The Stars Group, Inc reported strong revenue and EBITDA growth across its online gaming verticals for the second quarter, as well as changes to its management team and governance structure on Wednesday morning as the entity – formerly known as Amaya Gaming – continues its rebranding.
“Our evolution and transformation into The Stars Group continued as we completed our name change and head office move, while our second quarter saw the strengthening of our core senior management team and continued solid revenue growth led by our real money online casino offering,” said Rafi Ashkenazi, chief executive officer of The Stars Group.
On August 1, the company officially completed the name change and moved its corporate domicile from Quebec to Ontario, Canada. It also announced the hiring of Brian Kyle as chief financial officer during the quarter. Kyle previously served in the same role at a Toronto-based technology company.
The parent company of PokerStars, the world’s most popular online poker brand, TSG reported a nearly 7 percent increase in total revenue to $305 million and a nearly 13 percent jump in adjusted EBITDA for the quarter.
The increases were driven by strong growth in the company’s online casino and sportsbook verticals, which – despite minimal marketing expenditure – grew by 54 percent from the prior year quarter on an exchange rate-adjusted basis.
“With only minimal external marketing, our casino revenues continue to grow as we attract new players and increase engagement and excitement,” said Ashkenazi. He said that the company’s efforts to migrate poker players into the other verticals have been successful – with one-third of poker players now playing casino – and that 99 new online slot games have been released so far in 2017.
TSG also acquired the player database of the poker site PKR after its operations were suspended in May amid financial difficulties and offered to refund the site’s 60,000 customers for lost deposits with credits in PokerStars.
Online poker revenues, which remains TSG’s bread and butter, were $202.9 million – decreased roughly 6 percent year-over-year but was offset by the strength of its increasingly diversified revenue streams.
“We are seeing continued momentum through intense customer experiences which are leading to increased deposits and wallet capture across all three verticals,” Ashkenazi. “This is all despite the headwinds that negatively impacted poker revenue this quarter.”
The total number of quarterly active unique users – albeit under a revised definition – were down approximately 2 percent to 2.1 million worldwide, impacted in part by disruptions in Poland, Colombia and the Czech Republic.
“The company exceeded expectations and is now building a good track record with investors, in our view,” said Chad Beynon, an analyst with Macquarie Capital. “The Stars Group reported second quarter 2017 results, with continued operating momentum and flow-through resulting in top- and bottom-line beats, reflecting a very strong real-money online casino and sportsbook casino ramp (segment revenues up 50 percent year-over-year to $90 million) and a stabilized poker environment.”
TSG revised previously issued net earnings guidance for the full year 2017 up to $413 to $437 million, while the $1.2 to $1.26 billion range for revenues and $560 to $580 million range for adjusted EBITDA remained unchanged.
Shares of The Stars Group, which are traded on the Toronto Stock Exchange, were up to 18.80 Wednesday morning after closing Tuesday’s trading at $17.75.
