Playtech (LON: PTEC), the London-listed gambling software supplier, warned that profit growth will slow in the second half, even as it reported record first-half earnings driven by explosive growth in the United States.
Shares in Playtech traded at 401.8p on Thursday morning, up 1.2% from Wednesday’s close of 397.2p, having opened higher and risen as high as 409.6p before caution over the outlook capped gains, with the stock falling back as low as 382p. It remains well below its 52-week high of 436.6p, having climbed from a low of 210p in October last year.
According to Playtech’s results statement, as reported by Sharecast, adjusted underlying earnings rose 77% year-on-year to €162.5m in the first half, while revenues grew 10% to €425.1m. The adjusted EBITDA margin, a measure of operating profitability before interest, tax and one-off items, expanded to 30% from 19% a year earlier.
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That jump was powered by US and Canada revenue growth of more than 160%, alongside one-off investment income from Playtech’s stakes in Mexican gaming investee Caliente Interactive and US online gaming joint venture Hard Rock Digital.
Management cautioned that those same drivers will fade in the second half. Hard Rock Digital revenues are expected to normalise, Brazil investment spend will continue, and UK remote gaming duty, a tax on online gambling revenue, will weigh on results for a full half rather than part of one. UK B2B revenue, from software sold to other betting operators, already fell 8% in the first half.
Playtech generated €101m of free cash flow in the period and ended it with €39.2m of net cash after completing a €25m share buyback. The company reaffirmed full-year guidance of more than €270m in adjusted EBITDA, within its medium-term target range of €250m to €300m, giving markets a benchmark against which to judge how much of the flagged slowdown is already priced in.
