New markets boost Playtech results
B2B provider says new licencees, networks and newly regulated markets, including possibly one day the US, will see growth continue.
Business-to-business supplier Playtech has reported strong first half results boosted by regulatory changes across Europe, the launch of new networks and a rise of almost a third in revenues from its joint venture with William Hill. It also announced that it will provide a complementary flash-based casino product to Betfair that is expected to go live at the end of this month.
Playtech’s gross income increased by 31% to 87.9m for the six months ending June 30 2010 from 66.9m last year, total revenues were up by 29% to 72.9m from 56.7m, while adjusted EDITDA rose by 20% to 54.2m from 45.3m. Meanwhile, cash generated from operating activities and sums received from William Hill almost doubled to 60.8m compared to 37.4m in 2009. Total revenues for the six months from the deal were 72.9m, representing an increase of 29% over the 56.7m achieved in the first half of 2009.
In October 2008 Playtech signed an initial five-year agreement with William Hill to supply the UK bookmaker with its online casino and poker solutions. At the time William Hill chief executive Ralph Topping hailed the agreement with Playtech as “transformational”.
The company cited its strategic partnerships with Scientific Games and Sportech, announced in January, as well position the company to exploit new opportunities in newly regulating markets, including the US. It said its first half launch of Italian bingo, Olympic Casino and French poker networks increased its presence in “key new regulated markets”. It added that major licensees including Betfair flash casino in the third quarter of this year, RAY in Finland in the fourth quarter and Casino Gran Madrid in the first quarter of next year 2011 were all on target to launch.
Roger Withers, Playtech non-executive chairman, however said that restrictions in newly regulated French market would, “as anticipated”, impact revenues in the second half of this year but that this would be counterbalanced by “a strong pipeline of new licensees” which it expects to “more than offset” in 2011.
“We have a substantial list of new revenue streams and have more in the pipeline. These will do much to offset the impact of revenues lost as France closed its doors to online casinos. While it will take some time before our French poker business returns to historic levels, our growth trajectory remains very much intact,” he added.
The company said its acquisition of Virtue Fusion in February this year positioned it as the leading B2B bingo network provider, while it also had a pipeline of new licensee prospects in the UK and abroad.
Playtech’s revenue for the first quarter of this year was up 25% on the same period last year it revealed in June. The AIM-listed company reported Q1 revenue of 36.1m ($46.9m, £30.9m) representing year-on-year (YoY) growth of 25%.
Casino, Playtech’s principal product “continued to perform strongly” in the first half of the year, chief executive Mor Weizer said. Revenues were up 31% on the first half of 2009 to 49.1m. Playtech has one of the most comprehensive suites of side-games available in the market with more than 500 fixed odds, virtual sports, slots, and table games.
Playtech’s poker performance, however has “fallen back in line with the rest of the market in the second quarter”, according to Weizer. During the period poker revenues were 15.8m, a decline of 5% compared with the first half of 2009. The company said poker was impacted by the World Cup, with players less willing to participate in lengthy tournaments and sportsbook operators focusing their marketing spend on sports betting. “I believe that Playtech’s poker network strategy has helped to mitigate the impact of the decline in the poker market, where the unlevel playing field remains keenly felt,” Weizer said. In bingo Weizer said that its acquisition of Virtue Fusion had “exceeded” its expectations. Bingo revenues in the period, which did not show a full six months contribution from Virtue Fusion, were 4.5m, compared with 0.1m in the same period last year.
“Today’s announcement of the launch of Betfair’s web-based casino with Playtech at the beginning of September is another very positive step, as this is their principal format. It reflects a shifting market focus towards one where a complementary web-based offering is becoming equally important to the traditional high definition download product, particularly for attracting new players to try out games for the first time,” Weizer added.
Withers added that the board remains “fully committed” to a move to the Main List and that its search for a new chief financial officer was at an “advanced stage”.