ATG Grows Revenue in Q1 But Admits Uncertainty Due to Covid-19April 28, 2020 John Isaac
A 10.7 percent year on year increase in net gaming revenue has been reported by Sweden’s former horse racing monopoly operator AB Trav och Galopp (ATG) for the first quarter of 2019 to SEK1.11 billion, that is about $110.7 million.In the reporting period, Swedish revenue was up by 7.5 percent to SEK1.08 billion. Even though the operator noted that in the final weeks of the quarter, the international racing calendar was cut due to the world wide pandemic novel corona virus (Covid-19). Despite this, AGT core horse racing offering still saw a growth in revenue of 1.9 percent to SEK902 million.
Main Contributors to the Growth in Revenue
It said that this is a result of increased interest in Swedish racing, the growth was additionally aided by new betting products and an added number of jackpots in the V75 pool betting game. Even as the casino’s contribution grew at a slower but steady rate to SEK78 million which is 27.9 percent, Swedish sports betting revenue still jumped to SEK95 million which is 75.9 percent.
Viitala, who is the chief financial officer, was clear to note that these elevated growth rates were due to the fact that each product was still quite relatively new. This is after ATG launched online gaming and betting from 1 January 2019.
The inclusion of revenue from Denmark-facing Bet25.dk operator Ecosy aided the growth of revenue. According to Lotta Nilsson Viitala, the finance chief, the new subsidiary was responsible for four percentage points of the first quarter’s growth. This is after having agreed to acquire the business in November 2017, and AGT completed the deal in March of 2019.
ATG reported an additional SEK73m in revenue from its retail partners, and SEK139m in other revenue, related to rights fees for Swedish racing, aided by the suspension of activity in other markets as a result of Covid-19. This resulted in total revenue rising by 10.3% to SEK1.32bn.
As of 31 March, ATG had approximately 1.3m registered and active customers. Of this number, it considers 86% to be gambling sustainably, accounting for 71% of revenue, based on its player monitoring system. To date, 62,000 customers have also completed a self-test to assess their gambling habits.
Viitala explained that they are constantly working to develop their gaming responsibility and they have recently introduced mandatory loss limits in their casinos to ensure that the customers at ATG are safe and enjoying their gambling.
Expenses and Costs for the Quarter
Turning the attention to expenses for the quarter, ATG paid SEK221m in gaming taxes, up 12.8%, while personnel costs rose to SEK110m. Other costs, mainly commission paid to the operator’s retail network, declined marginally to SEK596m.
Depreciation and amortization charges grew 71.9% to SEK67m, while costs were slightly reduced by SEK18m in capitalized development costs. This left an operating profit of SEK343m, up 19.1% year-on-year.
ATG recorded a SEK2m benefit from financial items, for a pre-tax profit of SEK345m, and after paying SEK18m in income tax, its net profit for the quarter was up 18.1% at SEK327m.