TSG posts impressive earnings for Q1.
The Canadian gaming company The Stars Group (TSG) experienced record revenues in Q1 of 2020. The COVID-19 pandemic led to a significant surge in online poker and casino gaming, along with a double-digit increase in sales for merger partner Flutter Entertainment. Here's a closer look at the revenue numbers:
Spikes in Online Poker and Casino Gaming
The company behind PokerStars, TSG, experienced a 27% increase in revenue to $735 million (~ €679 million) in the three months ending March 31st. CEO Rafi Ashkenazi attributed the growth spurt to the coronavirus pandemic, as online poker and casino gaming saw significant growth rates. He stated:
"We observed increased customer activity in all online poker and casino products, starting from March. The international sales growth of around 44% in March was enough to offset the disruption in the betting market caused by sports cancellations."
In the British market, primarily covered by Sky Betting & Gaming, sales totaled $297 million, representing a 66% increase compared to the previous year. The growth was attributed to "strong operational dynamics" and a high net profit margin of 14.9%. The margin was nearly three times higher than in 2018, but slightly reduced by high marketing expenses for the Cheltenham horse racing festival. Betting turnover, however, dropped 18% to $1.2 billion due to the pandemic.
Stable Growth in International Markets
TSG's presence in Australia, via BetEasy, saw sales of $61 million in the first quarter, a 2% decline in comparison to the previous year. The drop was mainly caused by currency fluctuations. Profits increased by 5% in constant currency, but fell by 3% to $731 million in US dollars.
International sales, amounting to more than half of the total sales, reached $378 million, up 11%. The majority of the international revenue was generated by PokerStars, raking in approximately $254 million. The US performance of PokerStars "met expectations," as did FoxBet.
The Q1 operating profit is predicted to be between $140 and $149 million, representing an increase of at least 125%. Operating income from Great Britain is forecast to be between $58 and $63 million. The contribution of the international business is expected to be between $116 and $123 million. A loss of between $5 and $7 million is expected in Australia.
The estimated depreciation and amortization costs from these three sectors should equal around $109 to $110 million, essentially the same as in 2019. However, financial adjustments are predicted to generate up to $22 million, a considerable increase on the $3 million from 2019.
The expected EBITDA, or earnings before interest, taxes, and depreciation, is believed to be between $291 and $297 million, representing a minimum of 51% higher than the previous year. Ashkenazi shared his satisfaction with these developments in an official statement:
"Given these positive market trends, our well-diversified and cash-generating business, and our strong balance sheet, we believe we are well-positioned to handle any challenges related to the COVID-19 pandemic in 2020."
The planned merger with Flutter Entertainment remains on schedule. Ashkenazi confirmed that the billion-dollar transaction would occur by summer, creating the world's largest publicly traded gaming company. The combined entity would house three of the seven largest British online sports betting brands.
Flutter, known for its international renowned bookmakers like Paddy Power, Betfair, Sportsbet, and FanDuel, will be joined by TSG's SkyBet, BetStars, and Oddschecker. The two largest poker networks worldwide, Full Tilt Poker and PokerStars, would also merge under The Combined Group's roof, uniting over 13 million active users from more than 100 countries. Despite regulatory concerns in the UK, the CMA green-lit the merger just a few days ago. Meanwhile, Flutter released its own Q1 update, reporting revenues doubling to $680 million. Combined, the two companies generated over $1.4 billion in the first quarter.
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Source: www.onlinecasinosdeutschland.com
