Playtech’s profit plummets in H1 due to rising distribution costs

Playtech announced last week its results for the six months ended 30 June 2019, together with a trading update for the period to 20 August 2019.

As reported by the company, core B2B Gambling revenue grew by 9% in regulated markets versus H1 2018.  Revenue growth and a strong cost control also drove Core B2B Gambling margin of 29% (H1 2018: 19%, H1 2018 restated to include impact of IFRS 16: 24%).

Snaitech was the group's standout performer in H1 with 26% growth in adjusted EBITDA (from €59.3 million in H1 2018 after excluding gambling tax headwinds and 2018 World Cup impact, to €74.7 million in H1 2019).

Total shareholder returns increased 15% vs. H1 2018 including €25 million share buyback and interim dividend declared of 6.1 €c per share.

"Playtech's combination of scale and leadership in technology continues to deliver growth and strategic progress in our core gambling businesses. In H1 this continued progress has driven Group regulated revenue to a new high of 87% (H1 2018: 69%),” said Alan Jackson, Chairman of Playtech.

"In our B2B business double digit growth in regulated markets outside of the UK has been accompanied by landmark new licensee wins in key regulated markets, laying the foundations for future growth. In our B2C business Snaitech continues to go from strength to strength demonstrating impressive growth momentum in a key market."

Divisional highlights reported by the company included:

B2B Gambling Division

• Very strong momentum with over 10 brands added through July 2019
• Expanded business with existing customers including beginning rollout across GVC network, launch of Playtech customers in Sweden on Day 1 of market regulating
• Core B2B Gambling revenue growth of 11% vs. H1 2018 in regulated markets outside UK
• Core B2B Gambling revenue growth of 7% vs. H1 2018 in UK
• Strong growth of 27% in Sport, aided by hardware sales
•  Pipeline strong across key geographies including further structured agreements
• Asia remains volatile with low visibility; launching incentivization programme

B2C Gambling Division

• Snaitech H1 2019 adjusted EBITDA of €74.7 million driven by strong online revenue growth of 22%
• Snaitech achieved no. 1 market share in retail and online combined in June and July 2019
• Snaitech growth in Online stakes of 36% in H1 2019 versus H1 2018
• Sun Bingo saw 20% revenue growth at constant currency from €14.6 million in H1 2018 to €17.5 million in H1 2019; positive EBITDA contribution following renegotiation of contract

TradeTech Group

• Strong Q2 performance following highly challenging conditions across the industry in Q1
• Revenue of €39.1 million (H1 2018: €52.3 million) and Adjusted EBITDA of €8.2 million (H1 2018: €25.2 million) decreased significantly due to low market volatility in Q1 2019 and a very strong H1 2018 performance during favorable market conditions.

“The continued strength of the core business has allowed Playtech to continue its flexible shareholder returns policy, today declaring an additional buyback program alongside an interim dividend," Jackson concluded.

See the company’s full half-year report here.