increase in revenue during the first quarter primarily down to the continuing impact of acquired assets Sky Betting & Gaming and BetEasy.
Group revenue for the three months through to March 31, 2019 amounted to $580.4m (£451.0m/€519.0m), up from $392.9m in the same period last year.
UK revenue from the Sky Bet business, which TSG acquired in July last year, was responsible for $179.1m of total revenue. The majority of this was from gaming ($90.3m), while $74.5m was generated via sports betting on Sky Bet’s various digital platforms.
TSG’s Australian revenue rocketed by 458.9% year-on-year to $62.2m, due to the acquisition of BetEasy. The brand re-launched in July last year when the TSG CrownBet business merged with William Hill Australia under the BetEasy name.
However, it was not as positive for the TSG international business, with revenue falling by 10.8% from $381.8m in Q1 of 2018 to $340.6m this year, with declines across all verticals except betting.
Poker revenue fell 12.9% to $214.1, as expected, due to fluctuations in foreign exchange, while gaming slipped 7.3% to $98.9m for the same reason.
In contrast, betting revenue increased 20.2% to $20.0m as a result of an increase in stakes and customer engagement, driven by new markets and certain product launches.
Certain costs were also up in the first quarter, with total adjusting items climbing from $21.9m to $24.5m. Depreciation and amortisation also hiked from $74.4m in Q1 of 2018 to $109.3m, while income tax jumped from $1.4m to $7.8m.
Gross profit excluding depreciation and amortisation totalled $417.8m, up 33.6% on $312.6m last year, while adjusted earnings before interest, tax, depreciation and amortisation increased 11.6% to $195.6m.
However, operating income slipped 46.0% from $113.9m to $61.5m, while net earnings fell 62.8% to $27.7m and adjusted net earnings also dropped 23.9% to $105.6m.
Reflecting on the first-quarter performance, TSG CEO Rafi Ashkenazi said the operator delivered on key components of its 2019 objectives, adding that the business sees further growth opportunities across a number of markets.
“We continued to see growth in most markets in our international segment on a constant currency basis during the quarter, despite challenging operational conditions, the cessation of operations in certain markets and foreign exchange headwinds having a significant impact on our reported results as compared to the first quarter in 2018,” he said.
“Our UK segment continues to exceed our expectations operationally with record levels of new depositing customers and an acceleration of growth in QAUs, stakes and gaming revenue, although this performance was masked in the reported results by a record low betting net win margin of 5%.
“In Australia, we are pleased with our performance and continue to build our platform for market share gains.”
Ashkenazi also highlighted the recent link-up with Fox Sports in the US as a key part of the operator’s growth strategy. Last week, the two parties revealed that they are to launch a new sports betting service in the US, with two products set to go live this autumn.
“As we continue to lay the foundations to deliver sustainable long-term growth across the group, we are also now focused on positioning our new Fox Bet brand as a market leader in the US,” he said.
“Our leading positions in attractive markets, strong brands, technology and operating expertise have been bolstered by the new partnership with Fox Sports and positions us well for long-term growth.”