Allwyn, a leading multinational lottery operator, has released its financial results for the second quarter of 2024. The company reported solid overall growth, particularly in revenue, but faced challenges in certain markets, which affected its adjusted EBITDA.
Overview of Allwyn’s Q2 2024 Financial Results
In Q2 2024, Allwyn reported a total revenue of €2.15 billion ($2.39 billion), representing a year-on-year growth of 5%. Gross gaming revenue (GGR) reached €2.06 billion, also up by 5%. However, despite this top-line growth, adjusted EBITDA saw a decline of 11%, dropping to €340 million compared to last year.
Net revenue for the quarter came in at €941.2 million, up by 4% year-on-year, indicating healthy operational performance, even amid the pressures impacting EBITDA.
Excluding the Camelot Acquisition
A key aspect of the report is Allwyn’s performance when excluding the impact of its acquisition of Camelot, which was finalized in March 2023. Without Camelot, total revenue stood at €1.08 billion, with GGR reaching €1.04 billion, marking a 6% year-on-year growth for both figures. Net revenue also increased by 5%, reaching €685.4 million.
Where the results differ significantly is in adjusted EBITDA. Excluding Camelot, adjusted EBITDA increased by 4%, reaching €338.1 million. This suggests that the Camelot acquisition has been a primary source of the overall decline in Allwyn’s earnings, contrasting the growth observed when the results are considered without its impact.
CEO Commentary
Allwyn’s CEO, Robert Chvatal, expressed satisfaction with the company’s performance, stating:
“We delivered good top-line momentum and solid growth in profitability in most geographies. Our overall financial performance reflects the new incentive and profitability mechanism under the new license in the United Kingdom.”
Chvatal’s comments underscore the resilience of Allwyn’s core operations while also pointing to the challenges posed by the company’s expansion into new markets, particularly the UK, which has significantly influenced adjusted EBITDA.
Austria
Austria continues to be one of Allwyn’s strongest performing markets. The country contributed €401 million in total revenue during Q2 2024, with GGR of €386.9 million. Net revenue came in at €216.2 million, while operating EBITDA was €71.7 million, all of which represented a 7% increase year-on-year.
Adjusted EBITDA in Austria also grew, albeit more modestly, increasing by 4% to €69.6 million. One of the key drivers of growth in Austria has been the continued strong performance of numerical lotteries, which were up 10% compared to the same period last year. Online GGR also showed impressive growth, rising by 21%.
Czech Republic
In contrast to Austria’s solid performance, Allwyn’s results in the Czech Republic were more mixed. Total revenue for Q2 2024 in the Czech Republic declined by 1%, dropping to €124.6 million. Net revenue and operating EBITDA were also down, decreasing by 6% and 5%, respectively, with net revenue at €80.5 million and operating EBITDA at €33.7 million.
However, despite the dip in revenue and operating EBITDA, GGR increased by 1% to €122.1 million. Adjusted EBITDA was also up 5%, reaching €32.1 million, indicating that profitability remains stable even with the revenue challenges.
Greece and Cyprus
Greece and Cyprus, where Allwyn holds a majority share in OPAP, the Greek national lottery operator, continued to show strong performance. The two markets combined contributed €558.2 million in total revenue, of which €532.8 million came from GGR. Both metrics were up 7% year-on-year.
Net revenue in Greece and Cyprus grew by 6%, reaching €389 million, while adjusted EBITDA increased by 2% to €183.9 million. Although this growth is smaller than in some other markets, it reflects the consistent contribution that these countries make to Allwyn’s overall results.
Additionally, OPAP’s share buyback program, initiated in October 2023, saw the repurchase of 0.81% of its total outstanding shares for €45.9 million. As of 30 June 2024, Allwyn’s stake in OPAP had increased to 51.45%, up from 51% at the end of March.
Italy
Italy, one of Allwyn’s largest markets, reported €581.8 million in total revenue for Q2 2024, representing a 4% year-on-year growth. Net revenue increased by 3% to €120.5 million, and adjusted EBITDA grew by 3%, reaching €97 million.
While Italy’s growth rates were not as high as those seen in Austria or Greece and Cyprus, the country still played a crucial role in bolstering Allwyn’s overall financial performance.
United Kingdom
The UK was a significant outlier in Allwyn’s Q2 2024 results, with sharp declines in profitability despite steady revenue growth. The UK contributed €1.02 billion in total revenue, and GGR also matched this figure, both up 4% year-on-year. However, adjusted EBITDA in the UK plummeted by 92%, dropping to just €4.2 million from €50 million in the previous year.
The company attributed this decline to “the introduction of a new incentive and profitability mechanism with the start of the new licence,” suggesting that recent regulatory changes and new contract terms have heavily impacted profitability in the UK.
United States
In the US, Allwyn’s subsidiary, Allwyn LS, operates the Illinois State Lottery under a private management agreement. In Q2 2024, Allwyn LS reported €48.6 million in revenue, up 3% year-on-year. However, much like in the UK, adjusted EBITDA experienced a steep decline, falling by 61% to €3.1 million, down from €7.9 million in Q2 2023.
According to Allwyn, the decrease in adjusted EBITDA in the US was due to “lower incentive fees” and “weaker development in June,” largely caused by higher prize payouts compared to the same quarter last year.
H1 2024 Results
Alongside the Q2 results, Allwyn also provided an overview of its financial performance for the first half of 2024. For the first six months of the year, total revenue came to €4.26 billion, with GGR reaching €4.08 billion, both reflecting a 15% year-on-year growth.
Net revenue for the first half of 2024 was up 10%, reaching €1.88 billion. Adjusted EBITDA, however, saw a 4% decline, falling to €697.8 million. Excluding the impact of Camelot, Allwyn’s first-half results show growth across the board, with total revenue and GGR up 5%, reaching €2.19 billion and €2.1 billion, respectively. Adjusted EBITDA also increased by 4%, reaching €672.8 million.
Strategic Outlook
Allwyn’s Q2 and H1 results demonstrate the company’s ability to generate consistent revenue growth, even amid challenges in profitability, particularly in the UK and US markets. The sharp drop in adjusted EBITDA, especially in the UK, highlights the difficulties of navigating new regulatory frameworks and contractual changes.
However, Allwyn’s core markets, such as Austria, Greece, and Italy, continue to perform well, with solid growth in both revenue and profitability. The company’s focus on numerical lotteries and online gaming has also proven effective, driving substantial increases in GGR across key regions.
As Allwyn moves forward, its success will depend on addressing the profitability challenges posed by its operations in the UK and the US, while continuing to leverage its strengths in its core European markets. Additionally, the integration of Camelot will be a crucial factor in determining the company’s long-term growth trajectory, particularly as Allwyn continues to expand its presence in the global lottery market.
Allwyn’s Q2 2024 financial results offer a mixed picture. While the company has achieved solid revenue and GGR growth across most of its markets, profitability has taken a hit, particularly in the UK and the US. The Camelot acquisition, which was completed in 2023, appears to have been a contributing factor to the overall decline in adjusted EBITDA.
Despite these challenges, Allwyn’s core markets of Austria, Greece, Cyprus, and Italy continue to deliver steady growth, and the company’s efforts to expand its online presence are paying off. As Allwyn continues to navigate the regulatory and operational challenges in key markets, it remains well-positioned to achieve long-term growth, provided it can address the profitability issues that have surfaced in 2024.
With €2.15 billion in total revenue for Q2 and €4.26 billion for H1 2024, the company’s top-line performance remains strong, but improving operational efficiency and profitability in the UK and US will be key areas of focus going forward.