Playtech PLC: Resilient financial performance and strong operational execution in H1 2020

Playtech (LSE: PTEC) today announces its results for the six months ended 30 June 2020, together with a trading update for July and August 2020.

Financial summary

Group highlights

• Resilient H1 with Adjusted EBITDA of €162.3 million (H1 2019: €180.7 million excluding one-offs6) driven by online and an exceptional TradeTech performance together with early and decisive actions taken in response to COVID-19
• Significant U.S. momentum: New Jersey license received, launched with bet365 in early H2, further license applications underway and investment to increase
• New structured agreements signed in Guatemala and Costa Rica
• Launch of Playtech’s sustainable business strategy, Sustainable Success, to consolidate position as a global leader in safer products, data analytics and player engagement solutions
• Claire Milne appointed as Interim Chairman in May to provide continuity and stability; permanent Chairman process ongoing

Divisional highlights

B2B Gambling

• Significant progress in the U.S. and Latin America
• SaaS offering showing continued strong momentum with over 50 new brands added in H1, already surpassing FY 2020 target
• B2B Gambling Adjusted EBITDA of €63.2 million was down 36% versus H1 2019 (excluding one- offs6)
• Strong operational execution with existing and new Tier-1 licensees
• Significant momentum in Live Casino with new signings and existing licensees
• Asia negatively impacted in period by government restrictions in response to the pandemic

B2C Gambling

• Snaitech Adjusted EBITDA decreased to €47.1 million (H1 2019: €74.7 million) due to retail closures and cancellation of sporting fixtures, partially offset by 37% growth in online revenues versus H1 2019
• Snaitech saw continued strong performance in Sports; achieved number one market share position (retail and online combined) in Italy in H1 2020
• Snaitech land sale completed with €13.8 million received in H1 and remaining €35.7 million received in July
• Retail B2C Sport saw retail closures in the period due to the pandemic, resulting in a €5.4 million impairment of the business
• White label (including Sun Bingo) saw 22% revenue growth versus H1 2019 at constant currency to €29.5 million (H1 2019: €24.3 million)

TradeTech Group

• Outstanding H1 performance driven by exceptional market volatility and trading volumes throughout much of the period
• TradeTech’s revenues were €87.3 million in H1 2020, representing growth of 123% versus H1 2019, and Adjusted EBITDA was €52.8 million, up 544% (H1 2019: €8.2 million)
• Playtech continues to evaluate all options for TradeTech, and, as announced in August, the Group is in early stage discussions with a number of parties regarding a potential sale

Current trading and outlook

• The business is performing well, but caution remains given the backdrop
• Strong trading and cash generation in July and August, albeit with a stronger July
• Online is expected to continue to perform strongly
• Management remain cautious about the outlook for retail
• TradeTech’s first half performance not expected to be repeated in H2 with market volatility currently significantly lower than in H1
• Balance sheet remains strong, allowing for selected high-return investments such as in the U.S. market

Medium-term outlook

• Leading technology and strong balance sheet positions Playtech to emerge strongly from COVID- 19 disrupted period and take advantage of emerging opportunities
• Comprehensive product offering is ideally placed to capture significant U.S. market opportunity
• Significant opportunities for further material structured agreements
• Focus on extending Playtech’s position as a global leader in safer gambling products and leveraging its data analytics and player engagement solutions

Mor Weizer, CEO, commented:

“The attitude of our people coupled with the resilience and diversification of our technology-led business model has delivered a strong first half performance during an extremely challenging period for the industry. These strengths, combined with early decisive action to focus on the safety of our employees and protect the Group’s cash flow, has placed us in a strong position to benefit from the recovery and to capture the exciting market opportunity in the U.S. and Latin America.

The extraordinary trading conditions during the pandemic have brought us closer than ever to our licensees and we have seen even greater demand for our products, with an increased focus across the globe on intelligent software and personalised player journeys and protection tools. As the leading technology company in the gambling industry, our licensees look to us to deliver innovation that changes the way players experience gambling entertainment. Key to this approach is Sustainable Success, our new ESG strategy launched in H1, which aims to consolidate our position as a global leader in safer products, data analytics and player engagement solutions and build a safe and sustainable gambling industry for the benefit of all stakeholders.

As well as increasing our work with existing tier one licensees and adding more than 50 new brands to our SaaS model, we have also continued to execute our expansion into strategically important markets such as the U.S. with our first launch in New Jersey and further structured agreements in Latin America. The scale of our technology and the breadth of our product offering mean Playtech can capture commercial opportunities in the fast-growing U.S. and Latin America markets outside the remit of traditional B2B suppliers and we are investing in accelerating this strategy.”

About Playtech

Founded in 1999 and premium listed on the Main Market of the London Stock Exchange, Playtech is a technology leader in the gambling and financial trading industries.

Playtech is the gambling industry’s leading technology company delivering business intelligence driven gambling software, services, content and platform technology across the industry’s most popular product verticals, including, casino, live casino, sports betting, virtual sports, bingo and poker. It is the pioneer of omni-channel gambling technology through its integrated platform technology, Playtech ONE. Playtech ONE delivers data driven marketing expertise, single wallet functionality, CRM and responsible gambling solutions across one single platform across product verticals and across retail and online.

Playtech partners with and invests in the leading brands in regulated and newly regulated markets to deliver its data driven gambling technology across the retail and online value chain. Playtech provides its technology on a B2B basis to the industry’s leading retail and online operators, land-based casino groups and government sponsored entities such as lotteries. Playtech directly owns and operates Snaitech, the leading sports betting and gaming company in online and retail in Italy.

Playtech’s Financials Division, named TradeTech Group, is a leading technology provider in the CFD and financial trading industry and operates both on a B2B and B2C basis.

Playtech has in total c.6,400 employees across 24 countries and is headquartered in the Isle of Man.