Growth across Austria, Greece and Cyprus helped push revenue up 5% year-on-year at Allwyn in Q2, supported by the ongoing impact from the UK National Lottery.
Revenue in the three months to 30 June hit €2.15bn (£1.81bn/$2.39bn). This is ahead of €2.05bn in Q2 last year and also 2% more than Q1’s €2.11bn haul.
Gross gaming revenue – revenue from gaming activities – hit €2.06bn for the quarter. Again, this was 5% more than the previous year and 2% ahead of Q1.
However adjusted EBITDA declined 11% year-on-year to €340m. This was down to lower profitability in the UK market, as a result of a new incentive and profitability mechanism which sets the returns to good causes from National Lottery products at the same level. That in turn means Allwyn’s earnings only grow if returns to good causes go up.
This mechanism came into effect from the start of the next National Lottery licence on 1 February. Removing the UK and Allwyn’s US business, adjusted EBITDA would have been up 4% year-on-year.
Despite this, CEO Robert Chvatal is upbeat about long-term prospects for the group, setting out hopes for more revenue growth in 2024 and beyond.
He said: “I’m pleased to report another quarter of continued progress and solid financial performance, reflecting continued execution of our growth strategies.”
UK National Lottery continues to push revenue up
As was the case during Q1, Allwyn taking over the running of the UK’s National Lottery had an impact on performance. Allwyn assumed control on 1 February, replacing incumbent Camelot, which had operated the National Lottery since its launch in 1994.
Total revenue in the UK during Q2 topped €1.02bn, up 4% on the previous year. Allwyn said marketing initiatives and instant lotteries game launches progressed, further growth was held back by product and channel developments at what is still an early stage of the new licence.
However, while UK revenue increased, adjusted EBITDA for the market was down sharply. This fell 92% to $4.2m, mainly due to the new incentive and profitability mechanism implemented at the start of the National Lottery licence.
“We delivered good top line momentum and solid growth in profitability in most geographies, with our overall financial performance reflecting the new incentive and profitability mechanism under the new licence in the UK,” Chvatal said.
Not all Greek to Allwyn: growth across Europe
Turning to matters outside the UK, results from OPAP in Greece and Cyprus made for positive reading at Allwyn. Revenue increased 7% year-on-year to €558.2m, with adjusted EBITDA edging up 2% to €183.9m.
Allwyn noted continued strong online momentum and performance across sports betting and igaming, It also made reference to “resilience” in retail, benefiting from major sports events such as football’s Euro 2024.
Meanwhile, Allwyn saw Italy deliver good top-line growth, with revenue increasing by 4% to €581.8m. This was accompanied by a 3% rise in adjusted EBITDA to €97.0m.
Elsewhere, Casinos Austria revenue also increased 7% to €401.0m, with adjusted EBITDA rising by 4% to €69.6m. Allwyn put this mainly down to a 10% rise in numerical lotteries, including EuroDreams, and 18% increase in igaming revenue.
North of the border in the Czech Republic, where Allwyn traces its roots as Sazka Group, revenue dipped 1% to €124.6m, despite all major product lines performing well and digital growth. On the flip side, adjusted EBITDA climbed 5% to €32.1m, benefiting in part from operating efficiency and cost phasing.
What about Allwyn LS in the US?
Outside of Europe, Allwyn has a presence in the US via its Allwyn LS business. Acquired last year, this was previously known as Camelot Lottery Solutions (Camelot LS) before being rebranded under the Allwyn umbrella.
Revenue from Allwyn LS in Q2 increased 3% year-on-year to €48.6m. This relates solely to operations of the state lottery in Illinois under a private management agreement. Allwyn said higher operating cost recharges allowed revenue to rise during the quarter.
As for adjusted EBITDA, this fell 61% €3.1m. The group said this was primarily owing to lower incentive fees, also noting weaker development in June due to higher prize payouts, as well as a strong performance in Q2 last year.
H1 revenue tops €4.26bn
As to how Allwyn performed in H1, revenue for the six months to 30 June reached €4.26bn. This was 15% more than in last year, with much of it driven by the UK National Lottery licence.
However, when excluding Camelot acquisitions in both the UK and US, revenue was still 5% higher in H1 at €2.19bn. This, Allwyn said, demonstrates ongoing growth in other markets across Europe.
In terms of adjusted EBITDA for H1, this topped €697.8m, a drop of 4% from last year, mainly due to the mechanism put in place for the UK licence. Excluding Camelot acquisitions, this figure was 4% higher year-on-year at €672.8m.
“I am pleased with our continued progress and believe we are well-placed for the remainder of 2024 and the next chapters of our growth story,” Chvatal said.
Allwyn completes Instant Win Gaming investment
In other news, Allwyn has this week completed its investment in Instant Win Gaming (IWG).
As announced in February, Allwyn entered an agreement to purchase a 70% stake in the online content developer. Financial details of the deal were not disclosed but Allwyn said it hoped to complete the purchase in H2.
IWG co-founders Rhydian Fisher and Simon Bucknall, currently serving as CEO and COO of IWG, respectively, will retain their roles.
IWG supplies online instant win games to more than 25 national and state lotteries around the world. The IWG portfolio of content currently includes over 250 titles.
