Browse articles by topic Group talks up US opportunities after Q1 revenue growth

News Group has reported a 52% year-on-year increase in revenue for the first quarter of 2019, with the affiliate marketing giant to invest in the development of products for the US market in the year ahead.

Total revenue for the three months to March 31, 2019 grew to a record €5.2m ($5.9m), with organic growth accounting for around 50% of this total, or 98% of the year-on-year increase.

The vast majority (83%) of this sum came from locally regulated markets, Group noted, with new depositing customer (NDC) numbers up 66% to 26,525.

This growth came despite the affiliate admitting that it had been hit by the introduction of new gambling regulations in Sweden, its second largest market after the UK, from January 1, 2019. said regulation had provided long-term legal certainty in the market, and NDC production remained strong in Q1. However, it noted, NDC values had decreased and Swedish revenue had fluctuated as its operator partners familiarised themselves with the new regulatory framework.

Despite this, it said that it expects the market to stabilize and grow in coming quarters.

Over the quarter the group continued to scale up its operational resources and invest in product and software development, and content creation. This, it said, was largely aimed at developing offerings for the US market, as well as for further expansion in the sports betting vertical in Europe.

The group said this had put “downward pressure” on adjusted earnings before interest, tax, depreciation and amortisation margins compared to the prior year, which fell from 38% to 33% of revenue. However adjusted EBTIDA rose 30% year-on-year to €1.8m, setting a new quarterly record.

Expenses for the quarter rose to €3.7m, largely as a result of personnel expenses more than doubling to €1.6m, a result of the business’ total headcount leaping from 35 in Q1 2018 to 117 individuals, including consultants, by March 31.

This left an operating profit of €1.5m, up 79% year-on-year. Once finance-related costs of €56,000 (down 60%) and interest of €468,000 (up 18%) were taken out, and finance income of €22,000 was factored in, Group’s pre-tax profit stood at €969,000. This represented a significant advance on the prior year’s €305,000 profit. After taxes of €62,000, net profit for the quarter was €907,000.

Looking ahead, Group chief executive Charles Gillespie highlighted the opportunities presented by the roll-out of sports betting and igaming legislation across the US. The group will soon be able to strike revenue share deals with partners in the New Jersey market, having been cleared to apply for an Ancillary Casino Service Industry Enterprise License by the state’s Division of Gaming Enforcement.

It has also applied for a licence in Pennsylvania, where it believes online sports betting could launch before the end of May, and ahead of the state’s igaming market opening on July 15.

“Substantial progress has been made in the past weeks toward opening up additional US States for legal, online sports betting,” Gillespie added. “As of the time of writing, 15 states plus Washington DC either have legal sports betting today or have passed laws to launch it. 26 more states have introduced sports betting bills, 15 states of which still have their 2019 legislative sessions open.

“Only 9 states have now failed to make any effort on sports betting in 2019.”

While some state proposals are unlikely to lead to a viable online market, he said, regulations were likely to evolve over time.

Yet despite strong growth in traffic, Gillespie said that the US was likely to drive growth in the mid- to long-term, rather than being a major source of group revenue at present.

Looking to Europe, Group said it faced further pressure, following Q1’s fluctuating revenue in Sweden, from an increase in Remote Gaming Duty (RGD) in the UK. RGD was raised from 15% to 21% of revenue from April 1, alongside the reduction in maximum B2 gaming machine stakes, which the group said would have a “dampening” effect on UK growth prospects.

However Gillespie highlighted more positive news from Italy, after the country’s advertising and communications regulator Autorità per le Garanzie nelle Comunicazioni (AGCOM) clarified the scope of the government’s blanket ban on gambling advertising.

AGCOM has said that informative communications will not be subject to the prohibition, something which Group supports.

“[The] consumer should be able to actively seek out advice and compare the various offers available to them,” Gillespie said. “The affiliate’s role in the gambling advertising eco-system is a value-add to the consumer and not the kind of predatory marketing the Italian regulator was aiming to stop.”

He said that this would see the affiliate channel play an increasingly important role in Italy’s igaming market. To prepare for this, the group will reassign resources back to its Italian assets, in particular the Italian-language version of

“As we are now entering the seasonally low period for our sector, the internal focus will shift to completing some major technology projects and continuing to put in the foundation for the next several years of growth, both in the United States and in Europe,” Gillespie said in conclusion.