Playtech boosted by online B2B and US gains in H1

The gambling software development company announced revenue of €457.4m for the six months to 30 June, which was down 4% compared to the €476.7m accrued in the same period in 2020.

The B2B gambling segment grew by 19% to €267.2, driven by revenue growth from Caliente in Mexico, as well as strong growth in other regulated markets such as Colombia, Poland, Italy, and Greece. There was expansion in the US, with Parx Casino launching online casino in Michigan on Playtech’s IMS Platform and Player Account Management software in April. Revenue from the Americas increased to €46.4m, which was up 106% at constant currency.

UK revenues saw a decline of 10% to €59.6m, which was largely driven by retail closures as a result of the novel coronavirus (COVID-19) pandemic. Retail closures, which were in place for the majority of the period, significantly impacted Playtech’s B2B sports business which is heavily weighted towards retail via its self-service betting terminals (SSBTs).

In Europe, B2B gambling revenue growth was driven by several licensees including Totalizator Sportowy in Poland, Sisal in Italy as well as various customers in Greece. Revenue for that segment was at €66.5m.

Playtech’s B2B growth in revenues from unregulated markets excluding Asia came from Canada and Brazil, with Asian revenue increasing by 6%.

The B2C gambling segment fell by 22% to €196.6m, due mainly to retail closures in Italy impacting its Snaitech subsidiary.

Snaitech revenues decreased by 27% to €157.9m, owing to the effects of the COVID-19 pandemic which resulted in the closure of retail betting shops in Italy for almost the entire duration of H1 2021 versus last year when closures only affected half of the period. However, Snaitech’s revenue was supported by a 95% increase in online revenues. This increase was also due to the fact that major sporting events were cancelled for part of H1 2020, as opposed to H1 2021 where these were taking place as normal, including the UEFA EURO 2020 football tournament.

Playtech had an outlay of €333.3m in operational costs during the period, which was down by 9% on the €367.2m declared in the same period last year. Adjusted EBITDA was at €124.1m for the period, which was up 13% and 14% on a constant currency basis.

The group said adjusted EBITDA increasing, in contrast to the decrease seen in revenue, was due to the strong performance of the higher margin online business both under B2B and B2C, which also resulted in the period-on-period increase in the adjusted EBITDA margin from 23% in 2020 to 27% in 2021.

B2B underlying gambling costs, excluding costs passed directly to licensees, increased by 14% to €154.2m, driven by the increase in both Asia-related and strategic expenditure costs. B2B costs of €195.1m were up 17% year-on-year, meaning B2B adjusted EBITDA of €72.1m, up 14%.

While administrative and sales and marketing costs were similar to H1 2020, Asia costs increased by 127% to €25.2m largely due to the restructuring of the relationship with its largest regional distributor.

Strategic expenditure, including revenue driven costs relating to structured agreements, US expansion costs, and all costs relating to live operations, were up 51% to €28.3m. This was in line with the increase in revenue under structured agreements and in particular Caliente, as well as the increase in employee costs within the live division.

B2C gambling costs were down 30% to €144.6m, meaning B2C adjusted EBITDA of €52.0m, up 12% on H1 2020.

Snaitech operating costs decreased by 37% to €106.3m, in the main driven by the decrease in franchise commission, gaming concession fees, platform charges, maintenance of the retail network and costs relating to data feeds. Snaitech’s adjusted EBITDA increased by 10% due, it said, to its low fixed cost base and effective cost reduction.

Mor Weizer, Playtech’s chief executive, said: “I am delighted by our strong strategic and operational progress to date in 2021, despite the ongoing challenges posed by the pandemic. These results demonstrate the quality of our technology and products, the significant progress made against our strategic priorities, and wider momentum across Playtech’s operations.

“Looking forward, given the strong H1 performance, the momentum in the business and the easing of lockdown restrictions, we are confident of Playtech’s prospects for the remainder of 2021 and beyond.”

Looking ahead, Playtech has started the licensing process in additional US states and said it will continue to increase its investment in the US market. The group also said it is progressing on plans to develop a new Live Casino facility in Peru as it continues to expand its presence across Latin America.

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