Poker only blot in strong Playtech Q2s
Year-on-year revenues double following PTTS and other acquisitions - first licensees launch in Spanish market.
Playtech has seen its year-on-year revenues nearly double thanks to a strong performance across the majority of verticals, the London-listed software provider has announced in its trading update for the three months ended 30 June.
Last month’s agreement for a final 140m payment for PT Turnkey Services Ltd (PTTS) from majority shareholder Teddy Sagi’s Worldwide Online Enterprises, a deal completed in July 2011, was one of many contributors to the increase, bringing with it a year-on-year revenue rise of 26m for the quarter and more than 50m for the first half of 2012.
However revenues from the company’s William Hill Online joint venture dropped 29% compared to Q1, while Playtech also missed out on a lucrative contract to bring Greek monopoly operator OPAP online.
Meanwhile gross income, while flat quarter-on-quarter, was up 88% year-on-year. The quarter-on-quarter revenue increase amounted to 5%.
Casino was the star performer among the main product verticals with Q2 revenues of 37m up 36% on the corresponding period in 2011, with operators including Gala Coral going live during the quarter, while bingo (up 21% to 4.4m) and videobet (up 36% to 2.8m) also showed notable growth.
Poker was the only area of decline, down 12% year-on-year and 18% quarter-on-quarter to 4.4m, although a number of the operators on Playtech’s Spanish-facing iPoker.es network, including bet365 and William Hill, have gone live in the newly regulated jurisdiction. eGaming Review revealed yesterday that a number of local operators in the jurisdiction are yet to go live.
Playtech’s dot.com poker network has begun implementing a new set of network rules, introduced after the end of Q2, with the introduction of a tiered system for cash games expected to come into force next month, while one operator – Moore Games – was recently suspended for a breach of network policy.
Elsewhere, there was no specific mention of the company’s social licensing deal with Sagi-owned Viaden and CTXM, a deal reworked from a purported 95m acquisition which analyst Simon French of Panmure Gordon said at the time would “Reignite concerns over related party transactions.”
In a statement this morning, chief executive Mor Weizer (pictured) said: “Although we anticipate a seasonal slowdown during the traditionally weaker summer months, I believe that the company is well positioned to maintain the momentum into the rest of the year.”
Weizer also expressed his pleasure that the company had managed to secure a listing on the main market of the London Stock Exchange, where it began trading on 2 July.
Analyst Nick Batram of Peel Hunt reiterated his firm’s ‘Buy’ recommendation on Playtech’s shares, explaining: “The move to a Premium Listing has yet to deliver a rerating but if the company continues to deliver financially and the connected party transactions cease then the room for multiple expansion is significant.”
French, however, reiterated his firm’s hold recommendation, citing figures mentioned in the prospectus issued by Playtech ahead of its main market listing. “The disclosure that c9% of Playtech revenue arises from Malaysia and c3% from China give some cause for concern given the regulatory environment in these countries,” he explained. These markets contribute more than 9.3m combined in revenues.