Playtech has recently released the second profit warning within a year, and apparently, the company blames the Asian market and new competitors for their disappointing results.
According to Playtech, their share price recorded a significant drop, while revenue coming from the Asian market will be around €70 million lower than it was expected.
Is Competition Too Strong?
Namely, the average daily revenue is affected by “an increasingly competitive backdrop” and “a particularly aggressive pricing” environment from new entrants.
Apparently, the unexpected price war had a negative effect on the Playtech's business in Asia.
The company also faced difficulties in Malaysia, where its licensees were under scrutiny since the country's government tried to fight illegal gambling.
All this has led Playtech to adjust its earnings for 2018 to a €320-360 million range, but the results for the full year will not include the €220 million of profits generated by selling the stakes in online gambling group GVC last month.
Mor Weizer, Group Chief Executive Officer at Playtech, noted that clearly, the recent trading performance in Asia was disappointing, but stated 1the company had taken steps to further support its partners in the region and would continue to work to preserve its position in the face of an increasingly competitive environment.
Weizer added that in line with the stated strategy, progress in fast-growing, regulated and soon to-be-regulated markets continued apace. He pointed out the momentum in key markets had continued in the first part of 2018 with new agreements with Gala Leisure in the United Kingdom, SAS in Portugal and Totalizator, the Polish National Lottery.
More Opportunities in Other Places
Weizer added the regulatory developments in the United States represented a significant opportunity for the Group.
He finished by emphasizing the organic growth reported in the non-Asian B2B gaming business, combined with the recent acquisition of Snaitech in Italy, provided management with confidence that this strategy would materially improve the quality and diversification of Playtech's performance in 2018 and beyond.
Weizer also highlighted the opportunities that still existed within regulated European jurisdictions for Playtech. In the meantime, the company continues to execute a tier 1 operator strategy, which will include significant moves in the United States, where the repeal of the PASPA act had opened a whole new array of market opportunities.