The Stars Group has revealed its Q2 results for the period ended June 30, 2019, alongside updated 2019 full year guidance ranges. Total revenue was $1.2bn versus $804.4m year-on-year, with gross profit coming in at $881.5m against $640.5m on the same basis. Operating income was also ahead at $155.5m, up from $115m year-on-year. Adjusted EBITDA, meanwhile, hit $432.1m against $343.3m.

While those Q2 numbers look encouraging, the firm’s updated consolidated financial guidance suggests a lowering of expectations. Revenue of between $2.5bn and $2.575bn has been downgraded from the originally projected $2.64bn and $2.765bn. Adjusted EBITDA for 2019 is expected to reach between $905m and $930m versus the original $960m to $1.010bn estimate.

The adjusted EBITDA range reflects, inter alia, the impact of the group’s circa $40m investment in FOX Bet and its US operations; and an offsetting underlying improvement in operations, primarily driven by an operational excellence program to streamline certain fixed costs and currently expected sequential improvements in disrupted markets.

“The second quarter underpinned the success of last year’s acquisitions, particularly with the record performance of Sky Betting & Gaming and our increasing product and geographic diversification, as we continue to transform and position the business to execute on our strategy for strong, sustainable future growth,” said CEO Rafi Ashkenazi

He added: “2019 has been and remains a year of integration, execution and debt reduction. We are committed to those key strategic priorities for the rest of the year while we also build our foundation and momentum to become a market leader in the US. We are confident that the actions we have taken over the last year, and are pursuing now, including to reassess our fixed cost base, put us in a strong position to deliver our mid-term growth targets from the end of 2019.” 

According to the firm, revenue for the quarter increased primarily as a result of the contribution from Sky Betting & Gaming which was acquired in July 2018. During the quarter, online sports betting was The Stars Group’s largest product vertical (36% versus 20% in 2018), followed by online casino (31% versus 25% in 2018) and online poker (30% versus 53% in 2018), while 79% of consolidated revenues were derived from locally regulated or taxed markets (61% in 2018). Additional segment specific factors impacting revenue are described below.

In a general Q2 update the company focused on its US activities, saying: “The Stars Group and FOX Sports announced plans to launch FOX Bet, the first-of-its kind national media and sports wagering partnership in the United States. In addition to a commercial agreement of up to 25 years and associated product launches, including real-money and free-to-play games, FOX also acquired 4.99% of The Stars Group’s then-issued and outstanding common shares for aggregate proceeds of $236.0 million. FOX Bet currently remains on track to launch in applicable states prior to the start of the NFL season.

“In July, The Stars Group announced agreements with Penn National Gaming and the Akwesasne Mohawk Casino Resort in New York, providing market access for online betting and gaming in up to ten states and extending The Stars Group’s aggregate market access to up to 20 states, subject to license availability, state law and regulatory approvals.”