The Stars Group has issued a general business update showing the firm performing ahead of expectations in Q1 2020, but remaining mindful of potential impacts arising from the ongoing coronavirus outbreak.
CEO Rafi Ashkenazi told investors: “We are pleased with the performance of our business so far this year, which has seen continued strong underlying momentum within our UK and Australia segments, and a sequential improvement in our International segment from the fourth quarter of 2019.”
“Overall, we are so far performing ahead of our expectations and currently expect to see strong year over year growth in revenues for the first quarter.”
Revenues within The Stars Group’s International segment are slightly ahead of the prior year period on a constant currency basis, while the UK segment has experienced continued strong underlying trends alongside operator favorable sporting results, leading to strong growth in revenue year over year.”
He added: “Outside of our strong performance so far this year, the recent outbreak of the coronavirus pandemic (COVID-19) has resulted in the cancellation or postponement of major sporting events globally.
“We are closely monitoring the continued impact of the coronavirus, and the health and safety of our employees and customers remains our top priority, as we implement our business continuity plans and continue to observe and comply with local mandates and guidelines across our global offices.”
Ashkenazi warned: “Our employees are working remotely to ensure that our customers can continue to enjoy our products, and while we currently still offer a broad range of betting options for our customers, any sustained outbreak resulting in the further postponement or cancellation of major sporting events could have a material impact on our sports betting revenue in the near term.”
As at December 31, 2019, the firm had cash and cash equivalents of $321m, and subsequently prepaid $100m of its USD first lien term loan in February. In addition, it has access to its revolving credit facility, among other potential sources of liquidity, that together with its current cash and cash equivalents, provides approximately $1bn of liquidity.
The CEO concluded: “Notwithstanding, while it remains difficult to predict the scope, timing and length of the current sports postponements and cancellations, our business is online-only with a global geographic reach and a majority of revenues (62% in 2019) generated from poker and gaming. We therefore remain confident in our ability to continue driving revenue growth in the years ahead, despite the inevitable disruption in the sports industry during 2020.”
The Stars Group partner Flutter Entertainment has also issued an update on trading prospects in the light of the COVID-19 outbreak. Full story here.
