UK drives Stars Group growth despite international ‘disruptions’

Publishing its results for the fourth quarter and year ended December 31 2019, Toronto TSX-listed The Stars Group Inc has lauded strong growth across its UK division despite international betting revenue falling by 8.3% for the year. 

Stars Group revealed that its new UK and Australian divisions delivered growth in the year, which was ‘largely driven by strong underlying trends in customer activity and revenues across those segments’. 

In the UK, The Stars Group reported an ‘all-time high’ in quarterly revenues, with adjusted EBITDA seeing a growth of 41.1% from $73.96m in 2018 up to $104.3m in 2019. For the full year, these figures saw a 217.9% increase, jumping from $102.7m up to $324.6m. 

Operating income in the UK has also risen over the year by 660.1%, increasing from $102.1m in 2018 to $324.6 in 2019, while overall revenues for the full year grew from $394.1m in 2018 to $946.7m.

The Stars Group’s acquisition of Sky Betting & Gaming and BetEasy earlier this year was clearly a key factor in the company’s growth for the year, with online sports betting now responsible for 39.1% of the operator group’s revenues – up from 34.3% in 2018. 

“With sports betting now our largest product vertical and 81% of our revenues coming from locally regulated or taxed markets, we are well positioned for diversified growth in 2020 and beyond,” said Rafi Ashkenazi, The Stars Group’s Chief Executive Officer. 

“We entered 2020 with the full $100 million run-rate of expected cost synergies from our 2018 Sky Betting & Gaming acquisition and earlier this month prepaid an additional $100 million of debt, underpinning our ability to execute on complex integrations and the highly cash-generative nature of our business model.”

Adjusted EBITDA across the group saw a 17.9% growth for the year, up from $239.4m in 2018 up to $249.1m in 2019. Meanwhile net earnings saw a 156.8% increase on the year, growing from a loss of $108.9m in 2018, to $61.9m in 2019.

Internationally, The Stars Group saw an overall drop in revenues for Q4, which was ‘primarily as a result of adverse foreign exchange fluctuations and continued disruptions and regulatory headwinds in certain markets’.

While the operator group highlighted that these disruptions were largely in ‘lower-priority markets’, revenues for the quarter were 29% lower year-over-year, with improvements in some markets primarily offset by the closure of PokerStars in Switzerland in July 2019. 

Ashkenazi said: “In addition to cost synergies, we have detailed plans in place to continue driving revenue synergies and to increase investments in product and marketing, giving us confidence in continued revenue growth in the years ahead. 

“In 2020, we plan to further enhance the global appeal of the PokerStars brand, including by launching the PokerStars Sports brand, leveraging the operational capabilities of our Sky Betting & Gaming business, and launching television advertising for PokerStars Casino.

“Lastly, ahead of closing our combination with Flutter, which will enhance and accelerate each company’s growth strategy, we remain focused on our key strategic priorities of integration, execution, and debt reduction.”

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