PoC a "great opportunity" for Playtech

Playtech chief executive Mor Weizer (pictured) believes the UK’s looming Point of Consumption (PoC) tax regime represents a “great opportunity” for the firm as operators look for cost-efficient, low maintenance software deals.

Speaking after its Q3 results disclosure earlier this week, Weizer said the UK had grown in prominence for the supplier with revenues from the market growing at a rate of 28% year-on-year.

Meanwhile European revenues excluding the UK faltered – increasing at less than half the growth rate of the UK – in the face of tighter regulation. Weizer cited the Netherlands as an example of slowed growth as operators begin to suspend activities in the country pending possible licence applications at the end of the year.

But despite Playtech indicating the onset of the new tax regime would result in a €12m hit to its bottom line, Weizer said the effects of the new licensing and taxation regime had actually provided the firm with expansion opportunities.

“The introduction of this in a competitive market presents a great opportunity to further expand our white-label offering and operations as companies will seek a full turnkey solution that can improve their margins allowing them to focus on marketing and maintain their presence and position in the lucrative UK market,” Weizer said.

And while CFO Ron Hoffman praised the growth of existing UK partners, particularly Ladbrokes and Sky Bet, he also said greater potential could be found in the shape of new licensees.

The firm has experienced a boost in potential clients seeking full turnkey solutions as a means of reducing and limiting their expenditure, Weizer added, claiming a number of new UK-facing licensees are set to start operating Playtech’s software in the coming months.

“The group has only just started seeing the benefits of its new white-label and turnkey agreements while there are substantial growth opportunities from new licensees,” Simon French, Cenkos Securities analyst, said.

Eastern promise

But while the UK may provide the firm with immediate opportunities for growth, it is Asia that Playtech has identified as a real battleground for the future.

Revenues from the region were up 85% year-on-year for the three months ended 30 September, impacting the group’s regional revenue split. In the corresponding period a year ago Playtech drew a quarter of its revenues from Asia and almost two thirds from Europe.

A year later and the split has become more diversified. Playtech derived 56% and 36% of its revenues from Europe and Asia respectively and the firm expects this shift to continue over the coming years.

Playtech is seeking additional licensees in Africa and Latin America, but it’s Asia that continues to grow and one analyst said the group’s “attractive geographic exposure” was a key reason behind his firm’s buy recommendation.

However Asia is not free from regulatory uncertainty itself and, if anything, is more volatile than Europe at this moment in time. Singapore recently shut its doors to international gambling companies and the outlook remains unclear elsewhere, particularly in Malaysia.

Weizer, however, considers the Asian market to resemble how the European market looked “two or three years ago” and strongly expects regulation in the region will become friendlier towards international operators and suppliers in the coming years.

Should it do so, Playtech appears perfectly poised to make substantial gains and its geographical split only stands to narrow in the future.