Allwyn has reported a 98% rise in total consolidated revenue to €2.01bn (£1.72bn/$2.17bn) for the third quarter, driven by the acquisition of the Camelot UK and Camelot Lottery Solutions businesses Group at the beginning of the year.
The double gain had a significant impact on Allwyn, as third quarter revenue almost doubled year-on-year to €368.4 million. Revenues also rose in the period, while adjusted free cash flow rose 10% to €336.6 million.
In February the group bought Camelot UK, the current operator of the UK National Lottery. This comes before Allwyn takes control of the lottery under the fourth national lottery license in February next year.
Allwyn also acquired Camelot Lottery Solutions (Camelot LS) in early 2023. The US-focused company has since been renamed Allwyn North America to reflect the purchase.
Looking back on the third quarter, Allwyn CEO Robert Chvatal said he was pleased with the progress across the group. He added that third quarter results show Allwyn is well positioned for further growth in the fourth quarter and beyond.
“I am pleased to report that Allwyn delivered another quarter of solid financial performance and strategic progress, despite headwinds from customer-friendly sports results (which negatively impacted the sports betting sector in general) as well as less favorable jackpot cycles,” said Chvatal .
“Total revenue increased 98% year-over-year in the third quarter of 2023, reflecting robust performance in our existing regions as well as the significant contribution from the Camelot acquisitions we completed in the first quarter.
“We continued to generate solid margins and free cash flow, with inflation having a limited impact on our cost base, reflecting our favorable cost structure. Our largest cost categories were directly related to revenue and our focus on cost and capital efficiency.”
Gross gaming revenue at Allwyn up 98%
Looking at preliminary results for the three months to September 30, Allwyn did not release full figures. However, it does provide insight into the quarter’s sales performance.
Consolidated gross gaming revenue rose 98% to 1.92 billion euros in the third quarter. This again applied to the entire company, including the Camelot UK and Camelot LS operations. Net revenue – total revenue minus gambling taxes and charitable contributions – also rose by 38% to €883.3 million.
Excluding the double Camelot acquisition, total revenue in the quarter was 1% lower to 1.01 billion euros. Gross gaming revenue remained stable at €965.2 million, while net revenue fell 1% to €636.1 million.
Focusing on data excluding the acquisitions, Allwyn said growth was influenced by customer-friendly sports results seen across the industry. It was also affected by adverse jackpot cycles, with jackpots being won for major games before growing to a size to attract less frequent players. Allwyn cited the example of the EuroMillions jackpot, which reached a record high in the third quarter of 2022.
Great Britain accounts for almost half of sales in the third quarter
Looking at geographical performance, the UK is now by far Allwyn’s core market. Total UK revenue was €956.5 million in the third quarter, down 12% year-on-year, reflecting weaker numerical lotteries performance and shorter EuroMillions jackpot cycles.
Allwyn UK will take over operations of the UK National Lottery from Camelot UK on February 1, 2024. Allwyn highlighted certain costs associated with preparations for the transition to the new license.
Otherwise, total sales in the Greece and Cyprus segment fell by 4% to €503.4 million. Allwyn attributed this to unfavorable jackpot rollovers, customer-friendly sports results and one-off natural events, including the wildfires in Greece, which affected the availability of some point of sale (POS).
However, Allwyn has seen growth in its online channel in the region. This resulted in higher gross gaming revenue year-on-year, driven by stronger igaming performance and supported by new game launches.
There was also better news in Italy: total sales rose by 8% year-on-year to €554.0 million.
Austria will be affected by the loss of the casino license in Germany
In contrast, the Austria segment recorded growth, supported by good performance in instant lotteries, iGaming and video lottery terminals and casinos. Total sales rose by 2% to €379.9 million.
However, Allwyn said the performance of number lotteries was slightly weaker. This was influenced by shorter jackpot cycles on EuroMillions as well as a record rollover last year.
Allwyn also noted that the next license to operate 10 casinos in the Lower Saxony region of Germany was awarded to a competitor after the end of the quarter. The activity is reported within the VLTs and casinos in the Austria segment. The current license ends in August 2024.
The group also recorded growth in the Czech Republic, where total sales increased by 6% to €123.1 million. Allwyn said this was due to good organic sales growth across all key products. In particular, strong performance was noted in instant lotteries and igaming.
Finally, the US-based Allwyn LS Group company achieved total sales of 46.5 million euros in the third quarter, an increase of 12%. This was largely due to strong performance from the Illinois Lottery, which operates the company.
Consolidated sales since the beginning of the year exceed 5.70 billion euros
Allwyn did not provide further details about costs and profits. However, it has deteriorated its performance since the beginning of the year. Total sales for the nine months to September 30 reached €5.70 billion, up 98% from €2.88 billion last year.
Gross gaming revenue rose 99% to €5.47 billion and net revenue increased 43% to €2.60 billion. The group also noted that adjusted EBITDA increased by 26% to €1.10 billion and adjusted free cash flow increased by 23% to €1.02 billion.
Excluding the two Camelot acquisitions, total sales still rose by 7% to 3.09 billion euros. Of this, gross gaming revenue accounted for €2.97 billion, up 8%, while net revenue rose 8% to €1.97 billion.
Adjusted EBITDA increased by 11% to €968.5 million and adjusted free cash flow increased by 8% to €901.2 million.
“Overall, despite industry headwinds in the quarter, I am very pleased with Allwyn’s continued progress and believe we are well positioned to successfully end 2023 and for the next chapters of our growth story,” Chvatal said.