Strong First Half for Playtech
Playtech, a giant of the gambling industry, has reported that it expects strong financial results for the first half of the year, with earnings reaching €160 million. These predicted earnings are strong despite the impact of the outbreak of the novel coronavirus, COVID-19, on the business’s operations. The financial report for the first six months of the year will be released in full on the 17th of September. This will detail the steps taken by the company that allowed it to mitigate the impact of the pandemic.
The gaming solutions provider has attributed its strong performance in a difficult year to a high degree of resilience as well as the effective actions it took in the early stages of the outbreak of COVID-19. These actions not only protected its employees during a time where the health of many is at risk but also allowed the business to stay in the green by maintaining the flow of money into the organization.
This is not to say that Playtech did not feel the squeeze of the pandemic. The operator experienced some strain in certain divisions, namely its’ business to business sports betting operations. According to the company, this area of the company is highly focused on retail gambling and, therefore, was impacted severely by the closure of the gambling shops across Europe.
Certain markets caused significantly more issues than others. For Playtech, the United Kingdom and Greece both play pivotal roles in the company’s revenue. When both of these countries went into nationwide lockdowns that saw the closure of all retail gambling venues, Playtech experienced a substantial drop in income. The suspension of nearly all sporting events on the continent also hit the business hard.
These markets have since re-opened, and sports are gradually returning to their pre-COVID state. This has helped Playtech to recover some of its lost revenue but this recovery is incomplete. The company is still trading at a reduced level in this division of its business.
It wasn’t just business to business operations that were affected by the pandemic, the company also saw a drop in its business to consumer endeavors. Its’ Snaitech business in Italy saw a substantial drop in its earnings after its closure was forced. Italy was one of the hardest-hit nations by the pandemic and its lockdown was subsequently one of the strictest in Europe.
The operator has described its actions to reduce the impact of these losses. By making use of the lower fixed costs in Italy and the online nature of some of its business, as well as migrating some of its services, the company managed to minimize the effects of the lockdown.
After the lockdown, Snaitech has managed to rebound relatively quickly and effectively. Its physical venues were permitted to re-open after the 15th of June in Italy but it took until the start of July for the business to resume its operations in all of its locations. The business has since returned to its full strength and has posted great results and growth since its re-opening.
Playtech did see growth during the first half over some of its business divisions. For example, the operator’s business to business online casino services performed exceedingly well during the first six months of 2020. The company experienced a significant uptick in the incidence of online gambling during the lockdown which has somewhat decreased since things have started to return to normal. Playtech is still reporting higher incidences of online gambling than it saw before the outbreak of the virus, however.
Playtech’s results elsewhere were also significantly impacted by the pandemic. For example, in Asia, the operator experienced very mixed results. This continent also experienced widescale lockdowns and government-mandated trading restrictions which hurt Playtech’s returns. On the flip-side, the company did generate a good amount of money from a contract with a casino provider in Asia that has been in effect since March.
The company’s financial arm experienced highly positive results during the first half of the year. This division of the business managed to capitalize on some of the aspects of the year that have been detrimental to other areas of the operator’s business. For example, it successfully profited from increases in market volatility, particularly in the period prior to the 30th of April but also in July.
Overall First Half Results
These good results, alongside the return to profitability for the retail sports betting sector in Italy, have left Playtech in the green to the tune of €160 million before tax for the first half of the year.
The executive board of Playtech has described the company’s approach to these difficult circumstances as outstanding. The operator reacted quickly to these difficult and changeable circumstances to remain profitable during the pandemic despite the myriad of challenges it has posed to businesses.
The company has also stated it is pleased with the return to positive results for the areas of its operations that took the brunt of the impact from lockdowns and restrictions. Playtech is now confident that the turnaround in these areas will allow it to come back from the pandemic in a stronger position and to cement its claim as the leader in the market.
Playtech relied heavily on its shareholders during a difficult period. The company decided to increase the liquidity of its funds at the beginning of the crisis by suspending distributions to its shareholders for an indefinite period. It also suspended its share repurchase program that was announced at the end of 2019 and did not propose any annual dividend at the board’s yearly general discussion. These steps helped the company to save some €65 million when it desperately needed the cash.
Overall, these results have vindicated the decisions made by Playtech, and have allowed the company to remain in the green at a time when many businesses are struggling. At the beginning of the pandemic, results as strong as these would have been a distant pipe dream.
In February, the share price of the company had dropped by 9.5% and there were very real fears that COVID-19 would cause severe damage to the company. The quick decisions and smart business plans of the gaming solutions giant saved it from far harsher results that could have occurred should a different plan of action been implemented.
Partnership With Enlabs
In the wake of the pandemic, with services slowly returning to normal, Playtech has announced a partnership with the Balkan-facing operator Enlabs. The agreement between the companies will see the rollout of a wide range of online casino and poker content designed by Playtech using Enlabs’ platform.
The contract will see Enlabs using its Optibet.lv and BestPoker.com websites to offer Playtech’s online poker and casino services. This is significant as it represents Playtech’s first excursion into the Latvian market.
Enlabs will be allowed to use a suite of Playtech’s licensed branded games, such as the Justice League and Sporting Legends titles. This, alongside the scale and innovation of Playtech, will prove useful tools to enable Enlabs to deliver the highest degree of player experience and growth in established markets, according to the head of poker at Enlabs.
Playtech has made no bones about the difficulties that the poker market is facing but remains confident that continued investment in the market and its software and network will allow the company to remain at the forefront of online poker and to come out on top in the future. Playtech is confident that this partnership will prove fruitful in the coming months and years.
Both companies have posted strong results in the wake of the pandemic and both will be hoping that their shrewd business decisions such as this agreement will help them to remain profitable in their respective niches.