Scout slashes losses as client base grows in Q3

15 November 2019

Scout Gaming Group has reported a 127.5% year-on-year increase in third quarter revenue, while the fantasy sports software supplier was able to significantly reduce its net loss for the period.

Revenue for the three months to 30 September grew to SEK8.2m (£658,856/€769,554/$848,670), with chief executive Andreas Ternström (pictured) noting that this had been driven by clients starting to market their Scout-powered fantasy offerings following an initial learning period.

“We have contracted and launched new clients, increased our prize pools and launched new betting related games such as our internal sportsbook, covering fantasy markets,” he said. “This has resulted in all-time high revenues and improved profitability measures across the board.”

He said that growth in players meant that the supplier could now offer the world’s largest fantasy pools on European football, which would provide a “strong competitive advantage” for the business going forward.

The third quarter saw Scout strike a number of key supply deals, including an agreement with Betway to launch its games in African markets. It also partnered broadcaster Eurovision Sport, a division of the European Broadcasting Union (EBU), to license its games to the union and its partners.

A new game, Player Odds Sportsbook, which combines fantasy mechanics with real-money betting, went live in August.

The expansion led to an increase in costs for the three-month period, to SEK18.6m. Personnel expenses climbed to SEK9.2m, with other external expenses growing to SEK6.9m, while the business incurred charges of SEK2.6m related to deprecation and write-downs.

This saw the business post an operating loss of SEK10.4m for Q3, down marginally year-on-year.

After recording a benefit from finance-related items of SEK942,000 and an income tax benefit of SEK14,000, Scout’s net loss for the quarter stood at SEK9.5m, an improvement on the SEK11.9m loss reported for the prior year.

Ternström suggested that profitability would continue to improve, with a period focused on signing up new clients, which led to increasing costs, ending during the third quarter.

“We now expect successively improved earnings going forward,” he said. “Volatility between quarters may continue to occur as a result of larger customer launches and events but should decrease as the revenue base grows.”