In a trading update published today (24 May), Playtech said it now expects adjusted EBITDA for full-year 2023 to come in ahead of current consensus expectations.

According to the company, the improved performance is forecast following a successful start to the year, as a result of certain tailwinds throughout Q1.

Playtech’s B2B division performed “very well” throughout the first four months of 2023, the business said, as it expanded its presence in Latin American markets.

Its Caliente brand continued to demonstrate strong growth, it added, while building on its “leadership position in Mexico.”

In addition, the London-listed supplier continues to make progress in the US, following March’s pledge to invest $85m in Hard Rock Digital in exchange for a low single-digit percentage minority stake in the firm.

Playtech added that its live casino division had been able to capitalise on the market’s rapid expansion, and delivered “good growth” in the first four months of the year, while its higher margin SaaS business also delivered strong revenue growth, new launches and customer signings during the period.

In the B2C segment, Italian operator Snaitech continued to drive Playtech’s performance.

“Our strategy of focusing on regulated or soon-to-be regulated markets, combined with Snaitech’s impressive performance in Italy, means we remain well-positioned to make further progress and capitalise on the significant growth opportunities ahead.” 

– Playtech CEO Mor Weizer

The resumption of domestic football following the end of the FIFA World Cup, combined with pent-up demand for betting, provided a tailwind for the brand at the start of the year, Playtech said, “with the retail segment in particular seeing very strong growth.”

Snaitech’s online business also witnessed good growth, it added.

Strategic and operational measures put in place are beginning to take effect at German and Austrian-facing B2C brand Happybet, which led to a reduced EBITDA loss in the first four months of this year compared to last year. Happybet was integrated into Snaitech in 2021.

Despite the fact current growth rates are expected to come down later in the year following the Q1 tailwinds, the Playtech board expects an increase in 2023 EBITDA ahead of current expectations.

“I am delighted to report that our strong start to the year has continued, with growth across both the B2B and B2C divisions,” said Playtech CEO Mor Weizer. 

“Our strategy of focusing on regulated or soon-to-be regulated markets, combined with Snaitech’s impressive performance in Italy, means we remain well-positioned to make further progress and capitalise on the significant growth opportunities ahead.” 

In its full-year 2022 financial report, Playtech said it had a medium-term adjusted EBITDA target of between €200m and €250m for its B2B segment, and between €300m and €350m for Snaitech.

In the report, CFO Chris McGinnis also commented that: “The company has been investing for growth in recent years, and as a result, the focus has been on EBITDA within the company. Going forward, I believe we need to balance this and also focus on cash generation.”

Playtech has turned to English courts to seek clarification on “a point of disagreement” related to Caliplay, its joint venture with Mexico-based operator Caliente Interactive.

The London-listed supplier described Caliplay as “a highly valued customer” and “a highly successful and rapidly growing business”.

However, the two parties disagree over whether Caliplay still has an option to redeem an additional services fee that was included in a prior strategic agreement between the companies.

Under the initial agreement, the option was stated as being exercisable for a period of 45 days following the approval of the audited accounts of Caliplay for the year ended 31 December 2021.

Playtech said it believes the option has expired and previously referred to its expiry in its interim report for H1 2022.

While Caliplay has not sought to exercise the option to date, Playtech said the company has made it clear that it does not consider the option as expired.

The option was structured in such a way that the services fee would either be agreed upon by both parties, or failing that, determined by an independent investment bank.

The bank would value the fee based on Playtech’s current entitlement to receive additional services fees until December 2034.

For the six months ended 30 June 2022, Playtech said the amount of those service fees was €34.4m.

Playtech is now seeking a declaration from English courts to determine whether or not the option has, in fact, expired.

In August, Playtech scrapped plans to publicly list Caliplay due to the rising cost of capital.

According to Playtech’s H1 2022 results, Caliente has grown to become the supplier’s largest customer, with B2B revenue from the Americas reaching €69.8m in H1 2021, up 37% year-on-year.

Playtech will not go ahead with its plan to publicly list Caliplay, the company’s joint venture with Mexico-based operator Caliente Interactive, due to the rising cost of capital.  

The deal is the latest victim of a worsening capital market environment that has already caused Hong Kong-based TTB Partner to pull out of the planned acquisition of the UK gambling software supplier earlier in July.

Playtech owns a 39% stake in Caliplay and had explored a transaction which would have seen the business acquired by a US-listed special purpose acquisition company (SPAC) – Tekkorp Digital Acquisition Corp – in order to penetrate the US market and target Latin American clients in the US.

However on Friday (29 July), Playtech said it would no longer pursue the deal in the envisioned format.

“Market conditions have deteriorated significantly since the transaction was initially contemplated and, accordingly, this transaction is no longer being pursued in the same manner,” the company said.

The London-listed supplier said it is now looking into plan B and continues to explore alternative opportunities with Caliplay, to build a standalone US business under the Caliente brand focused on the Hispanic community in the US.

Both Playtech and Caliplay are still in discussions with the SPAC about this alternative opportunity, but talks are at an early stage.

Playtech: “Market conditions have deteriorated significantly since the transaction was initially contemplated and, accordingly, this transaction is no longer being pursued in the same manner.”

Investors are closely watching developments at Playtech after the TTB acquisition fiasco, which was followed by a report that Eddie Jordan’s JKO Play might renew its interest in purchasing Playtech.

Despite its acquisition troubles, Playtech said “it is trading ahead of expectations” highlighting its robust B2B performance which was partially “driven by very strong momentum from the Americas including Caliente and other structured agreements in addition to a strong performance across the wider B2B operations”.

Meanwhile, Playtech’s consumer-facing business Snaitech has seen “excellent results driven by its online business, retail recovery and favourable sports results”.

The company’s board said that “this momentum across the business” gives it “great confidence” in the prospects for FY 2022 and beyond.