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Playtech Plc has reaffirmed all financial year targets as group trading outperforms all corporate expectations, despite operating profits being dragged by tax impairments.
Posting its Interim 2023 results, Playtech declared a record H1 2023 performance with Adjusted EBITDA increasing by 10% to €219.9m (H1 2022: 199.1m) and total group revenue up by 8% to €859.6m (€792.3m).
However, period trading saw Playtech declare post-tax profits of just €3m, down from €71m, as the company booked a “fair value of the derivative of former financial assets on its income statement.”
The FTSE250 gambling technology group underlined its “continued strength seen across regulated B2B markets”, combined with the solid growth of its B2C assets.
Divisional highlights saw Playtech’s flagship B2B technology unit report revenue growth of 7% to €335m and Adjusted EBITDA of €81m (H1 2022: €77m).
“The Americas was the standout region during the period, with revenue growth of 43% to €99.7m.” with the Caliente joint-venture remaining the key driver of this growth. Brazil continues to grow strongly as it moves towards regulating, and the early performance of Galera.bet is encouraging “ – Playtech reported on B2B performance.
Discounting UK adjustments, in Europe the B2B unit grew 5% to €97m, benefitting from improved commercial partnership’s in the markets of Poland and Spain.
Coming into H2, B2B prospects are further emboldened by significant progress on its US strategy in which the group will launch its “Landmark agreement signed with Hard Rock Digital” which carries an €80m investment.
US acceleration sees Playtech licensed in 10 states, where it provides its tech solutions for PokerStars, 888, BetParx, Rush Street and BetMGM.
Group CEO, Mor Weizer, commented: “The strategic focus of Playtech’s B2B business remains on opportunities in regulated or soon to be regulated markets. There is a particular emphasis on high-growth markets including the US and Canada, Latin America and certain European markets.
“Accelerating the Group’s presence in the US remains a key strategic priority for Playtech. In 2022, we laid the groundwork by signing deals with multiple operators. 2023 is a year where we are focused on execution and rolling out those deals to multiple states. In the first half of 2023, we launched with several operators across multiple states.”
Elsewhere, the technology group’s B2C unit maintained solid performance with 9% revenue growth to €532m (€478.m) combined with an Adjusted EBITDA of €139m (€122m).
B2C growth was attributed to Snaitech Italia, which maintained its number one market share position across Italian sports betting brands in 2022 (retail and online combined), with Adjusted EBITDA growing 12% to €141.9m (€127.0m).
In the UK, Sun Bingo and Other B2C saw 8% revenue growth to €34.1m (€31.7) while Adjusted EBITDA grew to €2.8m, up from €100,000 generated in 2022.
Irrespective of unit growth, Playtech reported tax expenses for H1 2023 of €76m (tax rate: 38%), significantly higher than the expected €18.7m based on the UK headline tax rate of 23.5%.
The discrepancy is due to factors like derecognised deferred tax assets from UK tax losses related to its former Finalto FX subsidiary disposed of in July 2022 for a cash proceed of €224m.
Closing its H1 accounts, Playtech underlined its strong cash generation in H1 23, with adjusted operating cashflow of €232.8m and Group net debt as at 30 June 2023 was €248.2m, resulting in leverage of 0.6x.
CEO Weizer concluded: “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.
“The growth achieved in the first half of the financial year gives the Board further confidence in achieving Playtech’s medium-term Adjusted EBITDA targets for B2B (€200 – €250m) and B2C (€300 – €350m), while taking further strides to capture the exciting market opportunities ahead.”
