Playtech issues second profit warning within a year
Playtech, a provider of software for gambling operators, has issued its second profit warning within a year. As a result, shares in the company had dropped by 26% at the time of writing on Monday.
Playtech has said that a squeeze imposed by new competition, along with disappointing performance in Asian markets, have significantly impacted revenue. The 26% fall in the share price has knocked hundreds of millions from the company’s value.
Expected adjusted earnings are now thought to be between €320m to €360m.
Playtech is able to serve the Chinese market via a licence it holds in the Philippines. The market is lucrative for the group, with estimates suggesting about 40% of total profits derive from China.
However, many new firms have been able to enter the Chinese market this year, which Playtech says has severely impacted upon its expected profits and led to the second profit warning being issued. Revenues in Asia are expected to be €70m lower than previous estimates.
Commenting on the performance in Asia, CEO Mor Weizer said:
Clearly the recent trading performance in Asia is disappointing… We have taken steps to further support our partners in the region and we will continue to work to preserve our position in the face of an increasingly competitive environment. Given that the downturn in Asia has been relatively sudden and taking into account Playtech’s centralised cost base, the vast majority of this revenue loss will drop through to adjusted EBITDA.– Mor Weizer, CEO of Playtech
Second blow to Playtech shares
Playtech were forced to issue a first profit warning back in November last year after the Malaysian Government announced a crackdown on gambling syndicates in the country.
The result was for shares to drop 22% on the back of that warning and the company has stated there has been little improvement performance-wise in Malaysia.
Outside of Asia the company continues to perform better. Revenue not including Asia increased by 7% in H1 of 2018 and 12% in Q2.
Playtech also purchased the Italian betting firm Snaitech for €291m in April earlier this year.