Shares in online gaming software developer Playtech PLC (LON:PTEC) tumbled on Thursday after it warned of a sharp fall in trading levels in 2018.
Average daily revenue in the business-to-business (B2B) gaming division for the first 51 days of 2018 was down 11% year-on-year and down 8% on a like-for-like constant currency basis.
The business-to-consumer (B2C) gaming division is performing in line with expectations, the gaming company said in its results statement for 2017.
READ: Playtech slumps after issuing profit warning due to Asian slow-down
Revenue in 2017 rose 18% on a constant currency (CC) basis to €807.1mln from €708.6mln in 2016 and was 2% below the consensus forecast.
Adjusted underlying earnings (EBITDA) rose 11% on a CC basis to €322.1mln from €302.2mln the previous year.
The full-year dividend has been increased to 36 cents from 32.7 cents the year before.
"Playtech delivered double-digit revenue growth in 2017 despite headwinds in both regulated and unregulated operations. Playtech's performance continues to be converted into strong cash generation enabling a 10% increase to the full year dividend,” said Alan Jackson, the chairman of Playtech.
"Playtech's strategy to improve the quality of earnings for the group, organically and through M&A [mergers & acquisitions], was evident in the increase in regulated revenue to 54%. The health of the core business coupled with the strength of the balance sheet means Playtech is strategically well placed to execute on M&A that will continue to drive this growth and further diversify Playtech's revenue base,” Jackson continued.
"The completion of the Playtech BGT Sports integration and the completion of the new Live Casino studio in Riga are key operational milestones in the extension of Playtech's omni-channel offering and the quality of both offerings has already delivered new clients,” he added.
Analyst comment
Numis Securities said the full-year results were broadly in line and although current trading is soft, the shares remain cheap.
“We forecast 2018 revenue growth of 12% to €911mln (consensus €892mln) and EBITDA growth of 11% to €357mln (consensus €349mln), which currently assumes Malaysia recovering,” the broker said.
“Assuming no recovery [in Malaysia], we expect consensus will fall towards €330mln. By geography, we think its UK revenues will continue to come under pressure as its licensees consolidate and develop more technology in-house, e.g. SSBTs. Outside the UK, in less mature markets, we believe PTEC remains a key technology partner,” Numis said, as it stuck with its ‘buy’ recommendation and punchy 1,040p price target.
In early afternoon trading, Playtech shares were down 7% at 720.6p.
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