Playtech meets Q1 expectations despite Covid-19 setbacks
Gambling tech giant Playtech has revealed it was able to perform as expected in the first quarter, experiencing a strong trading period despite its business being impacted by the novel coronavirus (Covid-19) pandemic.
Though Playtech did not publish full financial results for the three months to 31 March, it did say it had an “extremely strong” quarter, with adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) totalling €117.0m (£104.7m/$128.0m).
Playtech said this was driven by the performance of its TradeTech financial arm, which it said benefitted from increased market volatility and trading volumes.
The group also saw a strong showing by its Snaitech business in January and February prior to the wider outbreak of coronavirus, which caused almost all sporting events to be cancelled and retail betting shops to close in Italy from early March.
Playtech said despite the impact of coronavirus, its results for March as a whole were in line with the original expectations, as it saw a strong performance by its online business, including live casino, its joint venture partners and TradeTech.
These trends continued into the start of Q2, which resulted in adjusted EBITDA of €23m for April, meaning adjusted EBITDA for the first four months of 2020 amounted to €140m.
Looking more closely at its different business segments in the period to 30 April, Playtech said its B2B online businesses performed well, but the retail elements of were severely hit by retail closures in a number of countries.
The B2B sport segment was particularly affected, given that it is predominantly retail focused, with its biggest markets being the UK and Greece. Betting shops in the UK currently remain closed and though in Greece most retail locations have reopened, the lack of major sports events and competitions limit betting options. As such, the B2B sport business is currently generating a loss of €3m adjusted EBITDA per month.
However, Playtech said it continued to deliver on its operational objectives for 2020, adding new tier one licensees such as Betsson, Kindred and Svenska Spel to its client roster. Playtech has added more than 20 new brands so far in 2020, and is on track to surpass its target of 50 for the year.
In terms of B2C, Snaitech performed better than was anticipated and despite the loss in revenue from retail closures and lack of sporting events, was only slightly loss making on an adjusted EBITDA basis in April. The timing of the reopening of retail locations in Italy currently remains unclear.
Playtech's white label business, predominantly the Sun Bingo brand, saw a strong performance so far in 2020, while the Germany- and Austria-based HPYBET retail B2C sports business has been boosted by restrictions being eased, with shops now beginning to reopen.
Looking to Asia and revenue from across the region was negatively impacted by government restrictions in China, Malaysia and the Philippines. However, this was offset by a temporary contract with a live casino provider in Asia.
Playtech said this contract increased revenue and EBITDA from Asia in April, resulting in revenues of €8m for the month. Playtech added that in May, revenue is set to be around €6m, including a lower benefit from the Asian provider that began resuming its normal operations this month.
In addition, Playtech said its TradeTech business generated adjusted EBITDA of over €45m in the four months to the end of April, while the segment also took steps towards a more efficient balance sheet, releasing €10m of cash that was previously tied up.
“So far this year, alongside actions taken to protect our people and our business, Playtech demonstrated remarkable operational resilience - demonstrating the strength and flexibility of our technology and our position in the industry,” Playtech chief executive Mor Weizer said.
“We have added new tier one licensees, added over 20 new brands and expanded agreements with some of our largest existing customers. Given this strategic progress and the actions we have taken, I am confident we will emerge stronger as the current restrictions related to Covid-19 ease.”
To help mitigate the impact of coronavirus, Playtech announced a number of new measures. These included the deferral or cancellation of capital expenditure, strict working capital management, suspension of shareholder distributions and salary reductions across the group, including 20% for all members of the board and the executive management team.
Other measures saw Playtech implement reduced working hours in certain locations, a reduction in marketing spending, cutting office and maintenance costs, and the renegotiation of timing of cash outflows, including contingent consideration payments due in 2020.
Meanwhile, Playtech has announced the exit of Alan Jackson as its chairman after seven years in the role. Jackson played a major role in the group’s initial public offering in 2006, but will now step away from the business, with Claire Milne to take on the role on an interim basis.
Jackson said: “It is with great pride that I look back over my time as chairman of Playtech. During my time with the company the gambling industry has changed dramatically and Playtech has demonstrated the strategic vision to grow into a diversified and trusted technology leader in its industry.
“In these uncertain times the Board and I are confident Claire’s appointment as interim chairman will bring the required experience, industry knowledge and stability needed.”