Q&A: Playtech CEO on M&A and the Hard Rock Digital investment  

Fresh from confirming a 7% year-on-year (YoY) jump in full-year 2023 revenue, and a 12% improvement in group EBITDA, Playtech CEO Mor Weizer tells EGR the business performed “very strongly” over the past 12 months. The B2C division broke the €1bn revenue barrier for the first time, mainly driven by Snaitech in Italy, with management noting previously upgraded group targets had been met. Looking to 2024, EBITDA midpoints for the B2B and B2C arms have been set at €225m and €325m, respectively.

Included in the report, bosses talked up the group’s relationship with Hard Rock Digital in the US after investing $85m in the tribal operator last year, while also noting that M&A remained on the table after being knocked back in its bid for SKS365 last year, with Lottomatica ultimately acquiring the Italian firm.

Notes were also included on the ongoing legal battle regarding the Caliplay business in Mexico, with a series of missed payments now leading to a court hearing in October to seek a point of clarification.

Here, Weizer touches on those points as he remains bullish on the future outlook for the 25-year-old business.

EGR: Playtech has reported solid financial results, with revenue and EBITDA both up but a 2% dip in adjusted post-tax profit. How do you sum up your feelings on the group’s performance in 2023?

Mor Weizer (MW): I think that what you should focus on is the adjusted EBITDA because it reflects the underlying performance of the business. Obviously, there is a lot of impact from accounting treatment, for example to do with the changes in valuations of our partnerships in different parts and the structure of agreements.

All in all, I am focused on the underlying performance of Playtech, and the business is going from strength to strength. I think that we are very well positioned. I think that it’s very important to say, that unlike maybe other operators reporting in recent days, our growth is only organic this year.

Our balance sheet is very strong with less than 1x net debt to EBITDA. So, we are in organic growth and M&A will continue to be an inherent part of our strategy. 2023 was all about organic growth. 2024 will be organic growth with some potential inorganic growth, without jumping to any conclusions. We are still active on this front. You asked me, ‘How do I feel about it?’ I feel very good. We raised expectations a number of times throughout 2023. So, we are on a positive trajectory.

EGR: Looking at M&A, what does a potential acquisition target have to look like for Playtech to make a move?

MW: It needs to be accretive and attractive for our shareholders, first and foremost. However, from an operational business perspective, I think that it should complement what Playtech has today in terms of territories or product.

So, for example, something that is quite unique for the US market. Maybe it is a product that Playtech doesn’t have. Maybe it’s a product that fits certain territories because of the local characteristics of the market. These are the type of M&A we are looking at. We are not simply looking at buying another content provider just for the sake of building scale. I think that Playtech is already at a scale that it doesn’t need to further grow with scale. However, if this is a byproduct of the M&A, so be it.

EGR: Last year a move for SKS365 ultimately didn’t come to pass as Lottomatica ended up acquiring the company. What’s your reflection on that missed deal, and what did you learn from it?

MW: You win some, you lose some. We’ve done a lot of acquisitions. I think we learnt a lot through the process as we always learn and want to learn new things. It was a very competitive tender – we tried to be as competitive as possible. But we had a limit. We would be willing to increase our offer up to a certain point.

Other people, maybe because of their status or their appetite or their business is slightly different to Playtech, they could generate more synergies. We were very competitive, and it was a decisive decision we made with the Snaitech team that it was better that we didn’t increase anymore.

EGR: How is the relationship with Hard Rock Digital progressing? Do you plan to invest further in the business after taking a mid-single-digit stake last year for $85m?

MW: The strategy is to partner for very long term together with Hard Rock Digital to support them as much as we can, both in the US and internationally. We see that as a long-term strategic partnership. We believe that Hard Rock Digital is very well positioned in the US to grow and to extend to other states and internationally. Our goal is to do as much as we can and put our hearts and efforts into this partnership to support their success.

EGR: What are your expectations for Hard Rock Digital’s future growth in terms of market share or financial performance?

MW: We have very limited mid-single-digit stake in this business, so it more of a question for . But I’m sure that they are very focused to become one of the tier-one operators; they are very ambitious.

The brand recognition and the brand awareness around Hard Rock Digital is as good as it can be. It’s an amazing brand. I think that they are extremely well positioned both in the US and other territories where they are intending to expand.

The question about market share is for them – it’s not for us, so I can’t answer on their behalf. But I have no doubt that they will become one of the one of the largest operators among only a handful. I think that FanDuel and DraftKings have done extremely well, alongside BetMGM. But I think that there is still room for various other ambitious operators that will be midsized compared to the three big ones.

I believe that, over time, there will be five major brands in the US, and I think that Hard Rock Digital will be among those, and this is why we are so excited about this opportunity.

EGR: Could you also provide some more colour on the Caliplay JV given the ongoing issues with missed payments?

MW: I’ll start with the most important thing: the business. We’ve enjoyed massive success in the last 10 years. Caliente is going from strength to strength, and we made a solid start to trading in 2024, reflecting strong growth in Latin America.

A lot of that is down to the success of Caliente. As you know, we are in the legal process with Caliplay and we’ve made as much disclosure as we can in the results announcement, so I will refer you to that. We are in ongoing discussions with Caliplay, but there can be no certainty on what any outcome might be. We are not in a position to comment any further other than suggesting that together we achieved a massive success, and we deem Caliplay as a highly valued customer for us.

EGR: Finally, coming back to the financial results, Playtech’s B2C arm broke the €1bn revenue barrier in 2023. What are the core drivers of that business at the moment?

MW: The beauty about the Italian market is that the online penetration is still very low, less than half of what you find here in the UK. There is still a lot of room for growth. It has more than doubled over the course of the last five years. There are also higher margins in online.

Online is growing faster . And in terms of EBITDA, the EBITDA contribution of online is already more than 50% from a group perspective, so more than 50% of the EBITDA is generated already by online, while obviously the portion of revenue from retail is higher.

In other words, the more we convert, the more we upsell. The more we transition to online, the better it is for the business and the higher the portion of online EBITDA will be against overall group EBITDA.

N.B. This interview took place yesterday, 27 March, before 888 disclosed Hard Rock Digital is set to acquire its US B2C assets.