Playtech Revenues Soar By 18% in H1 of 2016

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Monday, September 26th, 2016 | Written by Stephen Smith

Playtech, the owner of the iPoker network, has recently shared its revenue results for the first half of 2016, and the numbers reflect a trend that seems to be prevalent throughout iGaming–online casino games are booming while iPoker is on the decline. Despite the weak performance of Playtech’s H1 online poker results, CEO Mor Weizer (photo) expressed his commitment to the “important vertical” going forward, and stating his optimism for the future said:

“During the period we deployed our new mobile native offering across a number of customers in our client base, and launched Win2day, an Austrian operator which is scheduled to share liquidity with the Finnish monopoly, RAY. Following the French Senate’s approval of liquidity sharing between EU and EEA countries we expect to see similar liquidity pools emerge in Poker.”

Quick Overview

Playtech is the world’s biggest gambling software supplier, and over the past few years the company has seen its business go from strength to strength, generating revenues of €367m in 2013, €457m in 2014, before soaring by 38% to €630.1m in 2015. Over the past 52 weeks Playtech shares have dropped as low as 699.00p (February), and as high as £944.50p, but are currently trading at £905.50, giving it a £2.93bn market capitalization.

Key Facts from H1 Report:

1: Overall, H1 revenues for Playtech are up compared to the first half of 2016, with the operator posting an overall 18 percent increase in revenues to $379 million compared to H1 of 2015.

2: Poker revenues are down from the same period of time last year, falling by 16 percent to $5.6 million from the same period of time in 2015.

3: The iPoker network is falling behind competitors. At the end of August, the network was ranked 10th in terms of game traffic, which is the lowest position that the network has held in recent years. Only 760 seats were occupied on average at the network’s virtual tables.

4: While online poker in general is on the decline, the iPoker network is faring worse than the rest of the industry. The general trends show that the average decrease in cash game traffic is about 40 percent industry wide; however, cash game traffic has decreased by 66 percent at the iPoker network.

5: To try and combat the problems with low iPoker revenues, Playtech revised their rules and moved to a source-based rake setup that is designed to appeal to recreational players and hopefully bring more people to their tables. They also made modifications to their poker client to try and enhance player experience. In 2015, Playtech said that these changes were going to stabilize the declining market; however, the numbers this year indicate that the modifications made did not manage to stop the contraction in revenues or the flight of players from Playtech.

6: Despite the beleaguered iPoker network, the overall financial picture at Playtech is still rosy. The company’s casino games were up 27 percent when you look at the numbers from a constant currency standpoint with a $198 million increase in revenues in 2016 compared to 2015.

7: Mobile gaming was responsible for a large chunk of the boost in casino gaming revenues for Playtech, accounting for 80 percent of the increase. Roughly 29 percent of all of Playtech’s revenue now comes from mobile gaming worldwide, but in some market areas mobile gaming is dominating. In the UK, for example, mobile gaming currently makes up 54 percent of total revenues.

Acquisitions Planned

While Playtech is showing signs of struggling in the online poker market, a look at PokerScout’s most recent ‘Online Poker Traffic Report’ shows that the iPoker network has now improved its ranking to 5th place, and is currently showing 900 players over a seven day average. In the meantime, we’re unlikely to see the company make any huge changes to its iPoker network going forward, as it seems that Playtech has decided there are more profits to be made in other areas of iGaming. Case in point, the company still has a large amount of cash on hand at its disposal and in recent years has continued to make acquisitions to expand its business offerings, although it’s obvious by looking at the acquisitions that Playtech is focusing primarily on buying companies that provide solutions for businesses in the online gaming industry. As CEO Mor Weizer commented:

“Playtech continues to focus on M&A to augment organic growth and is currently in discussions for a number of potential acquisitions in the Gaming division and Financials division.”