Lottery operator Allwyn International has reported a 7% year-on-year increase in revenue for Q3 on the back of growth in Austria, Cyprus and Greece, while its UK-facing National Lottery business also continued to see success.
Total consolidated revenue during the three months to 30 September hit €2.14 billion (£2.00 billion/$2.55 billion). This surpasses the £2.01 billion reported in Q3 2023, according to preliminary results published by Allwyn today (9 December).
The Q3 total is also almost on par with the £2.14 billion Allwyn reported in Q2 this year and a 1% increase on the €2.11 million accrued in Q1.
Meanwhile, gross gaming revenue, which is revenue from gaming wagers minus payouts, was also higher year-on-year. The €2.06 billion posted in Q3 beats last year’s €1.92 billion total by 7%.
In addition, net revenue improved 11% to €2.06 billion for the quarter, with adjusted EBITDA rising 12% on the back of this. Adjusted EBITDA margin remained level at 41.8% during Q3.
“Total revenue increased, with the continuing growth of digital, our ongoing efforts in product development and our focus on bringing best-in-class content to customers being the key drivers,” CEO Robert Chvatal said.
“In executing our organic growth strategy, we remain focused on responsibilities to all stakeholders, including our resolute focus on safe play. The quarter also benefited from favourable jackpot cycles in lottery. This contrasted with Q3 last year which, in addition to unfavourable jackpot cycles, was impacted by customer-friendly sports results.”
Growth remains when excluding UK and US acquisitions
Group results are based on the Allwyn business as a whole and include Camelot acquisitions in both the UK and US.
Allwyn acquired Camelot UK Lotteries, the previous operator of the UK’s National Lottery, in February 2023. This came as it prepared to assume control of the operating of the National Lottery, which eventually took place in February this year.
In March 2023, Allwyn also completed its acquisition of Camelot Lottery Solutions in the US.
However, even when excluding these two businesses from the equation, revenue increased in Q3. Total revenue without the UK and US operations stood at €1.32 billion, an increase of 13% compared to the previous year.
Gross gaming revenue was 11% higher at €1.07 billion, while net revenue increased 13% to €720.7 million. In addition, adjusted EBITDA improved 21% year-on-year to €384.3 million.
This shows that while much of the attention has been on Allwyn’s UK operations in recent months, existing businesses continue to perform well.
“We delivered solid profitability, including excellent growth in Greece and Cyprus, and once more benefited from a strong performance from our equity method investees where, in addition to strong organic growth, profitability benefited from a favourable tax effect in the quarter,” Chvatal said.
European success for Allwyn
As noted by Chvatal, certain markets across Europe saw significant growth in Q3. Greece and Cyprus led the way with a 17% increase in consolidated revenue to €591.4 million. Adjusted EBITDA was also 26% higher at €213.4 million.
Allwyn said this was helped by online growth, as well as strong performances across numerical lotteries, sports betting and igaming. In particular, it noted a favourable jackpot cycle in Tzoker, which reached the second biggest jackpot in the game’s history.
Elsewhere, revenue in Austria was up 7% year-on-year at €407.3 million, although adjusted EBITDA dipped 2% to €74.0 million. Double-digit increases in numerical lotteries (17%) and igaming (12%), were the main reasons for growth in the country.
However, it was not all good news in Europe. Revenue from Italy declined by 6% to €521.9 million. Allwyn put this down to a particularly strong comparable period in 2023.
In addition, revenue in the Czech Republic, where Allwyn began its operations, fell 4% to €118.1 million. This was primarily due to the sale of a non-gaming business impacting performance.
UK revenue nears €1.00bn in Q3
Within the UK market, revenue grew 3% year-on-year to €980.9 million. This was despite activity levels being broadly stable compared with the year prior.
While marketing initiatives and instant lotteries game launches progressed, Allwyn said that performance continues to reflect limited product and channel developments at this stage of the new licence.
To rectify this, Allwyn said it remains focused on executing plans to “transform” the National Lottery. This will include upgrading legacy systems to support the product portfolio and improving the customer proposition.
However, despite revenue growth, adjusted EBITDA in the UK fell 84% to €7.0 million. This was due to a new incentive and profitability mechanism with the start of the new National Lottery licence.
IWG acquisition helps North America growth
In North America, revenue was 5% higher than in Q3 2023 at €55.8 million, with adjusted EBITDA also increasing by 1% to €11.1 million.
Revenue from non-gaming activities is generated from private management services relating to operation of the state lottery in Illinois under a private management agreement. It also draws revenue from gaming technology solutions and content to group entities and third-party customers.
In Q2, Allwyn confirmed it had completed its investment in Instant Win Gaming (IWG). This saw it take a 70% stake in the online content developer, with this now operating as part of its North American business.
According to Allwyn, North American Q2 results are presented on a ‘100% basis’, as if IWG were consolidated in both periods.
Year-to-date revenue tops €6.39 billion
Looking at Allwyn in the year-to-date, consolidated revenue for the nine months to the end of September rose to €6.39 billion. This is 12% higher than during the same period last year.
Gross gaming revenue for the period is up 12% at €6.14 billion and net revenue 10% at €2.86 billion. In addition, adjusted EBITDA for the year-to-date ticked 1% higher to €1.11 billion.
Even when excluding the UK and US operations, the year-to-date figures make for positive reading. Group revenue with these exclusions is 7% higher year-on-year at €3.32 billion, with gross gaming revenue up 7% at €3.18 billion and net revenue 7% at €2.11 billion.
Adjusted EBITDA without the UK and North America is also 9% higher at €1.06 billion.
“Overall, I am pleased with our continued progress,” Chvatal said. “I believe we are well-placed for the remainder of 2024 and the next chapters of our growth story.”
