Unibet soars as pound plummets

Unibet soars as pound plummets

Thursday, November 3, 2016 Posted by Scott Longley
Organic growth up despite actives fall

Unibet registered substantial double-digit organic growth for the third quarter despite the number of active players heading into reverse after the Euro 2016 football championships.

The company, which is soon to change its name to Kindred Group, said gross winnings rose 65% to £142.3m helped partly by currency movements affecting its reporting currency of the pound sterling and also by full contributions from the iGame and Stan James acquisitions.

The pair accounted for £14.8m of the revenue increase, or just over a quarter of the uplift. But while the figures would also have been flattered by the circa 14% fall in the value of the pound since the Brexit vote in June, it still means the company enjoyed organic growth of 27%.

Henrik Tjärnström, chief executive at Unibet, praised the company’s performance and suggested it should the true benefits of the efforts to bulk up via acquisition. “It is of course particularly satisfying that the excellent top line growth converted into a new all-time high in EBITDA, demonstrating again the scalability of the Group’s business model which is structured to meet the future challenges of further regulation.”

Underlying EBITDA rose a third quarter-on-quarter to £33.9m.

The financial performance came despite active player falling post-the Euros from 1.13 million to 1.06 million. The third quarter follows the pattern from previous years for Unibet of fall back in customer numbers in the quarter following a major international summer football, tournament.

The company said that gross winnings growth in the month since period close had bene close to 50%, though stripping out currency movements the figure stood at 20%.

Paul Leyland, partner at gambling consultancy Regulus, said the percentage of revenues from regulated markets stood at 33%, which suggests the company will take further hits in the coming years from newly regulating markets in which Unibet operates imposing new taxes and duties.

Pointing to the 122% rise in gambling taxes paid in the third quarter – partly due to exposure to the UK’s point of consumption (PoC) tax regime – the likelihood is that there will be more increases in this metric to come. “The onward march of POC regimes is likely to be a significant medium-term drag on profitability,” he said. “This is could be especially true given the relatively high casino mix for the group.”

Casino accounted for 48% of total revenues while sports-betting was worth just under 47% and the remainder was either poker or other revenues.

Leyland suggested another interesting metric was the degree to which desktop revenues were now suffering at the hands of the rise of mobile betting and gaming. Pointing to the 64% of revenue gambling on mobile devices given by the company, Leyland said this indicated that desktop revenues fell by 40% over the period of the third quarter. “(It) further demonstrates the structural changes being wrought by smartphone ubiquity,” he added.

He concluded that Unibet was exhibiting “all the trends’ of successful pan-European operators. “On the positive side, it is capitalising on a period of strong secular growth while successfully adjusting to customer behaviour shifts,” he said. “On the negative side, it is still largely reliant on dotcom and gaming revenue, the combination of which at best will see material fiscal disruption in the medium-term and at worst see material top-line disruption also.”

Totally Gaming says: Unibet charges on. The fall in the value of the pound aside, the growth the company is seeing is driven by a clear focus on its multiple brands in key European territories. The roadblocks ahead will all be to do with further regulation in jurisdictions across Europe, with the next one of major importance for Unibet being the Netherlands. Of all the figures to keep in mind in future results statements, it might be the rise in gambling taxes paid that will be the most significant.

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