It is not a good time to be a shareholder in online gaming tech giant Playtech. Things were great for the Playtech investors three years ago but a lot can change in three years.
Playtech shares traded for 995.50 pence per share on the London Stock Exchange in mid-2017. Those same shares are now only worth 366.50 pence each and could drop lower.
Investors saw the company’s Half-year report on September 17 and it makes sorry reading. Profit plunged a staggering 85 percent to €4.6 million from €24.8 million in the first half of 2019. Those figures are shadows of the €89.6 million profit made in H1 2017 when the company was flying.
Revenue fell to €564 million. Playtech management blamed Italian pandemic lockdowns and Asian black market restrictions.
Asia is, or should that be was, a major market for Playtech. Asian governments’ pandemic restrictions caused a 35% reduction in revenue to €42.3 million.
Almost every arm and division of Playtech saw revenue and profit fall through the floor. Tradetech, the company’s financial division, was the only strong performer. Its revenue hiked 123% to €87.3 million. Playtech warned this rise is unlikely to continue as market volatility has levelled off from earlier in the pandemic.
Rumours of Playtech offloading Tradetech began in August but there was no mention of this in the financial report.
Playtech CEO Addresses Investors
Mor Weizer is the CEO of Playtech said its management team is cautious about the upcoming months. Additional or new lockdown measures could severely damage revenue and profits for the H2-2020.
“The attitude of our people coupled with the resilience and diversification of our technology-led business model has delivered a strong first-half performance during an extremely challenging period for the industry. These strengths, combined with early decisive action to focus on the safety of our employees and protect the Group’s cash flow, has placed us in a strong position to benefit from the recovery and to capture the exciting market opportunity in the US and Latin America.”
“The extraordinary trading conditions during the pandemic have brought us closer than ever to our licensees and we have seen an even greater demand for our products, with an increased focus across the globe on intelligent software and personalised player journeys and protection tools. As the leading technology company in the gambling industry, our licensees look to us to deliver innovation that changes the way players experience gambling entertainment.”
“As well as increasing our work with existing tier one licensees and adding more than 50 new brands to our SaaS model, we have also continued to execute our expansion into strategically important markets such as the US with our first launch in New Jersey and further structured agreements in Latin America. The scale of our technology and the breadth of our product offering mean Playtech can capture commercial opportunities in the fast-growing US and Latin America markets outside the remit of traditional B2B suppliers and we are investing in accelerating this strategy.”
Shareholders Vote With Their Feet
The Playtech share price fell 6.39 percent at the close of trading in London as investors sold large holdings. The company’s senior management team are already under immense pressure from existing shareholders even before these poor trading figures.
Some 63.7 percent of shareholders voted against the management’s remuneration earlier this year. The salary of CEO Mor Weizer is a particular bone of contention, for example.
Weizer earned €2,930,588 in 2019, up from €2,055,437 in 2018. His combined salaries for the past 10-years weigh in at €19,528,000. Playtech’s value has halved during Wiezer’s reign.
The company does usually make a lot of money, however. It powers dozens of large online casinos and has its sports betting software installed around the world. Playtech invested heavily to diversify its portfolio. Only time will tell if that diversity pays off.