Allwyn Entertainment has detailed progress across multiple markets for its multinational operations, establishing a framework for expansion in the UK and reporting growth in established markets.
Although Italy posed some challenges for the group, it remained an outlier as the company’s Austrian lottery and casino operations saw a spike in revenue, coupled with increased investment in the Greek market.
Growing to pan-European lottery leadership
Publishing its full year and Q4 trading update, the pan-European lottery company reported ‘total consolidated revenue’ for FY22 of €4bn, up 24% on corresponding 2021 results of €3.2bn.
FY22 GRR stood at €3.8bn, realso an increase of 24% to €3.2bn. Overall, Allwyn’s net revenue for the full 12 months rose by 25% from €2bn to €2.5bn.
Meanwhile, FY22 operating EBITDA rose 19% to €1.1bn (€954m), whilst adjusted EBITDA grew 21% from €967m to €1.2bn, with a margin of 46%, slightly down from 48.5% the year prior.
The firm primarily attributed revenue growth to its online operations and the performance of both its Austrian and international casino businesses, although acknowledging that these brands had been impacted by COVID-19 comparatives.
This growth in revenue was cited as the driving force behind the uptick in adjusted EBITDA, whilst Allwyn asserted that the reduction in its consolidated margin was largely due to ‘shifts in the contribution of our different businesses’.
“I am pleased to report that Allwyn achieved another year of strong financial results in 2022, reflecting our continued successful execution of our organic and inorganic growth strategies,” said Group Chairman Robert Chvatal.
“These results demonstrate how much the business has progressed in the last several years, with both Total Revenue and EBITDA growing by over 90% since 2019 – during which time we have also deleveraged by more than 1x Adjusted EBITDA, significantly increased our ownership in our existing businesses, and strengthened our platform and increased our strategic optionality and diversification through securing entries into the UK and US markets.
“While delivering this strong performance, we have remained focused on our responsibilities to all our stakeholders and on safer gaming.”
Assessing Allwyn’s results on a quarterly basis, the group reported a year-on-year revenue uptick from Q4 2021 of 13% to €1.1bn (Q4 2021: €982m), with GGR also increasing by 13% from €937m to €1bn.
Net revenue rose by 14% to €708m (€624m), but EBITDA encountered more hurdles than in other quarters, with operating EBITDA falling by 8% to €277m (€301m). This was slightly compensated for by a 2% increase in adjusted EBITDA to €298m (€293m), although the margin dropped from 47% to 42%.
In its analysis of full year trading, Allwyn observed ‘inflationary pressures’ which had an impact on general consumer sentiment, but asserted that this had a ‘limited impact’ on its own business, citing ‘the lower price point of our products and low average speed per customer’.
Although energy costs have been rising across Europe, having an effect on the expenses of many land-based casino, lottery and betting businesses, Allwyn stated that this accounts for a low portion of its costs, adding that its profitability was helped by the fact a ‘significant portion’ of its costs are linked to revenues.
Strategic strides across all borders
When looking at Allwyn’s 2022 performance on a geographic basis, one of the most eye-catching developments is unsurprisingly the consolidation of its UK operations.
March saw the company named as the new 10-year licence holder of the UK National Lottery, ending the sole tenure of Camelot – which held the licence from the lottery’s creation in 1994.
Although Camelot mounted a legal challenge against the UK Gambling Commission’s (UKGC) decision to hand over stewardship to Allwyn, this was dropped when the latter agreed to acquire its former bidding rival.
Allwyn would solidify its standing as operator of the UK National Lottery, with its tenure due to start in February next year, by completing its acquisition of both Camelot UK in 2022 and Camelot Lottery Systems (Camelot LS) in March 2023, purchasing the assets from the Ontario Teachers Pension Plan (OTPP).
Across the other side of the continent, Allwyn bolstered its standing in Greece by acquiring a 36.75% stake in Kaizen Gaming – operator of the Betano and Stoiximan brands – and increasing its shareholding in Greek lottery OPAP to over 50%.
Chvatal asserted to the group’s investors that its Greek endeavours, coupled with its successful UK National Lottery tender, was an ‘excellent demonstration’ of its expertise across various European markets.
“We’ve continued to make great progress with this strategy in 2023, completing two landmark acquisitions,” he explained.
“First, the acquisition of Camelot UK, the current operator of the UK National Lottery, which supports the successful delivery of the National Lottery through 2023 and over the next decade.
“Second, we have acquired Camelot Lottery Solutions, which operates the Illinois Lottery, adding a seventh lottery market to our footprint and providing interesting strategic optionality, with a great platform in the US market and in-house iLottery technology.”
From a financial perspective, Allwyn’s Greece and Cyprus full year revenue rose 27% from €1.6bn to €2bn, with adjusted EBITDA also up 26% to €730m (€578m), with net revenue growth of 29% to €725.5m (€555m).
In Italy, however, difficulties were encountered with revenue, net revenue and EBITDA declining across the board at the end of the year. Revenue dropped 7% to €2.2bn (€2.4bn), net revenue 8% to €459m (€500m) and adjusted EBITDA 9% to €373m (€409m).
The group’s founding market of the Czech Republic remains steady with revenue growth of 11% to €471m (€425m), but the UK and Austria were the standout sectors for the group, the latter seeing revenue and adjusted EBITDA both rise 24% to €1.4bn (€1.1bn) and €261m (€211m).
Chvatal concluded: “Overall, I am very pleased with Allwyn’s financial and strategic performance in 2022 and the start of 2023 and believe we are well placed for the next chapters of our growth story.
“I would like to thank the entire Allwyn team for their hard work and for seizing opportunities to progress our strategic priorities and am very much looking forward to working together with them and with new colleagues from Camelot in 2023.”