Playtech, a company that provides technology for gambling, has announced that it will surpass the market forecasts for this year, as it achieved record earnings in the first half of the year.
The earnings were primarily driven by success in rapidly growing markets across the US and Latin America. In a recently published trading update that covered the six months to 30 June 2023, the company, which is behind a number of hugely successful online bingo sites, revealed that revenue had increased 8% year-on-year to €859.6 million.
Its B2C business, which includes Snaitech, HAPPYBET and Sun Bingo, grew 9% to €532.1 million, and its B2B segment was up 7% to €334.5 million. In the update, Chief Executive Mor Weizer said:
“Our success in the period was driven by our diversified portfolio, spanning B2B and B2C, in some of the fastest-growing regulated markets around the world. Having laid the groundwork in the US, we are growing our offering across multiple states and are confident in our future prospects following the landmark agreement with Hard Rock Digital. Additionally, we further cemented our leadership in LatAm with Caliente in Mexico and Galera.bet in Brazil. Snaitech in Italy enjoyed another strong period, with the management team continuing to leverage their retail presence to grow the online business.”
Playtech’s B2B segment performed particularly well in the Americas in H1, with revenue up 43% to €99.7 million. Caliente, a Mexican brand, was the most successful, and Brazil is continuing to grow as it comes closer to regulating the market.
Furthermore, the company expanded its presence in the US through a number of important agreements and debuts in new states. Its technology went live with several operators in multiple states, including 888, Rush Street Interactive and PokerStars. Playtech is now live in 10 US states.
Revenue in Europe, without the UK, was up 5% to €96.6 million, with growth in a number of countries including Poland and Spain. However, revenue was down in the Netherlands, where competition is increasing and the regulations are tightening. Revenue also fell 2% in the UK to €62.9 million, with Playtech’s clients taking pre-emptive action ahead of expected affordability checks for players.
Playtech’s largest B2C brand, Snaitech, enjoyed strong growth in H1. Revenue climbed 10% compared to H1 2022, aided by revenue growth of 9% in the retail segment and 12% in the online business. Within the retail segment, betting sales grew 24% compared to H1 2022, mainly due to pent-up demand following the FIFA World Cup Qatar 2022 (which Italy did not qualify for).
In Germany, HAPPYBET saw revenues drop 4% compared to H1 2022 due to the rationalisation of retail sites. In neighbouring Austria, revenue grew with the opening of more retail sites in the federal states of Tyrol and Vienna.
Sun Bingo and other B2C enjoyed revenue growth of 8% to €34.1 million. This has largely been attributed to the increased investment in marketing at the end of 2022.
The financial results of Playtech show a record total adjusted EBITDA from continuing operations amounting to €219.9 million, marking a 10% increase year-on-year. B2B costs rose by 8% year-on-year, reaching €253.2 million, leading to a total B2B adjusted EBITDA of €81.3 million, an increase of 5%. Operations accounted for the most significant portion of costs at €148.6 million, with a 2% rise primarily attributed to expenditures related to US expansion. Sales and marketing expenses surged by 24%, hitting €10.4 million, largely as a result of marketing activities returning to pre-Covid levels.
However, B2C adjusted EBITDA climbed by 14% to €138.6 million, boasting a 26% margin. Snaitech recorded an EBITDA of €141.9 million, showing a 12% growth year-on-year. Despite a 9% surge in costs to €346.5 million, the robust revenue growth compensated for it.
The profit before tax from continuing operations that was reported dropped to €79.6 million from the earlier €103.7 million. This decline included the drop in the unrealized fair value changes of derivative financial assets associated with several call options. Consequently, the total post-tax reported profit from continuing operations diminished from €71.4 million to €3.1 million.
Chief Executive Weizer explained that the progress made in the initial half of the fiscal year bolsters the board’s confidence in attaining Playtech’s medium-term adjusted EBITDA goals, with B2B ranging from €200-€250 million and B2C projected between €300-€350 million.
“We delivered our highest-ever adjusted EBITDA in the first half of 2023, demonstrating the benefits of the continued strategic and operational progress made in recent years. We have started the second half of the year well and are on track to deliver FY23 adjusted EBITDA slightly ahead of current expectations. With our proven strategy, robust balance sheet and our operational expertise, we are confident in our ability to capitalise on the many growth opportunities we have ahead.”
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