Paddy Power Betfair Posts Q3-2018 Trading Update
Online divisions boost revenue growth as retail lags
Online and retail gambling group Paddy Power Betfair posted its Q3-2018 trading update Friday, reporting:
- Group revenue in Q3 up 12 percent in constant currency and up 8 percent on a proforma basis at GBP 483 million;
- World Cup football contributed GBP 22 million revenue to the quarter;
- Online divisions contributed revenue up 15 percent at GBP 248 million (sportsbook +17 percent; exchange +1 percent; gaming +26 percent) as momentum accelerated in Q3 in both Paddy Power and Betfair;
- Australian activity declined with revenue down 2 percent despite good customer activity that saw stakes grow 25 percent in the quarter; revenue was impacted by bad sports results to the tune of GBP 9 million;
- US revenues up 22 percent on a proforma basis with strong momentum in existing products (revenue +14 percent pre-sports betting), supplemented by New Jersey sports betting revenues;
- Following the merger of Betfair US with FanDuel and subsequent sport betting launch, the group’s US business now comprises revenues from FanDuel fantasy sports (across 41 states); TVG horseracing (across 33 states); the FanDuel sportsbook (currently operating in New Jersey and West Virginia); and the Betfair Casino and Exchange in New Jersey.
Revenue was up 22 percent, with good underlying growth in each of these businesses supplemented by $5 million of sports betting net revenue. Excluding sports betting, revenue was up 14 percent, comprising of 18 percent growth in fantasy sports, 7 percent growth in TVG and 40 percent growth in the Betfair Casino.
- The Group’s objective for sports betting in the USA is to launch within key regulated states and quickly achieve online scale;
- Retail revenues were down 4 percent in Q3 at GBP 82 million (UK shops -1 percent; Irish shops -6 percent) with sports revenues impacted by weaker margin;
- Q3 proforma EBITDA was flat year-on-year (cc) and up 6 percent excluding the impact of US sports betting losses and betting tax increases;
- The Group had net debt of GBP 96 million at 30 September 2018, excluding customer balances.
During the quarter, a total of GBP 234 million was returned to shareholders via dividends and an ongoing share buyback programmes, taking the total cash returned in the year to 30 September to GBP 435 million;
- The company notes remote gaming tax increases approved in Australia, Ireland and the UK which will impact future earnings, along with cuts in FOBT stakes in the retail sector. Had these applied throughout 2018, the Group estimates that the gross impact on EBITDA from the combination of regulatory, tax and product fee changes in the UK, Australia and Ireland would have been approximately GBP 115 million;
- The Group also acknowledges that it settled a GBP 2.2 million penalty from the UK Gambling Commission regarding five cases of responsible gambling and anti-money laundering failures;
- Management expects full year EBITDA, pre-US sports betting, will be between GBP 465 million and GBP 480 million (previous guidance: GBP 460-480 million); with 2018 US sports betting investment currently expected to be around GBP 25 million.
Group CEO Peter Jackson reported:
“Q3 was a good quarter for the Group. In Europe, the encouraging momentum that we saw in Q2 accelerated further, with online revenue up 15 percent. This momentum, which was evident in both Paddy Power and Betfair, is driven by enhancements in product and good execution in promotions and marketing.
“In Australia, we continue to see very good scope to enhance Sportsbet’s leading customer proposition and target additional market share gains. Strategically, Q3 was a key period for increased investment in promotional generosity given both the sporting calendar and the changing brand landscape and this investment is driving increased customer activity.
“In the US, the exciting potential of the sports betting opportunity and the strength of our strategic positioning has been evidenced by our experience to date in New Jersey. FanDuel recorded a 30 percent share of the sports-betting market in September, driven by a market-leading customer proposition, our strong brand presence and the ability to cross-sell from our fantasy sports player base.
“Overall, we are pleased with the substantial progress we continue to make against our strategic priorities. Our continued investment in brands and customer proposition means that all our businesses will exit the year with enhanced competitive positioning. Together with our scale and strong balance sheet this means we are better positioned to face the significant regulatory and fiscal headwinds that apply next year and to capitalise on the long-term industry growth opportunity.”
Bet-At-Home Posts Record Third Quarter
Significantly positive earnings development, report reads
Bet-At-Home posted encouraging results in its latest third quarter and nine month 2018 statement, still riding on a successful marketing campaign initiated before and during the Football World Cup in Russia which it says significantly strengthened brand awareness and expanded its customer base.
Key performance indicators for the three month and nine month periods ending September 30, 2018, include:
- Historical EBITDA peak in the third quarter of 2018 at Euro 13.0 million, Euro 23.9 million accumulated (9M/2017: Euro 25.4 million).
- Gross betting and gaming revenue of Euro 37.6 million in the third quarter (Q3/2017: Euro 31.9 million), Euro 104.2 million accumulated.
- EBIT was Euro 22.9 million (9M/2017: Euro 24.4 million).
- Betting and gaming volume of Euro 2,305.1 million in the first three quarters of 2018, gross betting and gaming revenues in the first nine months of the financial year 2018 amounting to Euro 104.2 million (9M/2017: Euro 108.7 million).
- Betting fees and gambling levies amounted to Euro 15.2 million (9M/2017: Euro 14.5 million).
- VAT regulations for suppliers of electronic services within the European Union led to a negative impact on earnings in the amount of Euro 5.9 million (9M/2017: Euro 6.8 million).
- Marketing expenses were Euro 29.3 million (9M/2017: Euro 32.7 million).
- As at 30 September 2018, bet-at-home.com AG group had nearly 5.0 million registered customers (30/09/2017: 4.8 million).
The management board forecasts gross betting and gaming revenue of Euro 150 million in the fiscal year 2018 and EBITDA of between Euro 36 million and Euro 40 million.
Zeal Enjoys Strong Third Quarter
53 percent increase in new customers and favourable lottery environment drives growth
Online lottery provider ZEAL reported pleasing third quarter results along with a 54 percent increase in new registered customers.
Key performance highlights for the nine month period ending September 30, 2018 include:
- 5 percent increase in billings amounting to Euro 212.4 million (9M/2017: Euro 201.7 million) attributed to higher average jackpots in core products and strong performance in Instant Win Games and US lotteries.
- An 8 percent increase in Revenues of Euro 111.2 million (9M/2017: Euro 93.8 million).
- EBIT up 26 percent to Euro 29.1 million (9M/2017: Euro 12.5 million).
- Total Operating Performance to Euro 114.1 million (2017: Euro 97.6 million), up 17 percent.
- Earnings per share of Euro 2.39 (9M/2017: Euro 1.04).
- 418,000 new registered customers, up 54 percent year-on-year.
Helmut Becker, Chief Executive Officer, ZEAL Group:
“We continue to deliver strong profitable growth; focusing firmly on controlling costs while also improving customer acquisition and activity. In our core business, customer numbers, billings and revenues are all significantly up, while our acquisition costs per customer have halved. This is the result of the optimisations and investments we have continued to make.
“With positive performance also coming through from our start-ups in Norway and the UK, ZEAL is excellently positioned to capitalise on the global lottery sector’s growth potential.”
Will Hill Retail Challenge In YTD Trading Statement
Lauds progress in the U.S
William Hill delivered a mixed bag of results in a trading update for the H2 to date and year-to-date periods.
Key performance indicators include:
- Total Online net revenue, up 4 percent YTD, with Sportsbook growth of 8 percent and gaming of 1 percent.
- Retail net revenue was down 4 percent YTD, with Sportsbook declining 6 percent and gaming 2 percent.
- US existing business continues to deliver strong growth in Nevada, with net revenue YTD up 36 percent in local currency.
- US Expansion shows good volumes in early months with approximately $200m wagered, in line with the company’s expectations. Sportsbook amounts wagered increased 15 percent.
- Market access secured in 17 U.S. states with partnership deals signed with Eldorado Resorts, Golden Entertainment and IGT
- Full-year operating profit expected to be in the range of GBP 225 million to GBP 245 million, assuming normalised gross win margins in the remaining weeks of the year.
Philip Bowcock, CEO, commented:
“In our existing markets, Online continues to deliver good underlying KPIs. Our greater mass market focus is successfully driving new accounts growth, up 11% YTD. As expected average revenue per user is 19% lower, reflecting the more sustainable customer base we are building, with mass market actives up 28% YTD.”
Looking ahead, the company will launch a new technology solution in 2019 incorporating the newest elements of the Group’s existing platform and a bespoke Player Account Management system from NeoGames. The solution “is more feature-rich than any sports betting platform currently live in the US”, the update reads.
On the proposed acquisition of MRG (Mr Green) (see previous InfoPowa reports), Bowcock said the company’s strategy is to “build a digitally led, geographically diverse gambling business.”
The acquisition will provide William Hill with an enlarged pan-European footprint in faster growing digital markets, an established Malta hub from which to expand Online internationally and a team with a proven track record of consistently strong revenue growth.
Bowcock warned of the negative impact to online profit growth in 2018 of GBP 20 million and in 2019 of GBP 25 million directly attributed to the increase in the UK gambling commission’s remote gaming duty and more stringent KYC processes.
Gig Delivers Strong Third Quarter
Completes one-stop-shop quest
Gaming Innovation Group (GiG) has delivered a 21 percent revenue increase in its latest third quarter report.
Key performance indicators for the three months ending September 30, 2018 include:
- Operating revenues of Euro 37.3 million, up 21 percent year-on-year.
- EBITDA of Euro 5.0 million (Q3/2017: Euro 3.0 million), an increase of 66 percent.
- B2B revenues of Euro 15.4 million (Q3/2017: Euro 11.6 million), up by 33 percent y-o-y.
- B2C revenues of Euro 24.4 million (Q3/2017: Euro 21.9 million), up by 11 percent y-o-y.
- GiG engineered a turnaround in the fortunes of its B2C business, delivering EBITDA of Euro 1.4 million (Q3/2017: Euro -2.3 million)
- Marketing expenses of Euro 10.6 million (Q3/2017: Euro 11.9 million), were 29 percent of total revenues, down from 39 percent y-o-y.
The company’s one-stop-shop solution strategy has come to fruition with the final building blocks to GiG’s ecosystem coming together and enabling the firm to cover all verticals in iGaming.
“We have created a base from where now, with full force, we can drive forward as the full service provider which every company serious about iGaming must be part of. GiG sees strong interest for its services and products with an increasingly healthy pipeline of opportunities”, Robin Reed, CEO of GiG, said.
In conclusion, GiG updated full year 2018 guidance, now expecting revenues ranging between Euro 149 and 152 million and EBITDA ranging from Euro 16 to 18 million.
LeoVegas Shows Growth In Third Quarter Report
Despite challenging conditions in two core markets
Despite LeoVegas reporting double digit revenue growth in third quarter results, chief executve officer and co-founder Gustaf Hagman expressed dissatisfaction with growth and profitability as the company traversed a “transitional” period.
Key financials for the three month period ending September 30, 2018, include:
- Revenue increase of 41 percent to Euro 78.6 million (Q3/2017: Euro 55.6 million).
- Organic growth in local currencies excluding markets closed in 2017 was 14 percent.
- EBITDA was Euro 9.0 million (Q3/2017: Euro 7.6 million), corresponding to an EBITDA margin of 11.4 percent (Q3/2017: 13.7 percent).
- Net Gaming Revenue (NGR) from regulated markets was 35.5 percent (Q3/2017: 25.3 percent) of total NGR.
- Depositing customers increased 57 percent to reach 318,189 (Q3/2017: 202,980).
- Earnings per share before and after dilution were Euro 0.13 (Q3/2017: Euro 0.06).
The operator had a busy quarter with the launch of sports betting brand BetUK and the acquisition of a majority share in esports betting operator pixel.bet, while addressing changes in compliance requirements.
Hagman keenly anticipates the opening of the newly regulated Swedish market, saying LeoVegas holds a leading market position.
“Despite the important improvement efforts, we are not satisfied with our growth or profitability during the third quarter,” Hagman said referring to adherence to new compliance requirements along with the impact of significant projects undertaken to improve growth in the long term.
“On the whole, a picture has emerged in which our work in this area has had an adverse effect on growth during the third quarter, but at the same time entails that we are even better positioned for long-term growth. With these newly implemented routines we will have the best opportunity to work effectively and sustainably in a regulated environment – something that will only be possible for operators that have invested in the routines and processes required. We see this as a major competitive advantage.”
The company maintains its financial targets for 2020 of at least Euro 600 million in revenue and EBITDA of at least Euro 100 million.
“These targets are obviously more challenging today than when we communicated them this past spring, but we see good opportunities to reach them,” Hagman concluded.
Lotto24 Delivers Strong Third Quarter
‘Jackpot Trend’ drives good results
State-run lottery provider LOTTO24 AG turned in robust third quarter results and crossed the milestone two million customer mark.
Billings rose 44.3 percent year over year (yoy) to reach Euro 74.7 million (Q3/2017: Euro 51.8 million), and revenues were up 49.6 percent to Euro 8.7 million (Q3/2017: Euro 5.8 million).
Gross margin improved to 11.6 percent yoy (Q3/2017: 11.2 percent), and an addition 90 thousand customers were registered (Q3/2017: 55,000).
In the first nine months of 2018, Lotto24 generated total billings of Euro 235.9 million, up 43.3 percent, recorded 49.8 percent increase in revenues to Euro 28.1 million and a gross margin of 11.9 percent.
Accordingly the strong increase in revenues saw EBIT rise to Euro 2.2 million (9M/2017: Euro 0.5 million). Net Profit rose to Euro 7.8 million (9M/2017: Euro 1.3 million) due in particular to a positive technical tax effect of EUR 5.8 million in connection with the formation of deferred taxes.
New customers totalled 468,000, rising by 36.3 percent.
Looking ahead, the company now expects an increase in billings of 38 percent to 43 percent, further strong growth in new customers and a slight improvement in gross margin compared to the previous year.
“Depending on the further progress of external conditions – especially the jackpot trend – and marketing investments to attract new customers, both EBIT and net profit are expected to be well above the break-even mark,” a press statement reads.
Landmark Quarter For The Stars Group
And a transformative year, says CEO
The Stars Group has described third quarter results as a landmark within a transformative year.
Key financial highlights for the three-month period ending September 30, 2018 were:
Total Revenues up 73,6 percent to reach $571,963,000 (Q3/2017: $329,443,000), primarily driven by Sky Betting & Gaming and BetEasy.
Gross Profit was $442,757,000 an increase of 65.8 percent over Q3/2017.
Operating Income was $70,901,000, down 40.3 percent (Q3/2017: $118,724,000).
Net Earnings saw a loss of $9,730,000 (Q3/2017: $75,874,000.
Adjusted EBITDA was up 27,3 percent to $198,252,000) and the adjusted EBITDA margin was 34.7 percent (Q3/2017: 47.3 percent), down 26.7 percent which was attributed to the higher contribution from betting and gaming verticals in each segment.
Vertical splits comprise:
- Poker revenues declined 3.9 percent y-o-y contributing $212.8 million, impacted by fluctuations in foreign exchange rates and notably the operators exit from the Australian market.
- Gaming revenue was $107.6 million, up 28.9 percent y-o-y.
- Betting revenue was $21 million, up 79.9 percent y-o-y.
- Quarterly real money active uniques (QAUs) were 2 million, representing a 3 percent decline y-o-y, again impacted by the withdrawal from Australia.
- Quarterly net yield (QNY) was $ 167, up 11.3 percent y-o-y.
- Net deposits were $335 million, an increase of 4.1 percent y-o-y.
- Stakes were $233.7 million, an increase of 42.6 percent, and Betting Net Win was 0.9 percent, up 1.9 percentage points y-o-y.
“This was a landmark quarter during a transformative year for the company as we begin to deliver on our vision to become the world’s favorite iGaming destination,” Rafi Ashkenazi, The Stars Group’s Chief Executive Officer, commented.
“We are pleased with our quarterly results, which reflect both continued organic growth from our International business and contributions from both BetEasy and Sky Betting & Gaming, despite unfavorable sporting results during the period.”
“As we continue our transformation and look towards 2019, we are excited to take advantage of the opportunities ahead of us by leveraging our leading positions in attractive markets, strong brands, technology and operating expertise.”
Aspire Global Reports A Record Third Quarter
Share price surges as Swedish online gambling solutions provider reports revenues up 48 percent year-on-year
Investors in Swedish online gambling solutions provider Aspire Global will be a celebrating a 20 percent rise in share price following the company’s record performance in Q3-2018, which included the following highlights:
- Revenue was up a record 48 percent y-o-y in the quarter at Euro 28.6 million, thanks to impressive growth in its B2B activity, where revenue surged 51 percent to Euro 15.2 million;
- EBITDA up 48 percent at Euro 6.2 million;
- First-time depositors up by more than half to 96,600;
CEO Tsachi Maimon said the results vindicated the company strategy on expansion in regulated markets, which has included applications to operate in the UK, Denmark, Belgium, Portugal, Italy, Malta and more recently the Swedish market.
“We maintain our focus on regulated or soon-to-be regulated markets,” Maimon said. “We see great opportunities for a company with our profile to gain market shares in the changing landscape.”
Maimon advised that the company expects to launch between two to four signed brands as the new year commences.
Online And Retail Sports Betting Revenues Wane In Italy
October numbers show an unusual decline
Italy’s normally buoyant sports betting market delivered an unusual decline in both online and land-based wagering revenues in October, according to official figures from the regulator.
Overall sports betting revenue declined 26 percent y-o-y to Euro 133.7 million, with online down 21.2 percent at Euro 56.9 million and retail down 29 percent at Euro 76.8 million. The declines have been attributed to player-friendly results in football with players winning significantly.
YTD numbers draw a more positive picture – up Euro 1.2 billion from the Euro 972 million in the corresponding period of 2017.
In October Bet365 claimed the top market share for online sports bets at 15.9 percent, chased by SKS365 group’s Planetwin365 on 15.6 percent and Snaitech on 10.1 percent.
Intralot-Gamenet-Goldbet claimed the biggest retail sports betting market share at 21.4 percent, trailed by SKS365 on 12 percent and GVC-Eurobet on 11.9 percent.
The online casino sector recorded another positive month with revenues up 24.4 percent at Euro 64.9 million, although poker again disappointed with declines in cash games (down 11.8 percent at Euro 5.3 million) and tournaments (down 4.6 percent at Euro 6.7 million).
Retail and online virtual betting revenue in October reached Euro 24.5 million, pushing the YTD improvement up by 18.7 percent to Euro 217 million. Online lagged in the vertical, delivering Euro 16.7 million in October.
Goldbet claimed top market share in the virtual betting vertical at 29 percent, very comfortably ahead of closest rival Snaitech at 17.5 percent.
On a YTD basis, government has benefitted by Euro 10.7 billion in gambling tax receipts – a y-o-y rise of 4 percent.