Playtech Blames Malaysia Crackdown, Bitcoin Hype and Sun Newspaper for Profit Slump
Posted on: February 25, 2018, 05:00h.
Last updated on: February 25, 2018, 11:43h.
On Friday, Playtech, the world’s biggest supplier of online gambling software, cited “significant headwinds” for its slow growth through 2017.
Chief among these was a typhoon approaching from Malaysia in the form of a government crackdown on online gambling operators. It mowed down Playtech’s client base in Malaysia, one of its primary Asian markets.
Meanwhile, other gusts and gales buffeting the good ship Playtech included, curiously, the bitcoin investment craze. Also cited were ongoing problems with the bingo site it operates for the UK’s largest tabloid, The Sun newspaper.
Playtech’s shares reached an all-time high in July 2017. At the time, its market cap was about $4.6 billion but stock has plummeted by a quarter since it was forced to issue a November profit warning about the Malaysia situation.
On Friday, it noted that its earnings were in line with the revised November forecast. It added that it had seen “no change” in Malaysia and now plans to reorient its business towards the regulated markets.
The company said the hype around investment in cryptocurrencies was to blame for a “material” revenue dip last year.
Over the past few years, Playtech has diversified into currency and futures trading via several acquisitions. Its contracts-for-difference trading service allows customers to speculate on underlying price changes in assets. These include digital currencies, and Playtech said “crypto-hype” equated to a $7.6 million hit in 2017. Most of this came in the final quarter, when bitcoin rose by 320 percent in under three months.
Prices were going up significantly across many crypto instruments in what was very much a one-sided market with no proper hedging facilities available,” the company said.
It now offers a fully-hedged bitcoin futures product but admitted there are no opportunities to hedge for other cryptocurrencies.
Playtech Losing at Bingo
Playtech’s somewhat mysterious problems with its contract to run Sun Bingo, a gambling platform tied to the Rupert Murdoch-owned Sun newspaper, still persist. They contributed to a “significant” loss in 2017.
The company has blamed integration problems but said this week the situation “continues to improve,” adding that it is was in discussion with Murdoch’s News
For the full year to December 31, Playtech’s overall revenue rose 14 per cent to $992 million. Most of that growth occurred in the first half of the year, with second-half revenues dropping to $474 million, down nine per cent from the first half. Adjusted pre-tax profits were up 19 per cent to $312 million.
Playtech founder Teddy Sagi is one of Israel’s richest men but over the past year he has sold of large chunks of company stock to reinvest in his growing property empire.
Related News Articles
Similar Guides On This Topic
Related News Articles
September 30, 2021 — 7 Comments—
October 7, 2021 — 7 Comments—
October 4, 2021 — 6 Comments—
September 18, 2021 — 4 Comments—