Amaya rebrands itself as The Stars Group

Rafi Ashkenazi, chief executive of The Stars Group Inc., the online gambling company formerly called Amaya Inc., said he expects strong performance to continue after making major changes to recover from last year’s downswing.

Amaya had a rough 2016 with weak earnings and the departure of its founder David Baazov amid insider trading charges. But on Wednesday, the PokerStars owner reported it tripled its second-quarter profit from this period last year in its first results under its new name. It also revised its annual guidance to expect higher profit.

In the last quarter alone, the company changed its name, moved its head office to Toronto from PointeClaire, Que., paid off the balance from its multibillion-dollar acquisition of Rational Group in 2014, hired new executives for its leadership team and expanded its game offerings to rely less on poker.

“We were very happy to formally rename the company as The Stars Group last week,” Ashkenazi told analysts on a conference call Wednesday. It “successfully demonstrates that we’ve turned the page to open a new chapter in our company history.”

This new chapter includes a renewed appetite for mergers and acquisitions now that it has its finances in order and has paid down large chunks of its debt.

“Now that we are out of this quite tight financial framework, we feel more comfortable to start allocating more budget towards supporting casino and sportsbook acquisitions,” Ashkenazi said, adding sportsbook is the “primary focus” for M&A activity. “When it comes to casino, and I’ll also include the sports betting, I believe we are just at the beginning of the journey.”

The company intends to roll out 150 new high-margin casino games by yearend (it has already released 99).

The casino and sportsbook divisions pulled in 29 per cent of the company’s revenue in the three months ending June 30, up from 21 per cent in the same period last year. The diversification is critical as poker revenue declines, although Ashkenazi believes the poker business will be flat year-over-year after introducing a new loyalty program in July.

It’s still early days, and the program has yet to be rolled out around the world, but he said there has been an increase in engagement and in poker since its introduction.

The Stars Group also paid down $40 million of its second lien debt, which new chief financial officer Brian Kyle told analysts demonstrates its ability to generate free cash flow.

Still, it reported a net debt ratio of about 4.28 per cent, Kyle said, adding he is working to reduce that to around four per cent by the end of the year.

The company reported profit of US$70 million, up from US$22 million in this quarter last year.