The Stars Group Q1 2020 revenue to reach record highs
Toronto-headquartered operator expects to report first quarter revenue of $735m after 27% increase
The Stars Group Q1 2020 revenue is expected to top $735m (£591m), a record return for the poker and betting operator after a 27% year-on-year increase.
In its latest trading update, the Toronto-listed operator revealed its operating income is expected to rise 133% year-on-year to between $140m and $149m (£112.5m).
Company adjusted EBITDA is expected to increase by 51% year-on-year to between $291m-$297m, while adjusted net earnings are also expected to rise 78% to between $185m-$192m.
TSG said increased revenue was buoyed by “continued strong underlying momentum in customer activity” in its UK and Australia segments, as well as improvements in its international business.
Q1 UK revenue is expected to increase 66% annually to $297m (£238.8m), while international revenue is expected to grow 11% to $378m (£304m) during the quarter. Revenue from TSG’s Australian operations is expected to decrease slightly by 2% to $61m (£40.9m).
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TSG CEO Rafi Ashkenazi hailed the “encouraging trends” in the group’s results, reaffirming his belief that the business remains well-positioned to navigate any further headwinds relating to the coronavirus pandemic.
“We saw record revenues in the first quarter with 27% year-over-year growth and are continuing to see strong momentum into April, with strong growth in poker and gaming revenues helping to mitigate the cancellation of sporting events,” Ashkenazi said.
TSG has confirmed increased customer activity across its online poker and casino products during March as a result of the coronavirus pandemic and the cancellation of worldwide sporting fixtures.
TSG reported international revenue growth of 75% in the first month of Q2, with a corresponding fall of 30% in its UK revenue during the same period due to a 65% reduction in stakes as a result of diminished sporting events.
If the coronavirus pandemic continues to impact horse, greyhound and major sporting events, TSG said UK operating income will reduce between £10m-£15m with a corresponding A$10m impact in its Australian business.
Regulus Partners analyst Paul Leyland said TSG’s impending multi-billion-pound merger with Flutter Entertainment would prove to be useful for both businesses in terms of “diversification, liquidity and mitigation synergies”.
Leyland said: “Poker especially seems to be benefiting, which is likely to be a combination of the skill-based element being most fungible with heavily disrupted betting, a degree of nostalgia and, possibly most importantly, its ability to connect people in a period of lockdown – a social benefit of some forms of online gambling that has been largely overlooked in recent commentary.
“Nevertheless, the very resilience of online gaming demonstrates the extent to which social responsibility and sensitivity needs to be the strategic (as well as ethical) priority of the sector,” he added.