Lottomatica Q1 results dragged by costly Franchise payouts

Gruppo Lottomatica had praised the standout performance of its Italian online gambling subsidiaries, ahead of its corporate expansion integrating the assets of SKS365.

Publishing its Q1 trading results, the Borsa Milan gambling group generated a record betting volume of €8.7 billion, primarily attributed to a 36% increase in online wagers to €5 billion.

Q1 Gross Gaming Revenues (GGR), calculated by Lottomatica as ‘bets vs. payout’, stood at €1.05 billion (+1%), as group net revenues increased by 4% to €440 million (Q1 2023: €442 million).

A breakdown of segments saw Lottomatica’s online unit generate a net income of €150 million, up 21% on the 2023 comparatives of €124 million.

Updating investors, Lottomatica applauded the performance of its Goldbet and BetFlag subsidiaries for increasing their respective Italian online gambling market shares by 1.5% and 0.7%.

Group results were buoyed by Lottomatica gaming franchises (arcades, lotto, and VLT) generating net revenues of €195 million, up 4% on Q1 2023 results of €187 million.

Q1 results were dragged down by the Sports Franchises registering a 15% net revenue decline, attributed to “unfavorable payouts” registered by franchises at the start of the year.

Tough trading for Lottomatica’s Sports Franchises saw group EBITDA results decline by 4% to €150 million (Q1 2023: €155 million). The downturn reflected a 40% decline in EBITDA generated by sports franchises to €19 million.

For Sports Franchises, Lottomatica expects ‘normalized payouts’ to return by H1 trading, ahead of a summer of marquee sports events, UEFA Euro 2024, and the Paris 2024 Olympics.

The firm’s consolidated statement detailed that net profits stood at €30 million, generated from an operating cash flow of €110 million.

Guglielmo Angelozzi, Chief Executive Officer of Lottomatica Group, commented: “In the first quarter of 2024, we have continued our path of organic growth, also supported by solid market tailwinds, with Revenues and EBITDA achieving double-digit growth YoY (at normalised payout).

We have successfully completed the acquisition of SKS365 in April 2024, therefore upgraded the guidance, and continue to execute on our strong pipeline of bolt-on M&A.”

Period trading saw Lottomatica complete its €640 million acquisition of SKS365, a deal that will see Lottomatica become Italy’s largest omnichannel gambling group.

Expanding its business, Lottomatica provided an updated financial forecast for the full year 2024, anticipating revenues to range from €2.02 billion to €2.06 billion and Adjusted EBITDA to be between €680 million to €700 million. The guidance takes into account an eight-month contribution of SKS365 assets.