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Allwyn revenue up despite “weakened” consumer demand in Q1

| By Daniel O'Boyle
Lottery giant Allwyn International experienced rapid growth in Q1 of 2022, as CEO Robert Chvatal said the business successfully dealt with the challenge of “weakened” consumer demand.

Chvatal said the macroeconomic environment created difficulties during the quarter, but that these had not had a major impact on revenue.

“We note that general consumer demand has weakened in the last few months due to persisting inflationary pressures,” he said. “However, our business has seen only a limited impact so far due to the low price point of our products and low average spend, as well as our large number of regular players.”

The business made €869.3m in gross gaming revenue for the quarter, up 65% from Q1 of 2021, as revenue from each of Allwyn’s markets increased.

Slightly more than half of this revenue came from Greece and Cyprus, where Allwyn owns a 48.1% stake in lottery operator OPAP.

Here, revenue was up by 162.0% to €457.2m, partly due to the fact that Allwyn increased its stake in OPAP during the quarter.

Austria, where OPAP owns a stake in Casinos Austria and Austrian Lotteries, brought in €309.3m – up 52%.

Revenue from Allwyn’s home market of the Czech Republic was up by 7% to €102.8m.

Similarly, revenue from every vertical also increased.

Numerical lotteries remained Allwyn’s leading product, bringing in €364.3m, up 32%. Instant lottery revenue was up 30% to €64.2m. Revenue from sports betting was up 76% to €162.3m, while igaming revenue was up by 6% to €112.2m.

Meanwhile, video lottery terminals and casinos went from generating only €1.4m in revenue to bringing in €166.3m.

After gaming taxes, which grew less quickly then gross revenue, net gaming revenue was up by 89% to €534.4m.

“I am pleased that the first quarter in 2022 was mostly unimpacted by Covid-19, with only some operations in Austria, Greece and Cyprus, and Italy being subject to limited coronavirus-related restrictions, most of which have been subsequently lifted during Q2,” Chvatal said. “The fully reopened physical retail channel in these markets performed well while online sales continued to be strong across geographies, with the online channel contributing a record 43% of GGR in the Czech Republic.”

Operating costs also increased, but again more slowly. This, the business said was partly due to a successful restructuring plan implemented in June 2020, allowing the business to scale its business back up at lower cost after the Covid-19 pandemic.

As a result, operating earnings before interest, tax, depreciation and amortisation (EBITDA) for Q1 of 2022 was more than double that of Q1 2021, at €267.4m.

After depreciation and amortisation, Allwyn made a profit from operating activities of €206.0m, up 180% from Q1 of 2021.

The business also paid €44.5m in finance-related costs and €32.6m in tax, leading to a final profit of €128.9m, which was almost four times the profit recorded a year earlier.

The quarter also included three major milestones for Allwyn. In January, the business announced plans to merge with special-purpose acquisition company (SPAC) Cohn Robbins Holdings Corp, allowing it to list on the New York Stock Exchange.

In March, the Gambling Commission then announced that Allwyn would become the next operator of the UK National Lottery, which would make it the first non-Camelot operator in the lottery’s history.

“I am absolutely thrilled that in March 2022 we were selected as the preferred applicant for the fourth UK National Lottery licence by the Gambling Commission,” Chvatal said.

However, finalisation of this deal has been delayed by a legal challenge from Camelot. The Technology and Construction Court heard the complaint on 11 and 12 May, but has not yet made a ruling.

Finally, right at the end of the quarter, Allwyn completed its rebranding from its former name of Sazka, changing the names of all of its businesses in order to reflect a more “global” approach.

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