Lottery operator Allwyn International reports that, driven by the markets in Austria, Cyprus, and Greece, its third-quarter revenue increased by 7% year-over-year, while its National Lottery business targeting the UK also continued to succeed.
Within the three months ending September 30, total consolidated revenue reached 2.14 billion euros (2 billion pounds/2.55 billion dollars). According to the preliminary results released by Allwyn today (December 9), this exceeded the 2.01 billion pounds reported in the third quarter of 2023.
The total for the third quarter was also nearly on par with the 2.14 billion pounds reported by Allwyn in the second quarter of this year, representing a 1% growth from the first quarter's 211 million euros.
Meanwhile, total gaming revenue (gaming stakes revenue minus expenses) also grew compared to the same period last year. The total gaming revenue for the third quarter was 2.06 billion euros, 7% higher than the 1.92 billion euros from the same period last year.
Additionally, net revenue grew by 11% to 2.06 billion euros, with adjusted EBITDA increasing by 12%. The adjusted EBITDA margin for the third quarter remained at 41.8%.
CEO Robert Chvatal stated: "The main reasons for the increase in total revenue are the continuous growth in digitalization, our ongoing efforts in product development, and our commitment to providing top-tier content to our customers."
"While executing our organic growth strategy, we remain focused on our responsibility towards all stakeholders, including our firm focus on safe gaming. This quarter also benefited from a favorable jackpot cycle for the lottery, which contrasts sharply with the third quarter of last year, which, aside from an unfavorable jackpot cycle, was also impacted by customer-friendly sports event results."
Excluding acquisitions in the UK and US, growth remains strong
The group's performance is based on the overall Allwyn business and includes the acquisitions of Camelot in the UK and the US.
In February 2023, Allwyn acquired the former operator of the UK National Lottery, Camelot UK Lotteries. Prior to this, the company was preparing to take over the operation of the National Lottery and successfully completed the takeover in February this year.
In March 2023, Allwyn also completed the acquisition of Camelot Lottery Solutions in the US.
However, even excluding these two operations, revenue for the third quarter still increased. Total revenue excluding the UK and US operations was 1.32 billion euros, up 13% from the previous year.
Gross gaming revenue grew by 11%, reaching 1.07 billion euros, and net revenue grew by 13%, reaching 720.7 million euros. Additionally, adjusted EBITDA grew by 21% year-over-year, reaching 384.3 million euros.
This indicates that despite much of the recent focus being on Allwyn's UK operations, the existing business continues to perform well.
Chvatal stated: "We achieved robust profitability, including outstanding growth in Greece and Cyprus, and once again benefited from the strong performance of our equity method investees, in addition to strong organic growth, profitability also benefited from favorable tax effects this quarter."
Allwyn's success in Europe
Chvatal noted that certain markets in Europe achieved significant growth in the third quarter. Greece and Cyprus led with a combined revenue growth of 17% to 591.4 million euros. Adjusted EBITDA also grew by 26% to 213.4 million euros.
Allwyn stated that this was due to growth online, as well as strong performances in digital lotteries, sports betting, and igaming. Notably, the jackpot cycle for Tzoker was very favorable, marking the second-largest jackpot in the game's history.
Other aspects, Austria's revenue grew by 7% year-over-year to 407.3 million euros, but adjusted EBITDA fell by 2% to 74 million euros. Double-digit growth in digital lotteries (17%) and igaming (12%) were the main drivers of growth in the country.
However, not all news from Europe was positive. Italy's revenue fell by 6% to 521.9 million euros. Allwyn attributed this to particularly strong performance in the comparable period of 2023.
Furthermore, revenue in the Czech Republic, where Allwyn's business originated, fell by 4% to 118.1 million euros. This was mainly due to the impact of divesting non-gaming businesses.
UK third-quarter revenue nears 1 billion euros
In the UK market, although activity levels remained largely stable compared to the previous year, revenue still grew by 3% year-over-year to 980.9 million euros.
Despite progress in marketing activities and the launch of instant lottery games, Allwyn stated that performance at this stage of the new license still reflects limited product and channel development.
To address this issue, Allwyn stated that the company will continue to focus on executing the plan to "transform" the National Lottery. This will include upgrading old systems to support the product portfolio and improve customer propositions.
However, despite revenue growth, the UK's adjusted EBITDA fell by 84% to 7 million euros. This was due to the implementation of new incentives and profitability mechanisms with the start of the new National Lottery license.
Acquisition of IWG boosts North American business growth
In North America, revenue grew by 5% compared to the third quarter of 2023, reaching 55.8 million euros, with adjusted EBITDA also growing by 1%, reaching 11.1 million euros.
Non-gaming business revenue came from private management services provided for the Illinois Lottery under a private management agreement. Additionally, the group also generates revenue by providing gaming technology solutions and content for group entities and third-party clients.
In the second quarter, Allwyn confirmed that it had completed the investment in Instant Win Gaming (IWG). This means that the company now holds a 70% stake in this online content developer, which is now part of its North American operations.
According to Allwyn, the performance in North America for the second quarter was presented on a "100% basis," as if IWG had been consolidated during both periods.
Revenue exceeds 6.39 billion euros so far this year
Looking at Allwyn's performance so far this year, consolidated revenue up to the end of September rose to 6.39 billion euros. This represents a 12% increase from the same period last year.
Gross gaming revenue for the quarter grew by 12%, reaching 6.14 billion euros, and net revenue grew by 10%, reaching 2.86 billion euros. Additionally, adjusted EBITDA from the beginning of the year to date rose by 1%, reaching 1.11 billion euros.
Even excluding the UK and US operations, the data so far this year is encouraging. Excluding these operations, group revenue grew by 7% year-over-year to 3.32 billion euros, total gaming revenue grew by 7% to 3.18 billion euros, and net revenue grew by 7% to 2.11 billion euros.
Excluding the UK and North America, adjusted EBITDA also grew by 9%, reaching 1.06 billion euros.
"Overall, I am pleased with the progress we continue to make," Chvatal stated. "I believe we are well-prepared for the remainder of 2024 and the next chapter of our growth story."
