Playtech shares in freefall following profit warning
Gambling software company Playtech has seen a massive drop in their stocks after issuing a dire expectation for profits this year.
Shares were down almost 30%, sitting around 530p after previous close of 753.
The company makes software behind some of the world’s largest gambling platforms, covering both sports betting and online casino games.
It has highlighted struggles in the Asian market, particularly China and Malaysia, as the catalyst behind the current problems.
The company said: “Given that the downturn in Asia has been relatively sudden and taking into account Playtech’s centralised cost base, the vast majority of this revenue loss will drop through to adjusted EBITDA.”
New entrants to the market in China are believed to have hit prices, in turn leaving a dent in Playtech’s revenue. In addition, they have felt the impact of tighter legal conditions in Malaysia, which scuttled the market last year and has not improved.
CEO Mor Weizer said: “Clearly the recent trading performance in Asia is disappointing. We have taken steps to further support our partners in the region and we will continue to work to preserve our position in the face of an increasingly competitive environment.
“In line with our stated strategy, progress in fast-growing, regulated and soon to-be-regulated markets continues apace. Momentum in key regulated markets continued in the first part of 2018 with new agreements with Gala Leisure in the UK, SAS in Portugal and Totalizator, the Polish national lottery. Additionally, regulatory developments in the US represent a significant opportunity for the group.
“The organic growth reported in the non-Asian B2B gaming business combined with the recent acquisition of Snaitech in Italy provides management with confidence that this strategy will materially improve the quality and diversification of Playtech’s performance in 2018 and beyond.”
Adjusted EBITDA for the year is now expected to be between €320m and €360m, a drop of €70m from initial expectations. It announced in February a mark of €322m for 2017.
The warning puts more pressure on both the firm and Weizer, after an earlier profit warning in November last year.