Playtech : 2023 Half year results report

Playtech plc

("Playtech", the "Company", or the "Group")

Results for the six months ended 30 June 2023

Strong EBITDA growth in H1; FY23 on track to be slightly ahead of expectations

Playtech (LSE: PTEC), the leading platform, content and services provider in the online gambling industry, today announces its results for the six months to 30 June 2023.

Financial summary (continuing operations)1

		Reported			Adjusted2
	H1 23	H1 225		H1 23	H1 225
			Change			Change
	€'m	€'m	%	€'m	€'m	%
Revenue	859.6	792.3	8%	859.6	792.3	8%
EBITDA	207.3	173.9	19%	219.9	199.1	10%
Post-tax profit3	3.1	71.4	-96%	85.7	94.3	-9%
Diluted EPS	1.0 €c	22.9 €c	-96%	27.5 €c	30.2 €c	-9%
Net debt	248.2	494.5	-50%

Summary

• Record H1 23 performance with H1 Adjusted EBITDA up 10% to €219.9 million.
• Continued strength seen across regulated B2B markets and Snaitech.
• Comprehensive partnership signed with Hard Rock Digital in Q1 23, establishing Playtech in key US states and with international expansion to follow.
• The Group is on course to deliver FY23 Adjusted EBITDA slightly ahead of current expectations.

Divisional highlights

B2B

• Strong performance from B2B, with H1 23 revenue up 7% to €334.5 million versus H1 22. B2B Adjusted EBITDA increased 5% to €81.3 million (H1 22: €77.2 million).
• The Americas was the standout region during the period, with revenue growth of 43% to €99.7 million. Caliente remains the key driver of this growth. Brazil continues to grow strongly as it moves towards regulating, and the early performance of Galera.bet is encouraging.
• Significant progress made on executing the US strategy:
• • Landmark agreement signed with Hard Rock Digital in early 2023, including an $85 million (€79.8 million) investment in exchange for a small minority equity ownership stake.
  • Ohio, Maryland and West Virginia licences granted so far in 2023, and Playtech is now licensed in 10 states with further applications progressing.
  • Launched with several operators across multiple states, including 888, Rush Street Interactive and PokerStars, and expanded our relationships with BetMGM and BetParx as they launch in further states.
• Announced an extension of the partnership with NorthStar, alongside a strategic investment to ensure Playtech is well-positioned to benefit from the regulation of the Canadian market.
• Europe ex-UK revenue grew 5% to €96.6 million, with growth seen across multiple countries including Poland and Spain.
• Live Casino continued to see healthy revenue growth; the Company remains focused on regulated markets which saw revenue growth of 24% in H1 23 versus H1 22.
• SaaS revenues grew more than 50% in H1 23 versus H1 22, illustrating our excellent progress towards achieving the medium-term SaaS revenue target of €60 million - €80 million.

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• Launched BetBuddy, part of Playtech's safer gambling technology, with five new brands in H1 23, bringing the total to 15 brands in eight jurisdictions.

B2C

• Solid B2C performance (including Snaitech, HAPPYBET and Sun Bingo & Other B2C) with revenue up 9% to €532.1 million (H1 22: €487.3 million). Adjusted EBITDA up 14% to €138.6 million (H1 22: €121.9 million).
• Snaitech Adjusted EBITDA increased 12% to €141.9 million (H1 22: €127.0 million) driven by growth across both retail and online, as well as pent-up demand following the World Cup.
• • Retail Adjusted EBITDA up 13% to €73.2 million (H1 22: €64.7 million)
  • Online Adjusted EBITDA up 10% to €68.7 million (H1 22: €62.3 million)
• The Snai brand maintained its number one market share position (retail and online combined measured by GGR) across Italian sports betting brands in H1 2023.
• HAPPYBET, now integrated into Snaitech's operations, reported Adjusted EBITDA of €-6.1 million (H1 22: €-5.2 million), although the current period includes a €2 million historical litigation settlement expense. Strategic and operational measures have been taken across both retail and online, with leading KPIs showing improvement.
• Sun Bingo and Other B2C saw 8% revenue growth to €34.1 million (H1 22: €31.7 million) while Adjusted EBITDA grew to €2.8 million, up from €0.1 million in H1 22.

Financial and corporate activity

• Reported post-tax profit of €3.1 million in H1 23, was down from €71.4 million in H1 22, due to an overall reduction in the fair value of the derivative financial assets recognised in the income statement, and the derecognition of brought forward deferred tax assets.
• Strong cash generation in H1 23, with adjusted operating cashflow4 of €232.8 million.
• Group net debt as at 30 June 2023 was €248.2 million, resulting in leverage of 0.6x.
• Robust balance sheet following the issuance of a €300 million bond due 2028. In July 2023, part of the proceeds were used to redeem all of the outstanding €200 million notes due 2023, and also to repay outstanding debt under Playtech's revolving credit facility, such that this facility is now fully undrawn.

Corporate governance

As announced on 17 May 2023, John Krumins advised the Board that he wished to step down from the Board. At the request of the Chairman, John agreed to remain as a Non-executive Director of the Company and Chairman of the Audit Committee until after the publication of the Group's interim results, ensuring a smooth transition to his successor as Chairman of the Audit Committee. Playtech now confirms John Krumins will be stepping down on 29 September 2023.

Playtech has also made the following changes to the Committees of the Board, effective from 29 September 2023:

• Ian Penrose will assume the Chair of the Audit Committee and is appointed to the Nominations Committee, while stepping down from the ESG Committee.
• Samy Reeb is appointed to the Audit and ESG Committees along with assuming the Chair of the Risk Committee, replacing Anna Massion.
• Anna Massion will become the Chair of the Remuneration Committee, replacing Ian Penrose and is also appointed to the ESG Committee.

Current trading and outlook

• Following a strong H1 performance, H2 has started well with normal seasonality.
• On track to deliver FY 2023 Adjusted EBITDA slightly ahead of current expectations.
• B2B medium term Adjusted EBITDA target of €200 - 250 million and B2C medium-term Adjusted EBITDA target of €300 - 350 million maintained.
• Strength of balance sheet further improved by strong cash generation and bond issuance, giving flexibility to pursue both organic and inorganic growth opportunities.
• The Board remains confident in Playtech's ability to execute on growth opportunities across both B2B and B2C divisions.

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Mor Weizer, CEO, said:

"We delivered our highest ever Adjusted EBITDA in the first half of 2023, demonstrating the benefits of the continued strategic and operational progress made in recent years. I would like to thank all our colleagues for their hard work and support in making this possible.

"Our success in the period was driven by our diversified portfolio, spanning B2B and B2C, in some of the fastest-growing regulated markets around the world. Having laid the groundwork in the US, we are growing our offering across multiple states and are confident in our future prospects following the landmark agreement with Hard Rock Digital. Additionally, we further cemented our leadership in LatAm with Caliente in Mexico and Galera.bet in Brazil. Snaitech in Italy enjoyed another strong period, with the management team continuing to leverage their retail presence to grow the online business.

"We have started the second half of the year well and are on track to deliver FY23 Adjusted EBITDA slightly ahead of current expectations. With our proven strategy, robust balance sheet and our operational expertise, we are confident in our ability to capitalise on the many growth opportunities we have ahead."

	- Ends -
For further information contact:
Playtech plc		[phone]
Mor Weizer, Chief Executive Officer
Chris McGinnis, Chief Financial Officer
c/o Headland
Sandeep Gandhi, Head of Investor Relations		[phone]
Headland (PR adviser to Playtech)		[phone]
Lucy Legh, Jack Gault

1Totals in tables throughout this statement may not exactly equal the components of the total due to rounding.

2Adjusted numbers relate to certain non-cash and one-off items, as well as material reorganisation and acquisition-related costs. The Board of Directors believes that the adjusted results more closely represent the consistent trading performance of the business. A full reconciliation between the actual and adjusted results is provided in Note 10.

3Adjusted Profit refers to post-tax Profit from continuing operations attributable to the owners of the Company after the relevant adjustments as detailed above. Reported Profit refers to post-tax Profit from continuing operations attributable to the owners of the Company before adjustments.

4Adjusted operating cash flow refers to net cash provided by operating activities from continuing operations after adjusting for changes in jackpot balances, client funds, professional fees and the ADM security deposit in Italy.

5H1 2022 numbers have been restated to reflect Snaitech's online bank charges, which are now being recognised within EBITDA. Refer to Note 4B for more details.

Conference call and presentation

A presentation on the earnings will be held today at 9.00 am via a live audio webcast accessible using this link:

https://www.investis-live.com/playtech/64e31fc09b8a600d00eba947/melgkr

Analysts and investors can also dial into the call using the following details:

United Kingdom (Local): [phone]

United Kingdom (Toll-Free): [phone]

Global Dial-In Numbers

Access Code: 303420

The presentation slides will be available today from 8.30 am at:

http://www.investors.playtech.com/results-centre/presentations.aspx

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Forward looking statements

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". By their nature, forward-looking statements involve risk and uncertainty since they relate to future events and circumstances. Actual results may, and often do, differ materially from any forward-looking statements.

Any forward-looking statements in this announcement reflect Playtech's view with respect to future events as at the date of this announcement. Save as required by law or by the Listing Rules of the UK Listing Authority, Playtech undertakes no obligation to publicly revise any forward-looking statements in this announcement following any change in its expectations or to reflect events or circumstances after the date of this announcement.

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 industry with over 7,300 employees across 19 countries.

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.

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Chief Executive Officer's Review

Overview

Playtech has continued to make good progress on its strategic priorities in the first half of 2023. We delivered record Adjusted EBITDA in the period, driven by strong performances from both the B2B and B2C businesses. The growth achieved in the first half of the financial year gives the Board further confidence in achieving Playtech's medium-term Adjusted EBITDA targets for B2B (€200 - €250 million) and B2C (€300 - €350 million), while taking further strides to capture the exciting market opportunities ahead.

The strategic focus of Playtech's B2B business remains on opportunities in regulated or soon to be regulated markets. There is a particular emphasis on high-growth markets including the US and Canada, Latin America and certain European markets. These regions helped the B2B segment to deliver revenue growth of 7% (+5% on a constant currency basis) to €334.5 million (H1 2022: €312.0 million). B2B Adjusted EBITDA increased 5% to €81.3 million (H1 2022: €77.2 million). This B2B performance absorbed marketing activities in the period to further promote Playtech's products, and thus, excluding the impact of these, growth would have been higher.

Accelerating the Group's presence in the US remains a key strategic priority for Playtech. In 2022, we laid the groundwork by signing deals with multiple operators. 2023 is a year where we are focused on execution and rolling out those deals to multiple states. In the first half of 2023, we launched with several operators across multiple states, including 888, PokerStars and Rush Street Interactive, while also expanding our presence with BetParx and BetMGM.

In early 2023, we signed a landmark agreement with Hard Rock Digital to provide Casino and Live, amongst other content, in North America. Playtech has also invested $85 million (€79.8 million) in exchange for a small minority stake in Hard Rock Digital.

In Latin America, Playtech has continued to see excellent growth from Caliente, which further cemented its leadership position in Mexico. Our other strategic agreements in Latin America also performed well. Sports betting has now been regulated in Brazil, subject to Congress approval, and Playtech is well positioned to capitalise on the opportunity given its exciting strategic agreement with Galera.bet.

In Europe ex-UK, B2B revenue was driven by strong performances across several countries, including most notably Poland and Spain.

Playtech remains committed to diversifying its B2B division by driving growth through our SaaS business model. At the FY 2022 results, we announced a medium-term SaaS revenue target of €60 million - €80 million, and we are pleased to report that we are making excellent progress towards achieving this target, with the SaaS business delivering revenue of €23 million in H1 23, up more than 50% versus H1 22. We continued to see strong customer acquisition with more than 50 further brands added, bringing the total to over 400.

B2C revenues rose 9% to €532.1 million (H1 2022: €487.3 million) and Adjusted EBITDA increased 14% to €138.6

million (H1 2022: €121.9 million), as Snaitech delivered another excellent performance. Both retail betting, which benefitted from pent-up demand after the football World Cup (given Italy was absent from the tournament), and the online business performed well. The latter benefitted from strong brand loyalty, continuous improvements to apps and technology, and a broadening of its content offering.

None of this would have been possible without our colleagues around the world, and I would like to thank them for their hard work and commitment to deliver first-class customer service to all of our clients. They are our greatest asset and are the key force behind the results published today.

B2B

Core B2B

Regulated markets

Playtech's B2B business remains focused on opportunities in regulated and soon to be regulated markets. The majority of these are high-growth markets such as the US, Latin America and certain European countries.

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