TSG First Quarter Revenue Expected to Surge 27% Year-On-Year

The Stars Group issued a general business update to investors today, providing its expectations for the financial results during the first quarter of 2020.

Canadian-headquartered online gaming company The Stars Group /TSG/ is now expecting a spike in revenue for the past three months, mainly due to the surge in activities in two of its verticals, poker and casino. The jump in revenue, to $735 million compared to $580 million for Q1 2019, is expected to be enough to mitigate the negative impact from the lack of sports events.

“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,”

Rafi Ashkenazi, CEO, The Stars Group

The two traditionally strong markets for the company that were behind the growth in TSG’s revenue in 2019, UK and Australia, continued to perform strong, supported by a surge in customer activity since the beginning of the year.

UK & Australia

For the UK, TSG is expecting first quarter revenue of approximately $297 million, a 66% jump year-on-year, mainly due to the strong operational momentum in betting and gaming products. Stakes, in comparison with 2019 Q1, went down around 18%, mainly as a result of the significant reduction in the last half of March, caused by the mass cancellations of sports events.

In Australia, TSG is now expecting Q1 revenue of $61 million, which represents a 2% decrease compared to the $62 million for 2019 Q1, but the decline is mainly due to negative foreign exchange fluctuations, as the Constant Currency Revenue increased by 6%. Growth in stakes year-on-year will be around 5% on the local base currency and is a result of the continuous effort from the acquired by TSG BetEasy to engage new customers through promotional activities.

The Rest of The World

The International segment revenue is expected to post first quarter revenues of approximately $378 million, an increase of 11% year-on-year compared to the $341 million for 2019 Q1. Growth in revenue will be mainly due to the spike in customer activity, continued expansion into new regulated markets such as the USA, as well as the reduced impact from the disruptive regulatory forces from 2019.

In March, The Stars Group noticed a trend of reactivation of former customers in its poker and casino games that drove revenue by 44% compared to March 2019, probably due to the largely implemented by local and national authorities “stay-at-home” and other social restrictions directives.

Safer Gambling

The company used the occasion to reaffirm its commitment to safer gambling by encouraging players to take advantage of the available tools from deposit limits to cool-off periods and reality checks. TSG confirmed it monitored player risk and intervened whenever bad gambling habits signals were detected.

Merger with Flutter

The planned merger with Flutter Entertainment continues along expectations, with the recent development being recommendations to shareholders to approve the deal issued by two advisory firms, Institutional Shareholder Services and Glass Lewis & Co. Shareholder vote will take place April 24, during the special meeting of shareholders that will take place virtually.