News

The Stars Group Reports Third Quarter 2018 Results

Published

6 years ago

November 7, 2018

Zoltan Tundik

The Stars Group Reports Third Quarter 2018 Results Reading Time: 24 minutes

The Stars Group Inc. today reported its financial results for the third quarter ended September 30, 2018 and provided certain additional highlights and updates. Unless otherwise noted, all dollar ($) amounts are in U.S. dollars.

“This was a landmark quarter during a transformative year for the company as we begin to deliver on our vision to become the world’s favorite iGaming destination,” stated Rafi Ashkenazi, The Stars Group’s Chief Executive Officer. “We completed our acquisition of Sky Betting & Gaming, which was cleared by the CMA in October, making us the leader in the UK online betting and gaming market. We also launched BetEasy in Australia and sports betting in New Jersey.”

“We are pleased with our quarterly results, which reflect both continued organic growth from our International business and contributions from both BetEasy and Sky Betting & Gaming, despite unfavorable sporting results during the period,” said Mr. Ashkenazi.

“As we continue our transformation and look towards 2019, we are excited to take advantage of the opportunities ahead of us by leveraging our leading positions in attractive markets, strong brands, technology and operating expertise,” concluded Mr. Ashkenazi.

European Gaming Congress 2024 (Warsaw, Poland)

Third Quarter 2018 Summary

Consolidated

	Three Months Ended September 30,			Nine Months Ended September 30,
In thousands of U.S. Dollars Advertisement (except percentages and per share amounts)	2018	2017	% Change	2018 Advertisement	2017	% Change
Total Revenue	571,983	329,443 Advertisement	73.6%	1,376,386	952,065	44.6%
Gross Profit Advertisement	442,757	266,966	65.8%	1,083,259	774,460 Advertisement	39.9%
Operating Income	70,901	118,724	(40.3%) Advertisement	185,832	335,128	(44.5%)
Net Earnings (loss)	9,730 Advertisement	75,874	(87.2%)	(70,733)	212,110	(133.3%) Advertisement
Adjusted Net Earnings ¹	119,500	119,595	(0.1%)	389,285 Advertisement	346,990	12.2%
Adjusted EBITDA ¹	198,252	155,767 Advertisement	27.3%	541,545	453,305	19.5%
Adjusted EBITDA Margin ¹ Advertisement	34.7%	47.3%	(26.7%)	39.3%	47.6% Advertisement	(17.4%)
Diluted (loss) earnings per Common Share ($/Share)	0.06	0.37	(84.9%) Advertisement	(0.34)	1.05	(132.3%)
Adjusted Diluted Net Earnings per Share ($/Share) ¹	0.45 Advertisement	0.58	(23.8%)	1.67	1.71	(2.2%) Advertisement

Net cash flows from operating activities	73,227	144,870	(49.5%)	369,307 Advertisement	370,843	(0.4%)
Free Cash Flow ¹	(26,723)	95,306 Advertisement	(128.0%)	140,392	255,028	(45.0%)

_____________________________

¹ Non-IFRS measure. For important information on The Stars Group’s non-IFRS measures, see below under “Non-IFRS Measures” and the tables under “Reconciliation of Non-IFRS Measures to Nearest IFRS Measures”.

Total Revenues – Revenues for the quarter increased 73.6% year-over-year primarily as a result of the contribution of revenue from the acquisitions of Sky Betting & Gaming (“SBG”) and BetEasy, as well as organic growth in the International segment.
Adjusted EBITDA and Adjusted EBITDA Margin – Adjusted EBITDA for the quarter increased 27.3% year-over-year, primarily driven by the impact of the acquisitions of SBG and BetEasy and by increased gross profit from organic growth within the International segment. Adjusted EBITDA Margin for the quarter decreased 26.7% year-over-year, primarily driven by the higher contribution from the Betting and Gaming verticals within each segment.
Consolidated Debt and Cash – The total principal amount owing on long-term debt outstanding at the end of the quarter was $5.65 billion with a carrying value of $5.52 billion. The Stars Group ended the third quarter of 2018 with approximately $419 million in operational cash on its balance sheet, which translated into Net Debt of $5.1 billion. Subsequent to the quarter end, on October 24, 2018, The Stars Group fully repaid the $100 million outstanding on its revolving credit facility using cash on its balance sheet.
U.S. Sports Betting Update – On August 10, 2018, The Stars Group and Mount Airy Casino Resort announced a partnership to enter Pennsylvania’s online sports wagering and gaming market, where The Stars Group will offer to customers in Pennsylvania its online poker, casino (including slots and tables) and sports wagering products. On September 13, 2018, The Stars Group launched its BetStars online sports betting brand in New Jersey through its partnership with Resorts Casino Hotel. The offering, which is initially available through mobile, provides New Jersey customers with an innovative and robust mobile-led sportsbook alongside The Stars Group’s already existing online poker and casino offerings available through the PokerStarsNJ and PokerStars Casino NJ brands.
Sky Betting & Gaming Update – On July 10, 2018, The Stars Group completed the previously announced Sky Betting & Gaming acquisition for $4.7 billion, and on October 11, 2018, the UK Competition & Markets Authority cleared the acquisition, allowing The Stars Group to begin executing on its integration plans. As it relates to the previously announced expected synergies of at least $70 million, The Stars Group currently believes that approximately 53% will relate to headcount and other staff costs, 23% to purchasing costs and 24% to other cost savings. In addition, The Stars Group currently estimates that it may achieve approximately $5 million of such synergies before year end, followed by a further $50 million in 2019 and an additional $15 million in 2020. The Stars Group continues to expect approximately $85 million in implementation costs to achieve those synergies, with the majority of such costs being incurred in 2019.

International

Three Months Ended September 30,

Nine Months Ended September 30,

In thousands of U.S. Dollars (except otherwise noted)

2018

2017

% Change

2018

2017

% Change

Stakes

233,694

163,844

42.6%

705,251

451,699

56.1%

Betting Net Win Margin (%)

9.0%

7.1%

26.1%

8.1%

6.1%

33.4%

Revenue

Poker

212,832

221,393

(3.9%)

675,688

642,946

5.1%

Gaming

107,602

83,474

28.9%

316,253

243,959

29.6%

Betting

21,030

11,688

79.9%

57,351

27,541

108.2%

Other ²

10,982

12,888

(14.8%)

35,155

37,619

(6.5%)

Total Revenue

352,446

329,443

7.0%

1,084,447

952,065

13.9%

Gross Profit

287,522

266,966

7.7%

873,444

774,460

12.8%

Gross Profit Margin (%)

81.6%

81.0%

0.7%

80.5%

81.3%

(1.0%)

General and administrative

111,295

95,250

16.8%

319,668

276,798

15.5%

Sales and marketing

31,912

32,624

(2.2%)

119,136

97,914

21.7%

Research and development

6,808

6,030

12.9%

22,985

18,513

24.2%

Operating Income

137,507

133,062

3.3%

411,655

381,235

8.0%

Adjusted EBITDA ¹

182,228

162,880

11.9%

533,025

478,264

11.4%

Adjusted EBITDA Margin (%) ¹

51.7%

49.4%

4.6%

49.2%

50.2%

(2.2%)

_____________________________

² Other revenue includes $1.0 million that the Corporation excluded from its consolidated results as it related to certain non-gaming related transactions with the United Kingdom segment.

Poker – Poker revenue for the quarter was $212.8 million, or a decrease of approximately 3.9% year-over-year. Excluding the impact of year-over-year changes in foreign exchange rates, Poker revenues for the quarter would have increased by 0.3%. The reported decrease was primarily driven by foreign exchange fluctuations, the cessation of operations in certain markets, notably Australia in September 2017, and cross selling to other verticals (particularly during the FIFA World Cup), and offset by, among other things, the Stars Rewards loyalty program (introduced during the quarter ended September 30, 2017) and the introduction of shared poker liquidity in France and Spain in the first quarter and Portugal in the second quarter.
Gaming – Gaming revenue for the quarter was $107.6 million, or an increase of 28.9% year-over-year. Excluding the impact of year-over-year changes in foreign exchange rates, Gaming revenues for the quarter would have increased by 32.5%. The reported increase was primarily the result of product and content improvements to PokerStars Casino, including the introduction of over 250 new casino games since the beginning of the year and the launch of PokerStars Casino in certain new markets. This was partially offset by, among other things, the impact of year-over-year changes in foreign exchange rates.
Betting – Betting revenue for the quarter was $21.0 million, or an increase of 79.9% year-over-year. Excluding the impact of year-over-year changes in foreign exchange rates, Betting revenues for the quarter would have increased by 86.5%. The reported increase was primarily the result of increases in Stakes and Betting Net Win Margin. These increases were primarily driven by increased wagering activity due to product and content improvements to BetStars, the launch of BetStars in certain new markets, and the 2018 FIFA World Cup.
Adjusted EBITDA and Adjusted EBITDA Margin – Adjusted EBITDA for the quarter increased 11.9% year-over-year, primarily driven by increased revenue and gross profit across all segments as noted above. Adjusted EBITDA Margin for the quarter increased 4.6% year-over-year, primarily driven by increased revenues combined with operational leverage from additional product and content improvements and a decline in sales and marketing expenses in the quarter.
Quarterly Real-Money Active Uniques (QAUs) – QAUs were 2.0 million, which represents a decrease of 3.1% year-over-year. This decrease was primarily the result of the cessation of real-money online poker operations in certain markets, notably Australia in September 2017, and The Stars Group’s continued strategy of focusing on high-value customers (primarily recreational players), as offset by the growth and expansion of the real-money casino and betting product offerings.
Quarterly Net Yield (QNY) – QNY was $167, an increase of 11.3% year-over-year, and QNY excluding the impact of year-over-year changes in foreign exchange rates was $174, an increase of 16.0% year-over-year. QNY is a non-IFRS measure.
Net Deposits – Net Deposits were $335 million, an increase of 4.1% year-over-year. The increase was primarily driven by the implementation of the Stars Rewards loyalty program and continued focus on high-value customers (primarily recreational players), foreign exchange fluctuations and continued development of the casino and betting product offerings.
Stakes and Betting Net Win Margin – Stakes were $233.7 million, an increase of 42.6% year-over-year, and Betting Net Win Margin was 9.0%, an increase of 1.9 percentage points year-over-year. The increases in the quarter were primarily due to product and content improvements to BetStars driving incremental QAUs, the launch of BetStars in certain new markets, and the World Cup. The Betting Net Win Margin for the International segment is less exposed to the English Premier League and UK horse racing, and as such, was not impacted to the same extent by the operator-unfavorable results The Stars Group experienced within the United Kingdom segment as a whole.

United Kingdom

	Three Months Ended September 30,			Nine Months Ended September 30,
In thousands of U.S. Dollars (except otherwise noted)	2018 Advertisement	2017	% Change	2018	2017	% Change Advertisement
Stakes	1,221,854	—	—	1,221,854 Advertisement	—	—
Betting Net Win Margin (%)	7.0%	— Advertisement	—	7.0%	—	—

Revenue Advertisement
Poker	2,884	—	—	2,884 Advertisement	—	—
Gaming	73,318	— Advertisement	—	73,318	—	—
Betting Advertisement	85,189	—	—	85,189	— Advertisement	—
Other	6,989	—	— Advertisement	6,989	—	—
Total Revenue	168,380 Advertisement	—	—	168,380	—	— Advertisement

Gross Profit	121,226	—	—	121,226 Advertisement	—	—
Gross Profit Margin (%)	72.0%	— Advertisement	—	72.0%	—	—
			— Advertisement			—
General and administrative	104,697	—	— Advertisement	104,697	—	—
Sales and marketing ²	40,224 Advertisement	—	—	40,224	—	— Advertisement
Research and development	4,940	—	—	4,940 Advertisement	—	—
Operating Loss	(28,635)	— Advertisement	—	(28,635)	—	—

Adjusted EBITDA ¹ Advertisement	27,943	—	—	27,943	— Advertisement	—
Adjusted EBITDA Margin (%) ¹	16.6%	—	— Advertisement	16.6%	—	—

____________________________

² Sales and marketing expense includes $1.0 million that the Corporation excluded from its consolidated results as it related to certain non-gaming related transactions with the United Kingdom segment.

Revenue, Adjusted EBITDA and Adjusted EBITDA Margin – Revenue from July 10, 2018 through the end of the quarter ended September 30, 2018, was $168.4 million. Adjusted EBITDA and Adjusted EBITDA Margin for the same period were $27.9 million and 16.6%, respectively. Revenue for the period was primarily impacted by low Betting Net Win Margin when compared to historical averages driven by particularly operator-unfavorable sports results. This was partially offset by strong Stakes during the period, due to strong growth in QAUs. Adjusted EBITDA and Adjusted EBTIDA Margin were similarly impacted by the low Betting Net Win Margin and were also impacted by marketing investment for the start of the European football season.
Stakes and Betting Net Win Margin – Stakes and Betting Net Win Margin from July 10, 2018 through the end of the quarter ended September 30, 2018 were $1.22 billion and 7.0%, respectively. The Betting Net Win Margin can vary significantly from quarter to quarter; however, over the long term, the Corporation believes that these margins tend to become more predictable. The Betting Net Win Margin is below SBG’s expected long-term average of approximately 9% primarily as a result of operator-unfavorable results in English Premier League football and horse racing, which collectively represent a significant portion of Stakes. The Stars Group believes that had Betting Net Win Margin been 9% during the period, Betting revenue would have been $110.0 million as opposed to $85.2 million.

Australia

	Three Months Ended September 30,			Nine Months Ended September 30,
In thousands of U.S. Dollars (except otherwise noted) Advertisement	2018	2017	% Change	2018	2017 Advertisement	% Change
Stakes	825,438	—	— Advertisement	1,693,164	—	—
Betting Net Win Margin (%)	6.3% Advertisement	—	—	7.4%	—	— Advertisement

Revenue
Betting	52,157	—	— Advertisement	124,559	—	—
Total Revenue	52,157 Advertisement	—	—	124,559	—	— Advertisement

Gross Profit	35,154	—	—	89,589 Advertisement	—	—
Gross Profit Margin (%)	67.4%	— Advertisement	—	71.9%	—	—

General and administrative Advertisement	39,963	—	—	84,588	— Advertisement	—
Sales and marketing	21,050	—	— Advertisement	37,523	—	—
Research and development	114 Advertisement	—	—	1,098	—	— Advertisement
Operating Loss	(25,973)	—	—	(33,620) Advertisement	—	—

Adjusted EBITDA ¹	(4,764)	— Advertisement	—	7,861	—	—
Adjusted EBITDA Margin (%) ¹ Advertisement	(9.1%)	—	—	6.3%	— Advertisement	—

_____________________________

Revenue, Adjusted EBITDA and Adjusted EBITDA Margin – Revenue for the quarter was $52.2 million. Adjusted EBITDA and Adjusted EBITDA Margin for the same period were $(4.8) million and (9.1)%, respectively. Revenue for the quarter was impacted by low Betting Net Win Margin when compared to historical averages driven by particularly operator-unfavorable sports results.
Stakes and Betting Net Win Margin – Stakes and Betting Net Win Margin for the quarter ended September 30, 2018 were $825.4 million and 6.3%, respectively. The Betting Net Win Margin can vary significantly from quarter to quarter; however, over the long term, the Corporation believes that these margins tend to become more predictable. The Betting Net Win Margin is below BetEasy’s long-term average of 8.5% primarily as a result of operator-unfavorable results in horse racing, which represents a significant portion of Stakes. The Stars Group believes that had Betting Net Win Margin been 8.5% during the quarter, Betting revenue would have been $70.2 million as opposed to $52.2 million.

For additional information regarding The Stars Group’s reporting segments and major lines of operations, please see The Stars Group’s unaudited interim condensed consolidated financial statements for the three and nine months ended September 30, 2018 (the “Q3 2018 Financial Statements”), including note 6 therein, and management’s discussion and analysis thereon (the “Q3 2018 MD&A”).

Historic Supplemental Information and 2019 Update

Due to its recent acquisitions of SBG and BetEasy and to provide additional clarity with respect to the historical performance of The Stars Group’s business on a proforma basis for the three and nine months ended September 30, 2018 and 2017, and presented based on The Stars Group’s current reporting segments and lines of operations, see the information below under the heading “Supplementary Information”. Certain of this information contains non-IFRS measures. For important information on The Stars Group’s non-IFRS measures, see below under “Non-IFRS Measures” and the tables under “Reconciliation of Non-IFRS Measures to Nearest IFRS Measures”.

In addition, to provide further clarity with respect to the potential impact of such acquisitions on its full year 2019 results, The Stars Group is also providing information for certain financial items:

Depreciation and amortization excluding purchase price allocation amortization of between $65 and $75 million;
Cash interest expense of between $295 and $305 million;
Effective tax rate (applied to Adjusted EBITDA less cash interest expense and non-purchase price allocation related depreciation and amortization) of between 8.0 and 10.0%; and
Diluted Shares of between 274 and 278 million.

These unaudited expected financial items are based on certain accounting assumptions and reflect management’s view of current and future market and business conditions, including assumptions of (i) no material impairment or write-down of the assets to which this depreciation and amortization relates, (ii) no material change in the prevailing EURIBOR or LIBOR rates as at September 30, 2018 and no material adverse impact on applicable hedging counterparties, (iii) no material change in the mix of taxable income by jurisdiction, in the rate of corporate tax or tax regimes in the jurisdictions in which The Stars Group currently operates and no material change in the geographies where The Stars Group currently offers its products, (iv) no material increases or decreases in The Stars Group’s issued and outstanding shares, (v) no other material regulatory events, and (vi) no material foreign currency exchange rate fluctuations, particularly against the Euro, Great Britain pound sterling and Australian dollar.

Supplementary information

	Proforma Three Months Ended September 30, 2018
In millions of U.S. Dollars Advertisement	International	United Kingdom	Australia²	Corporate³	Consolidated Advertisement
Stakes	233.7	1,404.7	825.4	— Advertisement	2,463.8
Betting Net Win Margin	9.0%	7.3%	6.3% Advertisement	—	7.1%

Revenue
Poker	212.8 Advertisement	3.2	—	—	216.0
Gaming Advertisement	107.6	83.9	—	—	191.5 Advertisement
Betting	21.0	102.3	52.2	— Advertisement	175.5
Other	11.0	8.4	— Advertisement	(1.0)	18.4
Total	352.4	197.8 Advertisement	52.2	(1.0)	601.4

Operating Income (loss)	137.5 Advertisement	(67.9)	(26.0)	(12.0)	31.6

Adjusted EBITDA¹ Advertisement	182.2	37.5	(4.8)	(7.2)	207.7 Advertisement
Adjusted EBITDA Margin¹	51.7%	19.0%	(9.1%)	— Advertisement	34.5%

QAUs (millions)	2.0	2.0	0.3 Advertisement	—	4.3

	Proforma Three Months Ended September 30, 2017
In millions of U.S. Dollars Advertisement		International	United Kingdom	Australia²	Corporate	Consolidated Advertisement
Stakes		163.8	1,207.6	437.1	— Advertisement	1,808.5
Betting Net Win Margin		7.1%	9.0%	9.1% Advertisement	—	8.8%

Revenue
Poker		221.4 Advertisement	3.6	—	—	225.0
Gaming Advertisement		83.5	72.8	—	—	156.3 Advertisement
Betting		11.7	108.4	39.7	— Advertisement	159.8
Other		12.8	6.6	— Advertisement	—	19.4
Total		329.4	191.4 Advertisement	39.7	—	560.5

Operating Income (loss)		133.1 Advertisement	(24.7)	(10.0)	(14.3)	84.1

Adjusted EBITDA¹ Advertisement		162.9	54.7	(2.9)	(7.1)	207.6 Advertisement
Adjusted EBITDA Margin¹		49.4%	28.6%	(7.3%)	— Advertisement	37.0%

QAUs (millions)		2.1	1.6	0.1 Advertisement	—	3.8

	Proforma Nine Months Ended September 30, 2018
In millions of U.S. Dollars Advertisement	International	United Kingdom	Australia²	Corporate³	Consolidated Advertisement
Stakes	705.3	4,194.9	1,982.2		6,882.4 Advertisement
Betting Net Win Margin	8.1%	8.9%	7.6%	— Advertisement	8.4%

Revenue
Poker	675.7	10.5 Advertisement	—	—	686.2
Gaming	316.2 Advertisement	244.2	—	—	560.4
Betting Advertisement	57.3	372.0	150.4	—	579.7 Advertisement
Other	35.2	27.2	—	(1.0) Advertisement	61.4
Total	1,084.4	653.9	150.4 Advertisement	(1.0)	1,887.7

Operating Income (loss)	411.7	(177.8) Advertisement	(35.4)	(163.5)	35.0

Adjusted EBITDA¹	533.0 Advertisement	161.4	13.5	(27.3)	680.6
Adjusted EBITDA Margin¹ Advertisement	49.2%	24.7%	9.0%	—	36.1% Advertisement

	Proforma Nine Months Ended September 30, 2017
In millions of U.S. Dollars	International	United Kingdom Advertisement	Australia²	Corporate	Consolidated
Stakes	451.7 Advertisement	3,728.6	1,194.5	—	5,374.8
Betting Net Win Margin Advertisement	6.1%	8.5%	9.2%	—	8.4% Advertisement

Revenue
Poker	643.0	10.6	— Advertisement	—	653.6
Gaming	244.0	206.4 Advertisement	—	—	450.4
Betting	27.5 Advertisement	315.8	109.5	—	452.8
Other Advertisement	37.6	18.6	—	—	56.2 Advertisement
Total	952.1	551.4	109.5	— Advertisement	1,613.0

Operating Income (loss)	381.2	(80.0)	(16.2) Advertisement	(46.1)	238.9

Adjusted EBITDA¹	478.3	161.0 Advertisement	3.5	(25.0)	617.8
Adjusted EBITDA Margin¹	50.2% Advertisement	29.2%	3.2%	—	38.3%

FX Rates

Mar. 31,

Jun. 30,

Sept. 30,

Mar. 31,

Jun. 30,

Sept. 30,

Average for the three months ended

2017

2018

GBP to USD

1.2393

1.2786

1.3087

1.3917

1.3616

1.3035

AUD to USD

0.7579

0.7508

0.7890

0.7861

0.7572

0.7393

_____________________________

²The Australia segment supplementary information includes the results of operations of William Hill Australia beginning with its acquisition on April 24, 2018. In August 2018, The Stars Group substantially completed its migration of customers and platforms and integration of William Hill Australia into BetEasy.

³ Other revenue includes $1.0 million that the Corporation excluded from its consolidated results as it related to certain non-gaming related transactions with the United Kingdom segment.

Financial Statements, Management’s Discussion and Analysis and Additional Information

The Stars Group’s Q3 2018 Financial Statements, Q3 2018 MD&A, and additional information relating to The Stars Group and its business, can be found on SEDAR at www.sedar.com, Edgar at www.sec.gov and The Stars Group’s website at www.starsgroup.com. The financial information presented in this news releases was derived from the Q3 2018 Financial Statements.

In addition to press releases, securities filings and public conference calls and webcasts, The Stars Group intends to use its investor relations page on its website as a means of disclosing material information to its investors and others and for complying with its disclosure obligations under applicable securities laws. Accordingly, investors and others should monitor the website in addition to following The Stars Group’s press releases, securities filings and public conference calls and webcasts. This list may be updated from time to time.

Conference Call and Webcast Details

The Stars Group will host a conference call today, November 7, 2018 at 8:30 a.m. ET to discuss its financial results for the third quarter ended 2018 and related matters, and provide additional detail with respect to the information in this news release, its webcast presentation, its Q3 2018 Financial Statements and Q3 2018 MD&A, as well as certain additional historical supplemental financial information, including on a proforma basis for the SBG and BetEasy acquisitions. To access via tele-conference, please dial +1 855-327-6838 or +1-631-891-4304 ten minutes prior to the scheduled start of the call. The playback will be made available two hours after the event at +1-844-512-2921 or +1 412-317-6671. The Conference ID number is 10005822. To access the webcast please use the following link: http://public.viavid.com/index.php?id=132084

Reconciliation of Non-IFRS Measures to Nearest IFRS Measures

The tables below present reconciliations of Adjusted EBITDA, Adjusted Net Earnings and Adjusted Diluted Net Earnings per Share to net (loss) earnings, which is the nearest IFRS measure:

	Three Months Ended September 30, 2018
In thousands of U.S. Dollars (except per share amounts)	International	United Kingdom	Australia Advertisement	Corporate	Consolidated
Net earnings (loss)	137,507	(28,635) Advertisement	(25,973)	(73,169)	9,730

Income tax recovery	— Advertisement	—	—	13,189	13,189
Net financing charges Advertisement	—	—	—	(74,360)	(74,360) Advertisement

Operating income (loss)	137,507	(28,635)	(25,973)	(11,998) Advertisement	70,901

Depreciation and amortization	34,398	53,642	10,855 Advertisement	43	98,938
Add (deduct) the impact of the following:
Acquisition-related costs and deal contingent forwards	— Advertisement	—	—	1,667	1,667
Stock-based compensation Advertisement	—	—	—	3,154	3,154 Advertisement
Loss from investments and associates	123	—	—	— Advertisement	123
Impairment of intangibles assets and assets held for sale	3,869	—	— Advertisement	—	3,869
Other costs	6,331	2,936 Advertisement	10,354	(21)	19,600
Total adjusting items	10,323 Advertisement	2,936	10,354	4,800	28,413

Adjusted EBITDA Advertisement	182,228	27,943	(4,764)	(7,155)	198,252 Advertisement

	Nine Months Ended September 30, 2018
In thousands of U.S. Dollars (except per share amounts)	International	United Kingdom Advertisement	Australia	Corporate	Consolidated
Net earnings (loss)	412,723 Advertisement	(28,635)	(33,620)	(421,201)	(70,733)

Income tax recovery Advertisement	—	—	—	15,438	15,438 Advertisement
Net financing charges	—	—	—	(273,071) Advertisement	(273,071)
Net earnings from associates	1,068	—	— Advertisement	—	1,068

Operating income (loss)	411,655	(28,635) Advertisement	(33,620)	(163,568)	185,832

Depreciation and amortization	108,354 Advertisement	53,642	20,723	62	182,781
Add (deduct) the impact of the following: Advertisement
Acquisition-related costs and deal contingent forwards	—	—	—	112,485 Advertisement	112,485
Stock-based compensation	—	—	— Advertisement	8,802	8,802
Loss from investments and associates	370	— Advertisement	—	—	370
Impairment of intangibles assets and assets held for sale	4,943 Advertisement	—	—	—	4,943
Other costs Advertisement	7,703	2,936	20,758	14,935	46,332 Advertisement
Total adjusting items	13,016	2,936	20,758	136,222 Advertisement	172,932

Adjusted EBITDA	533,025	27,943	7,861 Advertisement	(27,284)	541,545

	Three Months Ended September 30, 2017
In thousands of U.S. Dollars (except per share amounts) Advertisement	International	United Kingdom	Australia	Corporate	Consolidated Advertisement
Net earnings (loss)	130,493	—	—	(54,619) Advertisement	75,874

Income tax recovery	—	—	— Advertisement	(2,186)	(2,186)
Net financing charges	—	— Advertisement	—	(38,095)	(38,095)
Net loss from associates	(2,569) Advertisement	—	—	—	(2,569)
		— Advertisement	—
Operating income (loss)	133,062	—	— Advertisement	(14,338)	118,724

Depreciation and amortization	36,626	— Advertisement	—	5	36,631
Add (deduct) the impact of the following:
Stock-based compensation Advertisement	—	—	—	3,298	3,298 Advertisement
Gain from investments	(8,920)	—	—	— Advertisement	(8,920)
Reversal of impairment of intangibles assets and assets held for sale	(1,117)	—	— Advertisement	—	(1,117)
Other costs	3,229	— Advertisement	—	3,922	7,151
Total adjusting items	(6,808) Advertisement	—	—	7,220	412

Adjusted EBITDA Advertisement	162,880	—	—	(7,113)	155,767 Advertisement

	Nine Months Ended September 30, 2017
In thousands of U.S. Dollars (except per share amounts)	International	United Kingdom Advertisement	Australia	Corporate	Consolidated
Net earnings (loss)	378,666 Advertisement	—	—	(166,556)	212,110

Income tax recovery Advertisement	—	—	—	(856)	(856) Advertisement
Net financing charges	—	—	—	(119,593) Advertisement	(119,593)
Net loss from associates	(2,569)	—	— Advertisement	—	(2,569)

Operating income (loss)	381,235	— Advertisement	—	(46,107)	335,128

Depreciation and amortization	108,814 Advertisement	—	—	152	108,966
Add (deduct) the impact of the following: Advertisement
Stock-based compensation				7,914	7,914
Gain from investments	(9,137) Advertisement	—	—	(4,429)	(13,566)
Reversal of impairment of intangibles assets and assets held for sale Advertisement	(6,162)	—	—	(2,267)	(8,429) Advertisement
Other costs	3,514	—	—	19,778 Advertisement	23,292
Total adjusting items	(11,785)	—	— Advertisement	20,996	9,211

Adjusted EBITDA	478,264	— Advertisement	—	(24,959)	453,305

	Three Months Ended September 30, Advertisement		Nine Months Ended September 30,
In thousands of U.S. Dollars (except per share amounts)	2018	2017	2018 Advertisement	2017
Net (loss) earnings	9,730	75,874	(70,733) Advertisement	212,110
Income tax (recovery) expense	(13,189)	2,186	(15,438) Advertisement	856
Net loss (earnings) before tax	(3,459)	78,060	(86,171) Advertisement	212,966
Add (deduct) the impact of the following:	—	—	— Advertisement	—
Interest accretion	8,984	10,767	30,064 Advertisement	35,708
Loss on debt extinguishment	18,521	—	143,497 Advertisement	—
Re-measurement of contingent consideration	5,056	—	8,753 Advertisement	—
Re-measurement of derivatives	(11,300)	—	(11,300) Advertisement	—
Ineffectiveness of cash flow hedges	(11,949)	—	(11,949) Advertisement	—
Acquisition-related costs and deal contingent forwards	1,667	—	112,485 Advertisement	—
Amortization of acquisition intangibles	92,107	31,077	154,965 Advertisement	93,227
Stock based compensation	3,154	3,298	8,802 Advertisement	7,914
(Gain) loss from investments and associates	123	(6,353)	(698) Advertisement	(10,998)
Impairment (reversal of impairment) of intangibles assets and assets held for sale	3,869	(1,117)	4,943 Advertisement	(8,429)
Other costs (income)	19,600	7,151	46,332 Advertisement	23,292
Income tax impact of the above	(6,873)	(3,288)	(10,438) Advertisement	(6,690)
Adjusted net earnings	119,500	119,595	389,285 Advertisement	346,990
Adjusted net earnings attributable to
Shareholders of The Stars Group Inc.	119,961	119,595 Advertisement	389,430	346,990
Non-controlling interest	(461)	— Advertisement	(145)	—
	—	—	— Advertisement	—
Weighted average diluted number of shares	269,526,633	204,800,009	232,640,294 Advertisement	202,796,952
Adjusted Diluted Net Earnings per Share attributable to Shareholders of The Stars Group Inc	0.45	0.58	1.67 Advertisement	1.71

The table below presents certain items comprising “Other costs” in the reconciliation tables above:

	Three Months Ended September 30,		Nine Months Ended September 30, Advertisement
	2018	2017	2018	2017
In thousands of U.S. Dollars Advertisement	$000’s	$000’s	$000’s	$000’s
Integration costs Advertisement	17,088	—	28,555	—
Financial (income) expenses Advertisement	(4,948)	2,839	(2,899)	3,062
Termination of employment agreements Advertisement	4,486	1,358	6,544	4,166
AMF and other investigation professional fees Advertisement	(888)	(1,265)	3,771	3,888
Lobbying (US and Non-US) and other legal expenses Advertisement	4,260	2,916	9,918	12,233
Non-recurring professional fees Advertisement	1,423	664	1,976	2,168
Retention bonuses Advertisement	25	41	259	1,271
Loss on disposal of assets Advertisement	—	338	41	599
Austria gaming duty Advertisement	(3,679)	—	(3,679)	(5,000)
Termination of affiliate agreements Advertisement	—	—	—	407
Other Advertisement	1,833	260	1,846	498
Other costs Advertisement	19,600	7,151	46,332	23,292

The tables below present reconciliations of proforma Adjusted EBITDA to operating income (loss), which is the nearest IFRS measure:

	Proforma Three Months Ended September 30, 2018
In millions of U.S. Dollars	International	United Kingdom Advertisement	Australia¹	Corporate	Consolidated
Operating income (loss)	137.5 Advertisement	(67.9)	(26.0)	(12.0)	31.6

Depreciation and amortization Advertisement	34.4	102.5	10.9	—	147.8 Advertisement
Add (deduct) the impact of the following:
Acquisition related costs	—	2.9	10.3 Advertisement	1.7	14.9
Impairment of intangible assets	3.9	— Advertisement	—	—	3.9
Other Adjustments	6.4 Advertisement	—	—	3.1	9.5
Total adjusting items Advertisement	10.3	2.9	10.3	4.8	28.3 Advertisement

Adjusted EBITDA	182.2	37.5	(4.8)	(7.2) Advertisement	207.7

	Proforma Three Months Ended September 30, 2017
In millions of U.S. Dollars	International Advertisement	United Kingdom	Australia¹	Corporate	Consolidated
Operating income (loss) Advertisement	133.1	(24.7)	(10.0)	(14.3)	84.1 Advertisement

Depreciation and amortization	36.6	79.4	6.0	— Advertisement	122.0
Add (deduct) the impact of the following:
Impairment of intangible assets	(1.1)	— Advertisement	—	—	(1.1)
Other Adjustments	(5.7) Advertisement	—	1.1	7.2	2.6
Total adjusting items Advertisement	(6.8)	—	1.1	7.2	1.5 Advertisement

Adjusted EBITDA	162.9	54.7	(2.9)	(7.1) Advertisement	207.6

	Proforma Nine Months Ended September 30, 2018
In millions of U.S. Dollars	International Advertisement	United Kingdom	Australia¹	Corporate	Consolidated
Operating income (loss) Advertisement	411.7	(177.8)	(35.4)	(163.5)	35.0 Advertisement

Depreciation and amortization	108.4	269.9	25.6	— Advertisement	403.9
Add (deduct) the impact of the following:
Acquisition related costs	—	2.9 Advertisement	10.3	112.5	125.7
Impairment of intangible assets	4.8 Advertisement	—	—	—	4.8
Transaction related costs Advertisement	—	66.4	—	—	66.4 Advertisement
Other Adjustments	8.1	—	13.0	23.7 Advertisement	44.8
Total adjusting items	12.9	69.3	23.3 Advertisement	136.2	241.7

Adjusted EBITDA	533.0	161.4 Advertisement	13.5	(27.3)	680.6

	Proforma Nine Months Ended September 30, 2017 Advertisement
In millions of U.S. Dollars	International	United Kingdom	Australia¹	Corporate Advertisement	Consolidated
Operating income (loss)	381.2	(80.0)	(16.2) Advertisement	(46.1)	238.9

Depreciation and amortization	108.8	232.9 Advertisement	17.1	0.2	359.0
Add (deduct) the impact of the following:
Impairment of intangible assets Advertisement	(6.1)	8.1	—	(2.3)	(0.3) Advertisement
Other Adjustments	(5.6)	—	2.6	23.2 Advertisement	20.2
Total adjusting items	(11.7)	8.1	2.6 Advertisement	20.9	19.9

Adjusted EBITDA	478.3	161.0 Advertisement	3.5	(25.0)	617.8

_____________________________

¹The Australia segment supplementary information includes the results of operations of William Hill Australia beginning with its acquisition on April 24, 2018. In August 2018, The Stars Group substantially completed its migration of customers and platforms and integration of William Hill Australia into BetEasy.

The table below presents a reconciliation of Free Cash Flow to net cash flows from operating activities, which is the nearest IFRS measure:

	Three Months Ended September 30,		Nine Months Ended September 30,
In thousands of U.S. Dollars Advertisement	2018	2017	2018	2017
Net cash inflows from operating activities Advertisement	73,227	144,870	369,307	370,843
Customer deposit liability movement Advertisement	1,552	(2,884)	(12,349)	22,398
	74,779 Advertisement	141,986	356,958	393,241
Capital Expenditure:
Additions to deferred development costs Advertisement	(16,496)	(6,275)	(32,686)	(16,701)
Additions to property and equipment Advertisement	(9,530)	(3,253)	(18,791)	(5,507)
Additions to intangible assets Advertisement	(4,426)	(565)	(16,268)	(1,484)
Interest paid Advertisement	(62,113)	(30,556)	(128,391)	(95,620)
Debt principal repayments Advertisement	(8,937)	(6,031)	(20,430)	(18,901)
Free Cash Flow Advertisement	(26,723)	95,306	140,392	255,028

The table below presents a reconciliation of Net Debt:

In thousands of U.S. Dollars	As at September 30, 2018
Current portion of long-term debt	35,750 Advertisement
Long-term debt	5,483,900
Less: Cash and cash equivalents – operational	418,896
Net Debt Advertisement	5,100,754

For additional information on The Stars Group’s non-IFRS measures, see below and the Q3 2018 MD&A, including under the headings “Management’s Discussion and Analysis”, “Limitations of Key Metrics, Other Data and Non-IFRS Measures” and “Key Metrics and Non-IFRS Measures”.

About The Stars Group

The Stars Group is a global leader in the online and mobile gaming and interactive entertainment industries, entertaining millions of customers across its online real- and play-money poker, gaming and betting product offerings, which are delivered through both mobile and desktop applications and the web. The Stars Group offers these products directly or indirectly under several ultimately owned or licensed gaming and related consumer businesses and brands, including, among others, PokerStars, PokerStars Casino, BetStars, Full Tilt, BetEasy, Sky Bet, Sky Vegas, Sky Casino, Sky Bingo, Sky Poker, and Oddschecker, as well as live poker tour and events brands, including the PokerStars Players No Limit Hold’em Championship, European Poker Tour, PokerStars Caribbean Adventure, Latin American Poker Tour, Asia Pacific Poker Tour, PokerStars Festival and PokerStars MEGASTACK. The Stars Group is one of the world’s most licensed online gaming operators with its subsidiaries collectively holding licenses or approvals in 19 jurisdictions throughout the world, including in Europe, Australia, and the Americas. The Stars Group’s vision is to become the world’s favorite iGaming destination and its mission is to provide its customers with winning moments.

Cautionary Note Regarding Forward Looking Statements

This news release contains forward-looking statements and information within the meaning of the Private Securities Litigation Reform Act of 1995 and applicable securities laws, including, without limitation, certain financial and operational expectations and projections, such as certain future operational and growth plans and strategies, and certain financial items relating to the full year 2019 results. Forward-looking statements and information can, but may not always, be identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “would”, “should”, “believe”, “objective”, “ongoing”, “imply”, “assumes”, “goal”, “likely” and similar references to future periods or the negatives of these words or variations or synonyms of these words or comparable terminology and similar expressions. These statements and information, other than statements of historical fact, are based on management’s current expectations and are subject to a number of risks, uncertainties, and assumptions, including market and economic conditions, business prospects or opportunities, future plans and strategies, projections, technological developments, anticipated events and trends and regulatory changes that affect The Stars Group, its subsidiaries, and its and their respective customers and industries. Although The Stars Group and management believe the expectations reflected in such forward-looking statements and information are reasonable and are based on reasonable assumptions and estimates as of the date hereof, there can be no assurance that these assumptions or estimates are accurate or that any of these expectations will prove accurate. Forward-looking statements are inherently subject to significant business, regulatory, economic and competitive risks, uncertainties and contingencies that could cause actual events to differ materially from those expressed or implied in such statements. Specific risks and uncertainties include, but are not limited to: the heavily regulated industry in which The Stars Group carries on its business; risks associated with interactive entertainment and online and mobile gaming generally; current and future laws or regulations and new interpretations of existing laws or regulations, or potential prohibitions, with respect to interactive entertainment or online gaming or activities related to or necessary for the operation and offering of online gaming; potential changes to the gaming regulatory framework; legal and regulatory requirements; ability to obtain, maintain and comply with all applicable and required licenses, permits and certifications to offer, operate and market its product offerings, including difficulties or delays in the same; significant barriers to entry; competition and the competitive environment within addressable markets and industries; impact of inability to complete future or announced acquisitions or to integrate businesses successfully, including, without limitation, Sky Betting & Gaming and BetEasy; The Stars Group’s substantial indebtedness requires that it use a significant portion of its cash flow to make debt service payments; The Stars Group’s secured credit facilities contain covenants and other restrictions that may limit its flexibility in operating its business; risks associated with advancements in technology, including artificial intelligence; ability to develop and enhance existing product offerings and new commercially viable product offerings; ability to mitigate foreign exchange and currency risks; ability to mitigate tax risks and adverse tax consequences, including, without limitation, changes in tax laws or administrative policies relating to tax and the imposition of new or additional taxes, such as value-added and point of consumption taxes, and gaming duties; The Stars Group’s exposure to greater than anticipated tax liability; risks of foreign operations generally; protection of proprietary technology and intellectual property rights; ability to recruit and retain management and other qualified personnel, including key technical, sales and marketing personnel; defects in product offerings; losses due to fraudulent activities; management of growth; contract awards; potential financial opportunities in addressable markets and with respect to individual contracts; ability of technology infrastructure to meet applicable demand and reliance on online and mobile telecommunications operators; systems, networks, telecommunications or service disruptions or failures or cyber-attacks and failure to protect customer data, including personal and financial information; regulations and laws that may be adopted with respect to the Internet and electronic commerce or that may otherwise impact The Stars Group in the jurisdictions where it is currently doing business or intends to do business, particularly those related to online gaming or that could impact the ability to provide online product offerings, including, without limitation, as it relates to payment processing; ability to obtain additional financing or to complete any refinancing on reasonable terms or at all; customer and operator preferences and changes in the economy; dependency on customers’ acceptance of its product offerings; consolidation within the gaming industry; litigation costs and outcomes; expansion within existing and into new markets; relationships with vendors and distributors; natural events; contractual relationships of Sky Betting & Gaming or The Stars Group with Sky plc and/or its subsidiaries; counterparty risks; failure of systems and controls of The Stars Group to restrict access to its products; reliance on scheduling and live broadcasting of major sporting events; macroeconomic conditions and trends in the gaming and betting industry; bookmaking risks; an ability to realize projected financial increases attributable to acquisitions and The Stars Group’s business strategies; and an ability to realize all or any of The Stars Group’s estimated synergies and cost savings in connection with acquisitions, including, without limitation, the acquisition of Sky Betting & Gaming and the Australian acquisitions. These factors are not intended to represent a complete list of the factors that could affect The Stars Group; however, these factors as well as other applicable risks and uncertainties include, but are not limited to, those identified in The Stars Group’s annual information form for the year ended December 31, 2017, including under the heading “Risk Factors and Uncertainties”, in the June 21, 2018 prospectus supplement to the short form base shelf prospectus dated January 16, 2018 under the heading “Risk Factors”, and in the Q3 2018 MD&A, including under the headings “Risk Factors and Uncertainties”, “Limitations of Key Metrics, Other Data and Non-IFRS Measures” and “Key Metrics and Non-IFRS Measures”, each available on SEDAR at www.sedar.com, EDGAR at www.sec.gov and The Stars Group’s website at www.starsgroup.com, and in other filings that The Stars Group has made and may make in the future with applicable securities authorities in the future, should be considered carefully. Investors are cautioned not to put undue reliance on forward-looking statements or information. Any forward-looking statement or information in this news release are expressly qualified by this cautionary statement. Any forward-looking statement or information speaks only as of the date hereof, and The Stars Group undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

Non-IFRS Measures

This news release references non-IFRS financial measures, including Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Earnings, Adjusted Diluted Net Earnings per Share, Free Cash Flow, Net Debt and the numerator of QNY. The Stars Group believes these non-IFRS financial measures will provide investors with useful supplemental information about the financial performance of its business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating its business. Although management believes these financial measures are important in evaluating The Stars Group, they are not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with IFRS. They are not recognized measures under IFRS and do not have standardized meanings prescribed by IFRS. These measures may be different from non-IFRS financial measures used by other companies, limiting its usefulness for comparison purposes. Moreover, presentation of certain of these measures is provided for year-over-year comparison purposes, and investors should be cautioned that the effect of the adjustments thereto provided herein have an actual effect on The Stars Group’s operating results. In addition to QNY, which is defined below under “Key Metrics and Other Data”, The Stars Group provides the following non-IFRS measures in this news release:

Adjusted EBITDA means net earnings before financial expenses, income taxes expense (recovery), depreciation and amortization, stock-based compensation, restructuring, net earnings (loss) on associate and certain other items as set out in the reconciliation tables under “Reconciliation of Non-IFRS Measures to Nearest IFRS Measures” above.

Adjusted EBITDA Margin means Adjusted EBITDA as a proportion of total revenue.

Adjusted Net Earnings means net earnings before interest accretion, amortization of intangible assets resulting from purchase price allocations following acquisitions, stock-based compensation, restructuring, net earnings (loss) on associate, and certain other items. In addition, beginning with the Q3 2018 MD&A, adjustments are made for (i) the re-measurement of contingent consideration, which was previously included in, and adjusted for through, interest accretion, but starting with the Q3 2018 Financial Statements it is now a separate line item, (ii) the re-measurement of embedded derivatives and ineffectiveness on cash flow hedges, each of which are new line items in the Q3 2018 Financial Statements, and (iii) certain non-recurring tax adjustments and settlements. Each adjustment to net earnings is then adjusted for the tax impact, where applicable, in the respective jurisdiction to which the adjustment relates, as set out in the reconciliation tables under “Reconciliation of Non-IFRS Measures to Nearest IFRS Measures” above.

Adjusted Diluted Net Earnings per Share means Adjusted Net Earnings attributable to the Shareholders of The Stars Group Inc. divided by Diluted Shares. Diluted Shares means the weighted average number of Common Shares on a fully diluted basis, including options, other equity-based awards, warrants and the preferred shares of The Stars Group. The effects of anti-dilutive potential Common Shares are ignored in calculating Diluted Shares. Diluted Shares used in the calculation of diluted earnings per share may differ from diluted shares used in the calculation of Adjusted Diluted Net Earnings per Share where the dilutive effects of the potential Common Shares differ. See note 9 in the Q3 2018 Financial Statements. For the three and nine months ended September 30, 2018, Diluted Shares used for the calculation of Adjusted Diluted Net Earnings per Share equalled 269,526,633 and 232,640,294, respectively, compared with 204,800,009 and 202,796,952 for the same periods in 2017, respectively.

Free Cash Flow means net cash flows from operating activities after adding back customer deposit liability movements, and after capital expenditures and debt servicing cash flows (excluding voluntary prepayments), as set out in the reconciliation tables under “Reconciliation of Non-IFRS Measures to Nearest IFRS Measures” above. The Corporation believes that removing movements in customer deposit liabilities provides a more meaningful understanding of its free cash flows as customer deposits are not available funds for the Corporation to use for financial or operational purposes.

Net Debt means total long-term debt less operational cash.

To show the foreign exchange impact due to translation and purchasing power the Corporation calculates revenue on a constant currency basis, by translating the International segment’s revenue for the three and nine months ended September 30, 2018 using the prior year’s monthly exchange rates for its local source currencies other than the U.S. dollar, which The Stars Group believes is a useful metric that facilitates comparison to its historical performance.

For additional information on The Stars Group’s non-IFRS measures, see above and the Q3 2018 MD&A, including under the headings “Management’s Discussion and Analysis”, “Limitations of Key Metrics, Other Data and Non-IFRS Measures” and “Key Metrics and Non-IFRS Measures”.

Key Metrics and Other Data

The Stars Group provides the following key metrics in this news release:

QAUs for the International and Australia reporting segments means active unique customers (online, mobile and desktop client) who (i) made a deposit or transferred funds into their real-money account with The Stars Group at any time, and (ii) generated real-money online rake or placed a real-money online bet or wager on during the applicable quarterly period. The Stars Group defines “active unique customer” as a customer who played or used one of its real-money offerings at least once during the period, and excludes duplicate counting, even if that customer is active across multiple lines of operation (Poker, Gaming and/or Betting, as applicable) within the applicable reporting segment. The definition of QAUs excludes customer activity from certain low-stakes, non-raked real-money poker games, but includes real-money activity by customers using funds (cash and cash equivalents) deposited by The Stars Group into such customers’ previously funded accounts as promotions to increase their lifetime value.

QAUs for the United Kingdom reporting segment (which currently includes the Sky Betting & Gaming business operations only) means active unique customers (online and mobile) who have settled a Stake or made a wager on any betting or gaming product within the relevant period. The Stars Group defines unique for the United Kingdom reporting segment as a customer who played at least once on one of its real-money offerings during the period, and excludes duplicate counting, even if that customer is active across more than one line of operation. For the purpose of the three months ended September 30, 2018, QAUs for the United Kingdom reporting segment also include the applicable pre-acquisition period.

QNY means combined revenue for The Stars Group’s lines of operation (i.e., Poker, Gaming and/or Betting, as applicable), excluding Other revenues, as reported during the applicable quarterly period (or as adjusted to the extent any accounting reallocations are made in later periods) divided by the total QAUs during the same period. The United Kingdom reporting segment’s definition of QNY includes revenue noted in the definition above for the full financial quarter, including the pre-acquisition period. QNY is a non-IFRS measure. The Stars Group does not provide a reconciliation for the numerator of QNY as the revenue components thereof are set forth in this news release.

Net Deposits means the aggregate of gross deposits or transfer of funds made by customers into their real-money online accounts less withdrawals or transfer of funds by such customers from such accounts, in each case during the applicable quarterly period. Gross deposits exclude (i) any deposits, transfers or other payments made by such customers into The Stars Group’s play-money and social gaming offerings, and (ii) any real-money funds (cash and cash equivalents) deposited by The Stars Group into such customers’ previously funded accounts as promotions to increase their lifetime value.

Stakes means betting amounts wagered on The Stars Group’s applicable online betting product offerings, and is also an industry term that represents the aggregate amount of funds wagered by customers within the Betting line of operation for the period specified.

Betting Net Win Margin is calculated as Betting revenue as a proportion of Stakes.

The Stars Group is in the process of the integration and migration of customers and platforms with respect to the Australian acquisitions (which management believes is substantially complete as of the date hereof), the integration of Sky Betting & Gaming, and the implementation of its new operating and reporting segments, and once complete, The Stars Group may revise or remove currently presented key metrics or non-IFRS measures or report certain additional or other key metrics or non-IFRS measures in the future.

For additional information on The Stars Group’s key metrics and other data, see the Q3 2018 MD&A, including under the headings “Limitations of Key Metrics, Other Data and Non-IFRS Measures”, “Key Metrics and Non-IFRS Measures” and “Segment Results of Operations”.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

		Three Months Ended September 30,			Nine Months Ended September 30, Advertisement
In thousands of U.S. Dollars (except per share amounts)		2018		2017		2018		2017 Advertisement
Revenues		571,983		329,443		1,376,386		952,065 Advertisement
Cost of revenue		(129,226)		(62,477)		(293,127)		(177,605) Advertisement
Gross profit		442,757		266,966		1,083,259		774,460 Advertisement
General and administrative		(267,463)		(109,096)		(671,556)		(322,344) Advertisement
Sales and marketing		(92,531)		(33,116)		(196,848)		(98,475) Advertisement
Research and development		(11,862)		(6,030)		(29,023)		(18,513) Advertisement
Operating income		70,901		118,724		185,832		335,128 Advertisement
Net financing charges		(74,360)		(38,095)		(273,071)		(119,593) Advertisement
Net earnings from associates		—		(2,569)		1,068		(2,569) Advertisement
(Loss) earnings before income taxes		(3,459)		78,060		(86,171)		212,966 Advertisement
Income tax recovery		13,189		(2,186)		15,438		(856) Advertisement
Net (loss) earnings		9,730		75,874		(70,733)		212,110 Advertisement
Net (loss) earnings attributable to
Shareholders of The Stars Group Inc.		15,127		76,082		(63,067) Advertisement		211,987
Non-controlling interest		(5,397)		(208)		(7,666) Advertisement		123
Net (loss) earnings		9,730		75,874		(70,733) Advertisement		212,110
(Loss) earnings per Common Share (U.S. dollars)
Basic	$	0.06 Advertisement	$	0.52	$	(0.34)	$ Advertisement	1.45
Diluted	$	0.06	$ Advertisement	0.37	$	(0.34)	$	1.05 Advertisement
Weighted Average Common Shares Outstanding (thousands)
Basic		257,322		147,351		186,517 Advertisement		146,537
Diluted		269,527		204,800		186,517 Advertisement		202,797

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

	As at September 30,	As at December 31, Advertisement
In thousands of U.S. Dollars	2018	2017
ASSETS
Current assets Advertisement
Cash and cash equivalents – operational	418,896	283,225
Cash and cash equivalents – customer deposits	327,765 Advertisement	227,098
Total cash and cash equivalents	746,661	510,323
Restricted cash advances and collateral Advertisement	10,696	7,862
Prepaid expenses and other current assets	50,816	29,695 Advertisement
Current investments – customer deposits	104,125	122,668
Accounts receivable	154,102 Advertisement	100,409
Income tax receivable	29,643	16,540
Derivatives Advertisement	—	2,037
Total current assets	1,096,043	789,534 Advertisement
Non-current assets
Restricted cash advances and collateral	10,700	45,834
Prepaid expenses and other non-current assets Advertisement	27,496	26,551
Non-current accounts receivable	12,430	11,818 Advertisement
Property and equipment	76,745	44,837
Income tax receivable	11,805 Advertisement	14,061
Deferred income taxes	6,597	5,141
Derivatives Advertisement	32,904	—
Goodwill and intangible assets	10,205,886	4,477,350 Advertisement
Total non-current assets	10,384,563	4,625,592
Total assets	11,480,606 Advertisement	5,415,126
LIABILITIES
Current liabilities
Accounts payable and other liabilities	434,087 Advertisement	194,187
Customer deposits	429,574	349,766
Current provisions Advertisement	31,853	17,590
Derivatives	14,136	— Advertisement
Income tax payable	91,864	35,941
Due to related parties	2,028 Advertisement	—
Current portion of long-term debt	35,750	4,990
Total current liabilities Advertisement	1,039,292	602,474
Non-current liabilities
Long-term debt	5,483,900 Advertisement	2,353,579
Long-term provisions	4,268	3,093
Derivatives Advertisement	21,093	111,762
Other long-term liabilities	91,521	— Advertisement
Due to related parties	34,267	—
Income tax payable	12,825 Advertisement	24,277
Deferred income taxes	594,297	16,510
Total non-current liabilities Advertisement	6,242,171	2,509,221
Total liabilities	7,281,463	3,111,695 Advertisement
EQUITY
Share capital	4,095,038	1,884,219
Reserves Advertisement	(442,234)	(142,340)
Retained earnings	542,146	561,519 Advertisement
Equity attributable to the Shareholders of The Stars Group Inc.	4,194,950	2,303,398
Non-controlling interest	4,193 Advertisement	33
Total equity	4,199,143	2,303,431
Total liabilities and equity Advertisement	11,480,606	5,415,126

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine Months Ended September 30, Advertisement
In thousands of U.S. Dollars	2018	2017
Operating activities
Net (loss) earnings Advertisement	(70,733)	212,110
Add (deduct):
Income tax (recovery) expense recognized in net earnings	(15,438) Advertisement	856
Net financing charges	273,071	118,824
Depreciation and amortization Advertisement	182,781	108,966
Unrealized loss (gain) on foreign exchange	58,954	(9,891) Advertisement
Unrealized loss (gain) on investments	584	(9,332)
Impairment (reversal of impairment) of intangible assets and assets held for sale	4,901 Advertisement	(8,430)
Net (earnings) loss from associates	(1,068)	2,569
Realized loss (gain) on current investments and promissory note Advertisement	420	(9,155)
Income taxes paid	(27,182)	(8,941) Advertisement
Changes in non-cash operating elements of working capital	(49,805)	(10,284)
Customer deposit liability movement	12,349 Advertisement	(22,398)
Other	473	5,949
Net cash inflows from operating activities Advertisement	369,307	370,843
Investing activities
Acquisition of subsidiaries, net of cash acquired	(1,865,262) Advertisement	(6,516)
Additions to intangible assets	(16,268)	(1,484)
Additions to property and equipment Advertisement	(18,791)	(5,507)
Additions to deferred development costs	(32,686)	(16,701) Advertisement
Net sale of investments utilizing customer deposits	18,543	4,466
Cash movement from (to) restricted cash	35,000 Advertisement	—
Settlement of promissory note	—	8,084
Net investment in associates Advertisement	1,068	(2,000)
Proceeds on disposal of interest in associate classified as held for sale	—	16,127 Advertisement
Other	(1,074)	(6,577)
Net cash outflows from investing activities	(1,879,470) Advertisement	(10,108)
Financing activities
Issuance of Common Shares	717,250	— Advertisement
Transaction costs on issuance of Common Shares	(32,312)	—
Issuance of Common Shares in relation to stock options	30,572 Advertisement	9,921
Redemption of SBG preferred shares and payment of shareholder loan on acquisition	(674,286)	—
Issuance of long-term debt Advertisement	5,957,976	—
Repayment of long-term debt	(2,865,456)	(133,901) Advertisement
Repayment of long-term debt assumed on business combination	(1,079,729)	—
Interest paid	(36,559) Advertisement	(4,719)
Transaction costs on long-term debt	31,730	—
Net proceeds on related party debt Advertisement	(128,391)	(95,620)
Payment of deferred consideration	—	(197,510) Advertisement
Settlement of derivatives	(125,822)	13,904
Acquisition of further interest in subsidiaries	(48,240) Advertisement	—
Settlement of margin	—	(7,602)
Capital contribution from non-controlling interest Advertisement	12,060	—
Net cash inflows (outflows) from financing activities	1,758,793	(415,527) Advertisement
Increase (decrease) in cash and cash equivalents	248,630	(54,792)
Unrealized foreign exchange difference on cash and cash equivalents	(12,292) Advertisement	14,298
Cash and cash equivalents – beginning of period	510,323	267,684
Cash and cash equivalents – end of period Advertisement

Source: European Gaming Media

Latest News

What makes Turbo Games’ provably fair games so special?

Published

1 year ago

June 16, 2023

George Miller

what-makes-turbo-games’-provably-fair-games-so-special?

Reading Time: 4 minutes

A partnership between game developer Turbo Games and iGaming solution provider and aggregator Slotegrator began in November 2022 via the APIgrator game integration solution. Since then, the collaboration has been developing successfully — and now it’s time to analyze what made it successful.

Turbo Games has noticed how the new technologies spreading throughout the industry can work for the good of brand transparency and player loyalty: “We can already see how blockchain technology has made it possible to make betting checks more accessible to players. All you need is a blockchain-hash and a decoder service. We think we will continue to move in this direction. Many traditional online casinos do not offer the possibility to check the bet. Sooner or later we all have to come to this. Perhaps the development of artificial intelligence will help here, because we are already seeing its involvement in all spheres of human life.”

Turbo Games specializes in provably fair games. Provable fairness is a concept where players can verify their wins or losses using blockchain technology — the outcome of the game is dictated by a smart contract and is absolutely random, barring the possibility of any human involvement. Using cryptographic hashing algorithms, the gambling site and the player’s device both generate seeds (random strings of numbers). Players receive a key that allows them to check the results; if the results are the same as the game round they witnessed, it proves that there was no foul play.

According to statistics from Turbo Games, the audience for provably fair games is mostly between 18 and 25 years old. However, there are also players aged 35-40 who prefer traditional games but would like to try something new, and have turned their attention to provably fair games.

There are good odds that the technology of provably fair games will become more popular, if not even commonplace, because it gives players a feeling of transparency and proves that the business is trustworthy without the need to search through dozens of reviews. Whereas many innovations in iGaming simply add entertainment, provable fairness addresses security concerns and reassures players that they’re not being exploited, which is invaluable.

Provably fair games are beneficial for both players and online casinos. Vadim Potapenko, Head of Sales at Turbo Games, comments: “It often happens that the users are not satisfied with the result, because gambling is not only about big wins, but also possible losses. By allowing them to check the fairness of a bet, we make life easier for platforms and players. Of course, this allows us to communicate with partners and users that we work honestly and that’s why they should trust our games.”

Ayvar Gabidullin, Business Development Manager at Slotegrator, adds that “this type of game is now becoming more and more popular and has great potential for both players and game providers in the future. On the part of the player, the advantage is that the player can always be sure that his game is fair and he can independently check any of his bets. And for the game provider, this also simplifies the process of implementing casino games, since now it will not be necessary to obtain the appropriate certificates from independent laboratories before launching new games, they can immediately enter the market with these games and where anyone can check the result and make sure that that there is no cheating with players. Many game providers are starting to look towards this type of game. And as far as I see, many operators are starting to think about adding these games.”

What do players in 2023 need? The iGaming industry is all about reputation and trust. Players have a huge number of platforms to choose from, making them pickier and pickier. There’s an abundance of forums where players leave reviews, so if players view a brand as untrustworthy, there are plenty of places they can share their opinion. Provable fairness not only stops that from happening, it provides evidence to the contrary, giving players something else to talk about.

Slotegrator also recommends investing time and effort into localization and creating an effective and detailed marketing strategy — before trying provably fair technology players need to get to the platform, and there is no acquisition without marketing.

ABOUT SLOTEGRATOR

Since 2012, Slotegrator has been one of the iGaming industry’s leading software and business solution providers for online casino and sportsbook operators.

The company’s main focus is software development and support for online casino platforms, as well as the integration of game content and payment systems.

The company works with licensed game developers and offers a vast portfolio of casino content: slots, live casino games, poker, virtual sports, table games, lotteries, casual games, and data feeds for betting.

Slotegrator also provides consulting services in gambling license acquisition and business incorporation.

More information: https://slotegrator.pro/

ABOUT TURBO GAMES

Turbo Games — a provably fair games provider that belongs to Turbo Stars company — has an ambitious goal to establish widespread recognition throughout the iGaming world. Even though it is young, the company consists of professionals who have been working on the brand for over five years and are even planning to introduce a new brand for a wider audience soon.

Turbo Games also works in Europe, India, and South Africa, where the company sees the most potential and expects the same “hype” as in Brazil.

The portfolio of Turbo Games consists of 21 titles, including well-known games like Mines, Crash X, DoubleRoll, Hi-Lo, and Plinko. The studio releases a game every month. However, not all games are developed from scratch. Wicket Blast and Spin Strike, the last two releases, are based on cricket and the Indian Premier League. Crash X remains the most popular fast game in the Turbo Games portfolio, and the studio reports that crash games enjoy stable levels of popularity. Overall, the main focus of the brand is provably fair games.

More information: https://turbogames.io/

Baltics

Games Factory Talents has teamed up with Nordic Game to bring you Nordic Game Talents.

Published

1 year ago

June 6, 2023

Alex Marginean

games-factory-talents-has-teamed-up-with-nordic-game-to-bring-you-nordic-game-talents.

Reading Time: 2 minutes

Looking to take your career to the next level in the games industry? Then, Nordic Game Talents is the place to be! Games Factory Talents has teamed up with Nordic Game to bring you Nordic Game Talents.

From Oct 27-29, the online and interactive event is dedicated to recruitment and career building in the creative & games industry within the Nordic region. The event empowers participants to be part of a bigger community and motivates them to explore new paths in achieving their career goals.

Hiring creative & games studios – Supercell, Funcom, Panzerdog, Tactile Games, Gamecan, Fingersoft, Dazzle Rocks, Redhill Games to name a few from the Nordic region will be participating in the event. These studios will share information on their latest projects, work culture and what it takes to be part of their team. The individual games associations from Finland, Denmark, Sweden, Norway and Estonia will share insights through live sessions on the booming games industry in their respective countries. Career development topics pertinent to job seekers like – How to have a successful first interview, Creative Portfolio reviews will also be discussed.

Experienced game industry professionals and individuals beginning their careers from around the world are welcome to join the event. One-to-one interviews with the hiring studios can be scheduled through the event platform. A great opportunity to get to know the studios and network with game professionals from around the world.

Participating in the event

As a job seeker attending Nordic Game Talents, take a few minutes to fill out a simple registration form. After filling the registration form you will receive a link to the online event platform – PINE, to join the event on 27th October. Participants joining Nordic Game Talents will also receive a free-of-charge pass to the Nordic Game Conference.

To view the complete agenda, please click here and to learn more about the event please visit Games Job Fair

About Games Factory Talents

A Helsinki-based talent attraction agency dedicated to the games & creative industry. Our services include direct recruitment, organizing game job fairs and managing a community of game industry professionals through our GameDev Talent Board.

To learn more about Games Factory Talents visit – Games Factory Talents

810 THE SPREAD

Cumulus Media Launches 810 THE SPREAD, the Bay Area’s First Sports Station Focused on Sports Betting

Published

2 years ago

October 10, 2022

GamingAmericas.com

Cumulus Media (NASDAQ: CMLS) announces that it has launched the Bay Area’s first Sports radio station focused on sports betting, 810 THE SPREAD. The new station brings sports and sports betting news, information, and insights to the burgeoning and underserved sports betting audience in San Francisco. 810 THE SPREAD will deliver behind-the-book perspectives from experts in a highly entertaining and engaging format. 810 THE SPREAD goes live today on the legendary 810am frequency that has been the 80-year home of historic Talk Radio KGO-AM. Cumulus San Francisco also launched the station’s new website at www.810thespread.com. Kevin Graham, Program Director of Cumulus’ sister sports stations KNBR 680AM/104.5FM and 1050 KTCT, adds Program Director duties for 810 THE SPREAD.

Larry Blumhagen, Vice President/Market Manager, Cumulus San Francisco, said: “810 THE SPREAD joins our sports brands KNBR 680AM/104.5FM and 1050 KTCT for a trifecta of dynamic sports content across four signals and streaming everywhere. We are excited about this new chapter and look forward to serving the Bay Area’s passionate sports fans in an incomparable way.”

Blumhagen added: “This is a bittersweet day for us, as it’s hard to say goodbye to the legendary KGO, which has been a part of listeners’ lives for so many years. We want to thank all the people who have been a part of KGO’s historic run these many years – and the listeners who loyally tuned in to the station. Times change, and we must change with them.”

Kevin Graham, Program Director, 810 THE SPREAD, said: “810 THE SPREAD will be the Bay Area’s best bet for sports fans and sports betting enthusiasts, and we are pleased to introduce sports-betting radio to our community. The station will feature a lineup of expert personalities that deliver unique sports talk and sports betting insights that entertain, inform, and engage, along with Cal Football and Basketball as well as select professional and college sports play-by-play events. While 810 THE SPREAD will feature specific gambling information, we believe our entertaining presentation will make it a favorite for all Bay area sports fans and a perfect complement to the legendary KNBR and KTCT. With its addition, it truly shows Cumulus’ commitment to the Bay area as ‘The Sports Leader’!”

The weekday programming lineup for 810 THE SPREAD includes:

6am-9am – Bet QL Daily – The must-consume show for sports fans and betting fans alike. Hosted by Joe Ostrowski, Joe Giglio, and Erin Hawksworth.

9am-12pm – Jim Rome - Aggressive, informed sports opinions, rapid-fire dialogue, and plenty of sports smack. As one of the most prolific sports talk hosts in America, Rome draws massive tune-in with legions of fans known as clones, who live for Rome’s take on the day’s largest issues in sports.

12pm-4pm – You Better You Bet – Nick Kostos and Ken Barkley have you covered for the best bets on the biggest matchups, the latest line movement and updates in the futures market. We’ll have up-to-the-minute coverage of backdoor covers and bad beats, and the cheers and tears that come with them. It’s sports betting conversation like you’ve never heard before.

4pm-8pm – Bet MGM Tonight – Live sports betting updates for all the night’s games as they happen – plus live “look-ins” for Major League Baseball games in progress. Get the latest scores, sides, totals, props, parlays, futures, and much more with hosts Quinton Mayo, Trysta Krick, and Ryan Horvat.

8pm-12 Midnight – CBS Sports Radio

BetQL Network programming is provided by Cumulus Media’s Westwood One through a partnership with Audacy.

For more information or to stream 810 THE SPREAD, visit: http://www.810thespread.com.

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