Macau Gambling Growth In June Lower Than Expected
Revenue up 12.5 percent…lower than the 17 – 21 percent anticipated by analysts
Gross gaming revenue in Macau for the month of June amounted to MOP22.49 billion (US$2.78 billion), up 12.5 percent year-on-year but lower than expectations by analysts of a 17-21 percent range.
Macau’s Gaming Inspection and Co-ordination Bureau (DICJ) revealed the latest numbers on Sunday, noting that the amount recorded in June 2018 represents a 11.8 percent decrease from that recorded in May at MOP25.49 billion.
Accumulated gross gaming revenue for the first half of the year has reached MOP150.22 billion, a y-o-y increase of 18.9 percent.
June marks the 23rd month of consecutive revenue gains in the former Portuguese colony, after plunging to five-year lows due to slowing economic growth and a crackdown on corruption that began in 2014.
Playtech Reports Rising Revenues In Trading Update
But competitive pressure in Asia is a concern
In a trading update issued Monday, online gambling technology and games provider Playtech plc reported that revenues have continued to rise.
In business-to-business operations the company reported that average daily revenue on a year-to-date basis excluding Asia is up 7 percent compared with the same period last year, and up 12 percent in Q2-2018 vs. Q2-2017.
However average daily revenue in Asia continues to be impacted by an increasingly competitive backdrop. Towards the end of the first half, this market has seen a particularly aggressive pricing environment from new entrants to the market, which has impacted revenue.
The management team continues to take steps to protect Playtech’s position in the region, but given the recent decline and in the absence of any change in market dynamics, management warns of a significant impact on revenue throughout the rest of the year.
In business-to-consumer operations Playtech management reports that the gaming division is performing in line with expectations, with the Sun Bingo contract continuing to see some revenue improvement and negotiations with News UK ongoing.
TradeTech Group’s already reported good start to 2018 has continued, with the B2B division delivering a strong performance.
Playtech reported that the acquisition of 70.6 percent of Snaitech has been completed and that the company’s results have been fully consolidated into Playtech’s group accounts with effect from June 5, and will contribute to Playtech’s interim results.
Playtech has subsequently acquired a further 10.8 percent of Snaitech’s issued share capital and has launched the mandatory takeover offer for the remaining shares of Snaitech not already owned by the group.
Management believes the increased activity due to the FIFA World Cup and general strength in the Italian gaming market is encouraging for the current period.
Reporting on its sale of the Playtech holding in GVC Holdings plc, management said that Playtech’s 3.4 percent stake was sold on June 7, and net proceeds of Euro 222 million will be accounted for within the Group’s cash balances on the interim balance sheet date of 30 June 2018.
Together with the proceeds received from the sale of shares pursuant to the takeover of Ladbrokes Coral plc by GVC, the disposal is expected to lead to a one-off credit to Playtech’s profit & loss account of approximately Euro 42 million in H1 2018.
Turning to the future outlook of the company, management advised that interims for the six months ended 30 June will be posted on August 23. Given the downturn in Asia towards the end of the period together with the strong performance from Tradetech in the first half, Playtech’s H1 2018 group performance is broadly in line with its expectations at the start of the year.
Asia appears to be front-of-mind for Playtech, with the company commenting that for the remainder of the year, the current run rate in Asia is materially below both the average in H2 2017 and the average which was expected for H2 2018 at the start of the year.
“If the current run rate in Asia continues unchanged for the remainder of 2018, including no material improvement in Malaysia, Playtech’s expected revenue from Asia will be c. Euro 70 million lower than original expectations,” management reports.
“Given that the downturn in Asia has been relatively sudden and taking into account Playtech’s centralised cost base, the vast majority of this revenue loss will drop through to adjusted EBITDA.
“Consolidating Snaitech from June 2018 will contribute c. Euro 80 million of adjusted EBITDA to Playtech’s group forecasts for 2018, based on Snaitech’s current market consensus.
“Taking into account all of the above, including the consolidation of Snaitech and specifically taking into account the uncertainty in Asia, Playtech now expects group adjusted EBITDA for 2018 in the range of Euro 320 million to Euro 360 million. This excludes the Euro 42 million one-off gain in 2018 relating to the sale of shares in Ladbrokes and GVC which will not impact adjusted EBITDA but will increase adjusted EPS.”
Mor Weizer, CEO of Playtech, said: “Clearly the recent trading performance in Asia is disappointing. We have taken steps to further support our partners in the region and we will continue to work to preserve our position in the face of an increasingly competitive environment.
“In line with our stated strategy, progress in fast-growing, regulated and soon to-be-regulated markets continues apace. Momentum in key regulated markets continued in the first part of 2018 with new agreements with Gala Leisure in the UK, SAS in Portugal and Totalizator, the Polish national lottery.
“Additionally, regulatory developments in the US represent a significant opportunity for the Group. The organic growth reported in the non-Asian B2B gaming business combined with the recent acquisition of Snaitech in Italy provides management with confidence that this strategy will materially improve the quality and diversification of Playtech’s performance in 2018 and beyond.”
Playtech Shares Plunge 27 Percent Following Second Profit Warning (Update)
Asian market concerns trigger decline
Playtech’s trading update earlier today (Monday) voicing concerns regarding competition in the Asian market (see previous InfoPowa report) have been interpreted as the group’s second profit warning this year, triggering a 23 percent decline in share price Monday morning on the London exchange.
In early trading, shares were down 23 per cent at 580p.
The bank Credit Suisse estimates that at least 40 percent of Playtech’s profits come from China. In November last year, the Isle-of-Man headquartered company was forced into a profit warning following a crackdown on gambling syndicates in Malaysia, effectively ending access to one of its largest Asian markets.
Playtech said there was “no material improvement” in Malaysia, adding that expected revenue from Asia this year would be Euro 70 million lower than expectations.
The company reported: “Given that the downturn in Asia has been relatively sudden and taking into account Playtech’s centralised cost base, the vast majority of this revenue loss will drop through to adjusted [earnings].”
The company added that it now expected adjusted earnings for 2018 to be between Euro 320 million to Euro 360 million — a result that does not take into account the Euro 222 million Playtech made from selling its stake in online Gambling group GVC last month.
The Financial Times observed that the latest profit warning is likely to put more pressure on chief executive Mor Weizer. In May, the company lost a vote on its pay report, after some shareholders staged a protest against Weizer’s 78 percent pay rise for 2017, despite the November profit warning.
MGA Delivers Growth In 2017
Six percent increase in gaming related revenues
In its latest annual report, the Malta Gambling Authority (MGA) delivered a 6 percent rise in licence fees, gaming tax and other administrative fees and fines for a total revenue of Euro 66.3 million in 2017 (2016: Euro 62.5 million).
The direct contribution of the gaming industry to the Maltese economy was valued at Euro 1.1 billion in 2017, with approximately 9,800 full time jobs created within operators directly in the sector and other associated businesses.
The year was pivotal for the authority in the introduction of the new Gaming Act, the enhancement of compliance systems, the implementation of the EU 4th AMLD requirements and the enhancement of the MGA’s IT systems including the introduction of the MGA’s Licensee Relationship Management System (LRMS).
The implementation and introduction of these Acts and systems will continue to elevate the MGA’s regulatory standards, by strengthening controls and empowering the Authority to adopt a risk based approach towards enforcement and supervision, a press statement reads.
TBH Completes Sale Of Retail Assets
To PlayUp Limited
The Betmakers Holdings Limited (TBH) (formerly TopBetta Holdings) has completed the sale of its retail businesses TopBetta and Mad Bookie to PlayUp Limited for a $6 million consideration, which will be paid in two tranches.
“Completion of the Sale allows TBH to focus on rolling out its plans to be the preferred wholesale supplier of smarter data feeds and B2B wagering solutions to all wagering operators,” an industry advisory reads. “It also allows the Company to significantly reduce its monthly cost base.”
In addition, TBH has executed a Services Agreement and White Label Agreement for the ‘TopBetta’ and ‘Mad Bookie’ brands for an initial term of two years.
Irish Tech Firm Banach Raises Euro 2.2 Million In Seed Funding
Core management team formerly served at Paddy Power
Dublin-based betting technology firm Banach Technology Limited, founded in 2015, has raised Euro 2.2 million in enterprise seed funding which it will use to both expand product development and double its staff complement.
The company offers clients product, pricing and risk management streams of data in the sports gaming sector.
Banach Technology is led by Mark Hughes as CEO, who headed up quantitative analysis at Paddy Power, and Rob Reck as managing director who formerly served as a principal analyst also at Paddy Power. In addition, the team’s chief technology officer and chief operating officer Alex Zevenbergen and Hadrien Lepretre respectively, both served at Paddy Power as senior software engineer and chief data scientist.
Investors in the seed round, which was reportedly oversubscribed, included Paddy Power co-founders David Power and Stewart Kenny along with former executives Patrick Kennedy and Cormac McCarthy.
Nektan Reports Record Quarter And Full Year Trading Across B2c And B2b
Strong growth achieved by Gibraltar-based group
International B2B and white label provider Nektan plc has released its unaudited figures for the three months and year ended 30 June 2018 (Q4 FY18 and FY18), reporting the following highlights:
- Strong growth, with record NGR in Q4 FY18 of GBP 5.7 million, increasing by 10.9 percent compared to Q3 FY18 and by 36.7 percent versus Q4 FY17;
- Full year NGR was GBP 19.4 million, increasing by 48.1 percent y-o-y;
- FTDs continued to grow strongly to 43,289, up 14.3 percent versus the previous quarter and by 20.4 percent year on year;
- Cash wagering of GBP 162.9 million in Q4 FY18 up by 14.3 percent versus Q3 FY18 and was GBP 559.8 million for FY18 – up 43.4 percent versus FY17;
- The company launched 13 new sites and gained four new partners in Q4 FY18. It is now operating with a total of 113 brands from 55 partners, and has a strong pipeline of new brands from both existing and new partners to be launched during the current quarter, with growth expected from the UK and internationally, the latter being an important part of Nektan’s strategy going forward.
- Nektan’s platform has over 500 games from 24 games providers.
Management led by CEO Gary Shaw reported that the B2B side of the business is now a significant element in Nektan’s global strategy, and is being achieved through the company’s Evolve platform as the company moves towards EBITDA break-even in Europe, which is expected during FY19.
Nektan generated GBP 105,000 in revenue from the B2B business during Q4 FY18 versus GBP 83,000 in Q3 FY18 with a total of 12 deals now live globally versus 9 in Q3 FY18.
The first global platform deal with Tyche Digital now has four partners live and a significant pipeline of further integrations expected over the coming months, and Nektan has made its proprietary remote gaming server available to third party games studios who can integrate their content directly onto it.
The Group is in discussions with a number of industry partners to integrate E-Lite on a platform to platform basis in the next two quarters which would be an additional global revenue stream.
Nektan’s US subsidiary, Rapid Games has continued to grow its game portfolios and will go live with its second northern Californian on-premise mobile gaming partner during July 2018. The addition of Metric Gaming’s full service Race and Sports offering to Rapid’s platform is driving significant interest from new markets.
The group is currently reviewing its strategic options in the US and has had a number of expressions of interest to invest in Rapid.
Gary Shaw, Interim Chief Executive Officer of Nektan, said: “We see the business continuing to strengthen further and growth opportunities within both existing markets and, most encouragingly, in the rapidly accelerating demand for our technology from international partners, especially in Asia. In addition, with our licensed US mobile gaming platform, we are very well placed to take advantage of the huge opportunity presented by the opening up of the sector in the United States.
“Nektan is currently live in 37 countries across Europe, Asia and North America. We have developed from a UK-centric business into a global technology company, delivering to our partners operational gaming capability with speed and flexibility across multiple markets.”