Scout hails post-Covid-19 recovery as H1 revenue grows 96%

B2B fantasy sports supplier Scout Gaming Group has revealed that it was able to reduce its net loss during the first half of the year, after revenue almost doubled during the period.

Overall revenue for the six months through to 30 June amounted to SEK14.9m (£1.3m/€1.4m/$1.7m), up 97.7% from SEK7.6m in the first half of 2019.

Scout said the period's revenue growth came despite its operations being impacted by the novel coronavirus (Covid-19) pandemic.

The crisis led to almost all major sporting events being postponed or cancelled, which in turn meant fantasy competitions were paused. However, Scout noted that the return of some leagues towards the end of the half, primarily in Europe, shored up its first half performance.

Scout's esports betting service, launched across its network in April, helped fill the void left by the lack of traditional sports events, it added.

“We quickly managed to complete our esports offering and launch parts of it in mid-April,” Scout’s chief executive Andreas Ternstrom said. “In mid-May, the German Bundesliga games resumed and from that moment on we experienced a rapid recovery which in June resulted in record activity.”

In terms of spending for the period, operating expenses edged up 1.4% from SEK39.0m to SEK39.6m. This was primarily due to higher outgoings related to other external expenses, with costs here climbing 45.8% to SEK19.1m.

In contrast, personnel expenses were down 17.0% year-on-year to SEK17.6m, while depreciation, amortisation and impairment of PPE was also reduced by 39.3% to SEK2.9m for the half.

This corresponded to an operating loss of SEK24.6m, an improvement on a loss of SEK31.5m last year. However, Scout noted an SEK2.7m negative impact from financial items, which pushed its loss before tax to SEK27.3m, but this was still less than SEK29.3m in 2019.

After paying SEK33,000 in taxes, Scout ended H1 with a net loss of SEK27.3m, compared to SEK29.4m at the same point last year.

Focusing in on Scout’s performance in the second quarter, when the impact of the pandemic was most felt as sports events began to be cancelled in mid-March, revenue was up 57.5% year-on-year to SEK6.3m.

Scout said that revenue in the three months to 30 June mainly related to gaming related services its provides to its clients, with the increase in revenue mainly due to a rise in current partners.

Operating costs were 3.8% lower at SEK17.8m, while operating loss was reduced from SEK14.5m to SEK11.5m for the quarter. However, Scout was impacted by an SEK6.0m loss related to financial items, which pushed loss before tax to SEK17.5m, wider than SEK13.4m last year.

Scout paid SEK16,000 in tax, which left it with a net loss of SEK17.5m, compared to SEK13.3m in Q2 of 2019.

“We have had an accelerating underlying growth throughout the second half of the quarter and are pleased that we were able to demonstrate this so quickly after the restart of European sports,” Ternstrom said.

Ternstrom also noted a number of key events that took place after the end of the period, including the launch of a new fantasy game for England’s Premier League, offering a guaranteed prize pool of €1m for the 2020-21 season.

In addition, Scout was able to raise SEK75m through a heavily oversubscribed directed share issue, which Ternstrom said drew interest from existing major owners and new institutional investors.

“Activity in July and the first half of August continues to be high and we see very good opportunities for strong future growth,” he said. “I am happy for the shown confidence and sure that we can deliver on our growth ambitions in the coming years.

“The second half of the year has the potential to be as intense as we hoped.”