B2B breakdown
B2B operations accounted for some 39% of Playtech’s total H1 revenue, at €334.5m, amid year-on-year growth of 7.2% for the segment.
Of the B2B total, €99.7m came from regulated markets in the Americas as the region delivered year-on-year growth of 42.8%.
Regulated markets in Europe (excluding the UK) delivered a further €96.6m, up 4.8% year-on-year, while the UK generated €62.9m in revenue amid a 1.6% decline.
Regulated markets across the rest of the world accounted for just €3.3m, up from €2.9m in H1 2022.
That gave Playtech total regulated B2B revenue of €262.5m in H1 2023, up 14.7% year-on-year.
Meanwhile, unregulated revenue totalled €42.6m outside Asia, down 13.4% year-on-year, while Asian revenue was also down by 13.5% at €29.4m.
Playtech said the growth in B2B revenue was driven by key markets including Mexico, Poland and Spain.
Declining revenue in the UK was the result of “the continued impact of the uncertain regulatory climate,” it added.
Meanwhile, the revenue decline from unregulated markets outside Asia was mostly put down to unregulated markets shifting to the regulated category, such as in the Canadian province of Ontario.
Asian B2B revenue dropped “due to the continued pressures in the region,” Playtech concluded.
B2C breakdown
Playtech’s B2C operations generated €532.1m in H1, up 9.2% year-on-year and accounting for around 62% of the company’s total.
The lion’s share of that revenue came from the Snaitech business in Italy, in which Playtech acquired a 70.6% stake in 2018 for €291m.
Sun Bingo and other B2C brands generated a further €34.1m in revenue, up 7.6%, while Happybet generated €10.3m in revenue amid a decrease of 3.7%.
Results and management commentary
Overall, EBITDA grew by 19.2% year-on-year to €207.3m in H1 2023.
The business reported a post-tax profit of just €3.1m, however, compared to €71.4m in H1 2022.
That decline was due to “an overall reduction in the fair value of the derivative financial assets recognised in the income statement, and the derecognition of brought forward deferred tax assets,” Playtech said.
The company ended the period with €786m in cash and cash equivalents (up from €426.5m at the end of H1 2022), and net debt of €248.2m, down from €275.2m in the prior year.
“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,” said Playtech CEO Mor Weizer.
“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.”
Weizer concluded that the second half of 2023 has started well, and the business is on track to deliver full-year adjusted EBITDA slightly ahead of expectations.
Analyst reaction
London-based brokerage Peel Hunt reiterated its Buy rating and 800p target price for the stock.
“With Snaitech accounting for the majority of profits and B2B pivoting steadily to regulated markets, Playtech is a much better-quality business than the market gives it credit for,” wrote Peel Hunt analyst Ivor Jones in a note to investors.
“It has barely scratched the surface of the opportunity in the US, but it is scratching away enthusiastically: it is licensed in 10 states; has a US headcount of 150; and, in Hard Rock Digital, has a very well-qualified and financed partner for the US and beyond,” he added.
