UK regulatory costs hit Stride Gaming in first half results

31 May 2019

Online bingo and casino operator Stride Gaming has put a 13.0% year-on-year drop in revenue during the first half of its financial year down to the impact of new regulations in the UK market.

Net gaming revenue in the six months to February 28, 2019 amounted to £39.0m (€44.2m/$49.2m), down from £44.9m in the corresponding period last year.

Revenue from the operator’s in-house proprietary platform slipped 9% year-on-year to £27.0m, while revenue from third-party, non-proprietary platform fell 24% to £11.5m. Stride has put the latter down to terminations of several service platform agreements, as it shifts focus to its proprietary platform.

Stride’s board has described this as a "resilient" performance by the operator, in the face of challenging trading conditions such as increased fiscal pressure on UK operators, as well as tighter customer checks and controls being applied by the group.

The operator was able to cut certain costs in the period to help offset this drop in revenue, with distribution expenses down from £17.5m to £14.6m. Again, Stride said this is a result of a stronger focus on in-house technology.

Administration costs were also down from £10.4m to £9.2m, while costs of sales fell from £7.9m to £6.9m. Capitalised development costs climbed from £600,000 to £1.0m, while amortisation of capitalised development costs increased from £300,000 to £500,000.

Despite posting largely lower expenses, this did not halt a decline in gross profit, which slipped from £36.0m in the first half of its 2018 financial year to £29.7m in the most recent six-month period.

Operating profit dipped from £4.3m to £2.5m, while adjusted earnings before interest, tax, depreciation and amortisation also fell from £8.0m to £6.2m.

However, as Stride's losses from discontinued operations were reduced compared to the prior year, profit after tax was up from £1.5m, to £1.7m.

“The group has delivered a resilient performance in the first half of the year despite challenging trading conditions, reflecting the strength of our proprietary technology, as well as the skill and commitment of our team," chief executive Eitan Boyd said.

The results come as it was revealed today (May 31) that Rank Group has made an offer to acquire Stride. The all cash offer is worth 151 pence per Stride share.