Mirroring merger partner Flutter Entertainment, this morning The Stars Group Inc (TSG) has issued a trading update detailing that Q1 2020 revenue performance has been maintained despite facing COVID-19 disruptions.
TSG has predicted that it will generate circa $735 million in group revenues for Q1 2020 trading, reflecting a 27% increase on Q1 2019’s $580 million.
The TSX Group cited that a strong product mix and continued underlying growth across its UK (Sky Bet) and Australia (BetEasy) segments have helped the company deliver a robust opening to 2020 trading.
Maintaining revenue growth, TSG anticipates delivering a group operating income of between $140-149 million.
“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,” said Rafi Ashkenazi, Chief Executive Officer of The Stars Group.
“With these encouraging trends, a well-diversified and cash-generative business, and our strong balance sheet, we believe that we remain well-positioned to navigate further headwinds related to the COVID-19 pandemic in 2020, and remain fully committed to our combination with Flutter, which we now expect to close in the second quarter and are confident will enhance and accelerate our growth strategy.”
Detailing first insights into COVID-19 headwinds, which began to take shape in late March, TSG reported that it has seen strong take-up in its online casino and poker offering as its international segment (PokerStars) recorded a 44% revenue increase during the month’s trading.
TSG’s increased engagement in online poker and casino has carried into Q2, with early April revenues tracking at 33% higher compared to 2019 comparatives.
Nevertheless, COVID-19 headwinds have primarily disrupted the momentum of its UK Sky Bet asset in which revenues are approximately 30% lower, as wagering declined by around 65%.
TSG maintained its previous stance that COVID-19 impacts are ‘difficult to predict in actual scope’.
At present, the firm said that should the international sports calendar continue to be postponed, this would reduce operating income by approximately £10 million to £15 million for Sky Bet and by up to AUS $10 million for BetEasy with no material negative impact on its Pokerstars segment.
The lockdown period has seen TSG place a ‘core focus on safer gambling’, with the firm increasing resources and investment in player protections, while promoting its safer gambling tools such as setting deposit limits, using cool-off periods and using “reality checks” where available.
Furthermore, TSG customer service and compliance teams have increased customer interactions with regards to monitoring play, behaviours, data patterns and setting mandatory deposit limits.
“During these exceptional times, our top priority, however, is the health and safety of our employees and customers, which includes enhancing our responsible and safer gambling measures as well as ensuring that we provide our customers with all the help and support they may need,” added Ashkenazi.