Rank Group pleased with first quarter performance as it integrates Stride

Rank Group announced that its group like-for-like net gaming revenue was up 10% for the first quarter ended 30 September on Tuesday, with total net gaming revenue up 9%.

The FTSE 250 gambling operator said that on a channel basis, digital net gaming revenue grew by 16% and like-for-like net gaming revenue at its physical venues was ahead 9%.

Of those venues, its Grosvenor locations saw net gaming revenue growth of 15% and the international sites were ahead 4%, while the Mecca venues reported nil growth.

The board said the company’s digital segment continued to grow strongly, with Grosvenor growing net gaming revenue there by 27% in the quarter, supported by “strong growth” in customer numbers.

Rank noted that it successfully migrated onto its new content management system in September, and added that higher average revenue per user helped drive Mecca digital's net gaming revenue by 14% in the quarter.

YoBingo's performance was in line with last year.

The standout performance in the quarter came from Grosvenor venues, the board said, adding that the first quarter is seasonally the strongest quarter for the division, and was lapping weak comparatives.

It said all gaming product areas delivered revenue growth, with electronic roulette continuing to benefit from the investments the company had made to the machine estate, together with the regulatory changes on B2 staking limits in April, strong volumes being seen in table handle at good margins and continued growth in gaming machine revenues.

The board said it was “delighted” with the early flow through of revenue from its transformation initiatives launched in December.

Mecca venues' like-for-like net gaming revenue was flat, which the board put down to lower customer visits offset by a higher spend per visit.

International venues performed in line with expectations, with the rollout of gaming machine upgrades said to be nearing completion.

Looking at the acquisition of Stride Gaming, which Rank completed on 4 October, the company said it had started its integration with Rank Digital.

The board said the strategic rationale for the transaction was that Rank and Stride were “highly complementary” businesses, creating a “leading multi-channel operator” with genuine digital scale.

It also explained that a migration to Stride's proprietary technology platform would increase operational control and technology capability, with the acquisition also set to strengthen Rank’s existing digital leadership team.

The combined group also touted an “attractive” financial profile, with strong operational and revenue synergy opportunities.

Stride's net gaming revenue in the first quarter was £16.3m, down 15% on last year, which was reportedly driven by lower customer acquisition volumes and reduced margins in the period.

Rank’s directors said they remained confident that the firm would deliver all the benefits it outlined when the deal was announced.

Cash in the business at completion was approximately £25m - an increase of £3m since the announcement of the company’s offer to acquire Stride.

“We are pleased with the growth achieved across our businesses in this key part of our financial year, as well as with the ongoing progress we are making with our transformation programme,” said Rank Group chief executive officer John O'Reilly.

“The acquisition of Stride marks a pivotal moment in the development of our digital offering and having completed on 4 October, we are now starting the execution of all our plans for integration and delivery of synergy benefits.”

Rank said it would announce its interim results on 30 January.