Playtech Boosted by Online B2B and US Gains in H1 | Finance
Playtech saw B2B gaming and online growth outweigh the impact of store closings as it increased profits in the first half of the year.
Gambling software development company reported revenue of 457.4 million euros for the six months to June 30, down 4% from the accumulated 476.7 million euros during the same period in 2020.
The B2B gambling segment grew 19% to â¬ 267.2, driven by revenue growth for Caliente in Mexico, as well as strong growth in other regulated markets such as Colombia, Poland, ‘Italy and Greece. There has been an expansion in the United States, with the launch of an online casino by Parx Casino in Michigan on Playtech’s IMS platform and player account management software in April. Sales in the Americas amounted to â¬ 46.4 million, up 106% at constant exchange rates.
UK revenue was down 10% to â¬ 59.6 million, mainly due to store closures due to the novel coronavirus (COVID-19) pandemic. The store closures, which were in place for most of the period, had a significant impact on Playtech’s B2B sports business, which is heavily focused on retail through its self-service betting terminals (SSBT ).
In Europe, B2B gaming revenue growth was driven by several licensees including Totalizator Sportowy in Poland, Sisal in Italy and various customers in Greece. The turnover for this segment amounts to â¬ 66.5 million.
B2B revenue growth for Playtech in unregulated markets outside Asia came from Canada and Brazil, with Asian revenues increasing 6%.
The B2C gambling segment fell 22% to â¬ 196.6 million, mainly due to business closures in Italy impacting its subsidiary Snaitech.
Snaitech’s revenue fell 27% to â¬ 157.9m, due to the effects of the COVID-19 pandemic which resulted in the closure of betting shops in Italy for most of the duration of H1 2021 by compared to last year when the closures affected only half of the period. However, Snaitech’s revenue was supported by a 95% increase in online revenue. This increase is also due to the fact that major sporting events were canceled for part of H1 2020, unlike H1 2021 where they normally took place, including the UEFA EURO 2020 football tournament.
Playtech spent 333.3 million euros on operating expenses during the period, down 9% from the 367.2 million euros reported in the same period last year. Adjusted EBITDA stood at â¬ 124.1 million over the period, up 13% and 14% at constant exchange rates.
The group said the increase in Adjusted EBITDA, in contrast to the observed decline in revenue, was due to the strong performance of the higher margin online business in both B2B and B2C, which also resulted in the period-over-period increase in Adjusted EBITDA margin. from 23% in 2020 to 27% in 2021.
Underlying B2B gaming costs, excluding costs directly passed on to licensees, increased by 14% to â¬ 154.2 million, driven by higher costs for Asia-related and strategic expenses. B2B costs of 195.1 million euros increased 17% year-on-year, resulting in B2B adjusted EBITDA of 72.1 million euros, up 14%.
While administrative and selling costs were similar to H1 2020, costs in Asia increased 127% to â¬ 25.2m largely due to the restructuring of the relationship with its largest regional distributor.
Strategic expenses, including costs generated by revenues related to structured agreements, costs of expansion in the United States and all costs related to direct operations, increased 51% to 28.3 million euros. This is in line with the increase in turnover under the structured agreements and in particular Caliente, as well as the increase in personnel costs within the live division.
B2C gaming costs fell 30% to â¬ 144.6m, i.e. B2C adjusted EBITDA of â¬ 52.0m, up 12% compared to H1 2020.
Snaitech’s operating costs fell by 37% to â¬ 106.3 million, mainly due to the drop in franchise fees, game concession fees, platform fees, network maintenance. distribution and data flow costs. Snaitech’s adjusted EBITDA increased 10% due, he said, to its low fixed cost base and effective cost reduction.
Mor Weizer, Chief Executive Officer of Playtech, said: âI am delighted with our strong strategic and operational progress to date in 2021, despite the continued challenges posed by the pandemic. These results demonstrate the quality of our technology and products, the significant progress made against our strategic priorities and a broader dynamic in Playtech’s operations.
âLooking ahead, given strong first half performance, business momentum and the easing of foreclosure restrictions, we are confident in Playtech’s outlook for the remainder of 2021 and beyond. “
Looking ahead, Playtech has started the licensing process in other US states and said it will continue to increase its investment in the US market. The group also said it is making progress with plans to develop a new live casino in Peru as it continues to expand its presence in Latin America.