GVC’s (LON:GVC) July 2016 trading update reveals its early progress after its February acquisition of bwin.party has continued into Q216. Q2 net gaming revenue (NGR) per day rose by 11% y-o-y on a pro-forma basis (+16% on a constant currency basis). Pro-forma H116 NGR was up 8% to €439m (+11% CC) with both GVC and bwin brands delivering growth. Recent operational progress has included a successful application to the Premium Segment of the LSE. Forthcoming challenges to be navigated include the H216 platform migration. However, we believe GVC’s positive update underpins our full-year forecasts, which remain unchanged.
Both GVC and bwin labels delivering growth
Both GVC and bwin labels achieved pro-forma y-o-y NGR growth in H116 (+15% and +9% respectively on a CC basis). Growth accelerated in Q216 due to a mixture of successful early product initiatives and favourable Euro 2016 results, which saw the Q2 sports margin rise to 9.9% from 7.9% a year ago. While we would normally expect a c 50/50 NGR split for H1 vs H2, we have allowed for some contingency in our H216 forecasts due to the ongoing integration work. As a result we expect H216 revenues of €411m vs €439m in H1. There are also a number of potential regulatory and taxation changes expected in H2. Although we do not expect them to have a material impact, they are likely to exert some marginal cost pressure.
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