The double addition has had a significant impact on Allwyn, with revenue almost doubling year-on-year in Q3 to €368.4m. Earnings were also higher in the period while adjusted free cash flow was 10% higher at €336.6m.
The group purchased Camelot UK, current operator of the UK’s National Lottery, in February. This comes ahead of Allwyn taking control of the lottery in February next year under the fourth National Lottery licence.
Reflecting on Q3, Allwyn CEO Robert Chvatal said he was pleased with progress across the group. He added that the Q3 results show Allwyn is well placed for further growth in Q4 and beyond.
“I am pleased to report that Allwyn delivered another quarter of solid financial performance and strategic progress, notwithstanding headwinds from customer-friendly sports results (which impacted the sports betting sector in general) as well as less favourable jackpot cycles,” Chvatal said.
“Total revenue increased by 98% year-on-year in Q3 2023, reflecting a steady performance in our existing geographies in addition to the significant contribution from the Camelot acquisitions that we completed in the first quarter.
“We continued to deliver solid margins and free cash flow generation, with only a limited impact of inflation on our cost base, reflecting our favourable cost structure. Our largest cost categories were directly linked to revenue and our focus on cost and capital efficiency.”
Gross gaming revenue up 98% at Allwyn
Looking at preliminary results for the three months to 30 September, Allwyn did not publish figures in full. However, it does offer an insight into revenue performance for the quarter.
Consolidated gross gaming revenue in Q3 was 98% higher at €1.92bn. Again, this was based on the whole business, including the Camelot UK and Camelot LS operations. Net revenue – total revenue minus gaming taxes and good causes contributions – also increased by 38% to €883.3m.
When excluding the double Camelot acquisition, total revenue was 1% lower at €1.01bn for the quarter. Gross gaming revenue was level at €965.2m, with net revenue declining 1% to €636.1m.
Focusing on data excluding the acquisitions, Allwyn said growth was impacted by customer-friendly sports results, as seen across the industry. It was also hit by unfavourable jackpot cycles, with jackpots for key games being won before growing to the size to attract less frequent players. Allwyn gave the example of the EuroMillions jackpot reaching a record high in Q3 of 2022.
UK makes up almost half of Q3 revenue
Breaking down geographical performance, the UK is now the core market for Allwyn by some distance. Total revenue in the UK in Q3 was €956.5m, which was 12% lower than last year, due to weaker performance of numerical lotteries and shorter EuroMillions jackpot cycles.
The Allwyn UK will take over operations of the UK National Lottery from Camelot UK on 1 February 2024. Allwyn noted certain costs related to preparations for the transition to the new licence.
Elsewhere, total revenue in the Greece and Cyprus segment slipped 4% to €503.4m. Allwyn put this down to unfavourable jackpot rollovers, customer-friendly sports results and one-off natural events, including the wildfires that hit Greece, which impacted the availability of some points of sale (POS).
However, Allwyn did note growth within its online channel in the region. This posted higher gross gaming revenue year-on-year reflecting stronger igaming performance and helped by the launch of new games.
There was also better news in Italy, with total revenue up 8% year-on-year to €554.0m.
Austria will be hit by loss of casino licence in Germany
In contrast, the Austria segment reported growth, helped by a good performance in instant lotteries, igaming and video lottery terminals and casinos. Total revenue here was up 2% to €379.9m.
Allwyn, however, said the performance of numerical lotteries was somewhat weaker. This was impacted by shorter jackpot cycles in EuroMillions as well as a record rollover in the prior year.
Allwyn also noted the next licence to operate 10 casinos in the Lower Saxony region of Germany was awarded to a competitor post quarter end. The activity is reported within VLTs and casinos in the Austria segment. The current licence ends in August 2024.
The group also noted growth in the Czech Republic, with total revenue up 6% to €123.1m. This, Allwyn said, was driven by good organic top line growth across all major products. In particular, it noted a strong performance by instant lotteries and igaming.
Finally, the US-facing Allwyn LS Group business took €46.5m in total revenue in Q3, up 12%. This was mainly due to a strong performance of the Illinois Lottery, which the business operates.
Year-to-date consolidated revenue tops €5.70bn
Allwyn did not disclose further details in terms of costs or profit. However, it did break down its year-to-date performance. Total revenue for the nine months to 30 September reached €5.70bn, again up 98% from last year’s €2.88bn.
Gross gaming revenue hiked 99% to €5.47bn and net revenue was 43% higher at €2.60bn. The group also noted that adjusted EBITDA increased 26% to €1.10bn and adjusted free cash flow 23% to €1.02bn.
Excluding the two Camelot acquisitions, total revenue was still 7% higher at €3.09bn. Of this total, €2.97bn was designated as gross gaming revenue, up 8%, while net revenue jumped 8% to €1.97bn.
Adjusted EBITDA climbed 11% to €968.5m and adjusted free cash flow 8% to €901.2m.
“Overall, despite the sector headwinds in the quarter, I am very pleased with Allwyn’s continued progress and believe we are well placed to end 2023 successfully and for the next chapters of our growth story,” Chvatal said.