Revenue in the 12 months to 31 December 2023 amounted to €364.0m (£311.3m/$390.5m), down 7.3% year-on-year. Intralot said this was primarily due to the discontinuation of its Malta licence.
Intralot also posted increase in spending during the year. This, coupled with lower revenue, led to a drop in bottom-line net profit, although EBITDA was higher on a year-on-year basis.
Reflecting on the full year, chairman and CEO Sokratis Kokkalis was largely upbeat. He spoke about “steady growth” in operating profitability and also referenced the reduction in debt – with this falling 32.1% to €333.2m.
Lower debt, Kokkalis added, will now allow Intralot to seek new opportunities to support its future growth plans.
“2023 was a year of steady growth in operating profitability with strong cash flow and achievement of strategic goals of margin expansion, deleveraging and debt reduction,” Kokkalis said.
“Important milestones were the successful share capital increase and the completion of the plan for the full refinancing of our debt, placing the company on a solid ground to pursue significant business opportunities globally, leveraging its modern and competitive technology.”
B2C decline hits Intralot
Breaking down revenue performance in 2023, the overall decline was driven by a fall in B2C revenue. B2C revenue from licensed operations also dropped 68.2% to €28.4m, accounting for 7.8% of all revenue.
Intralot said the expiration of its licence in Malta in early July 2022 was the main reason for the B2C decline, contributing to a €43.9m decline.
The group also noted lower B2C revenue in Argentina, with this down €17.0m. This came following recent economic reforms in the country and the decision by the new government to devalue the peso by over 50% in the last month of 2023.
B2B growth fails to offset B2C decline
Intralot reported growth across its two B2B segments: management and technology and support services. However, this was not enough to offset the B2C decline, meaning total revenue was lower.
B2C management revenue increased 43.2% to €72.4m, driven by growth in Turkey. Intralot highlighted online gaming growth in the country, as well as success in the local sports betting market. Morocco and US revenue also edged up year-on-year.
As for technology and support services, this remains Intralot’s core segment with revenue up 4.1% to €263.3m. Intralot said this was helped by local market growth in Croatia, while it also noted a marginal increase in the US.
Revenue in other jurisdictions was also up 9.8%, triggered by its new contract with Taiwan’s Public Welfare Lottery, agreed in mid-2023. However, Intralot did note a slight drop in Australia revenue due to negative foreign exchange movement.
Americas remain key for Intralot
Continuing with this geographical breakdown, Intralot said the Americas remain its core source of revenue. During 2023, revenue in this region hit €210.3m, although this was 10.6% lower than in 2022.
Europe revenue was also down 6.0% to €116.1m for the year. However, revenue in other markets increased by 30.7% to €91.4m, helping to partially offset declines elsewhere. Intralot discounted €53.7m in cross-segment revenues, resulting in the €364.0m final total.
As for type of gambling, 53.4% of all total revenue in 2023 came from lottery games. Sports betting accounted for 20.5% and video lottery terminals 11.8%. A further 14.3% came from IT products and services.
Bottom line net profit down 7.6%
Looking at costs, operating expenses increased 14.3% to €114.1m in 2023. However, it was not all bad news in terms of spending, with costs lower in other areas.
This included depreciation and amortisation, down 3.1% to €67.9m, and interest and related expenses, which was 2.9% lower at €35.7m.
As such, pre-tax profit amounted to €33.6m, a 12.8% increase on the previous year. Intralot did not state how much tax it paid but did reveal net income after tax and minority interest (NIATMI) was 7.6% lower at €5.8m for the year.
However, it was not all bad news. EBITDA was 5.4% higher at €129.5m and earnings before interest and tax was up 19.3% at €61.6m.
Intralot slips to loss in Q4
As for the final quarter of the year, this did not make for great reading at Intralot. Revenue was 7.7% lower at €84.0m, mainly due to the economic changes in Argentina.
Operating costs were 27.2% higher at €37.6m, while depreciation and amortisation spend increased 18.8% to €19.4m. There was, however, a slight fall in interests and related costs to €7.7m.
This meant a pre-tax profit of €1.4m, some 86.1% less than in the previous year. Tax details were not made public, although Intralot said NIATMI for Q4 was 125.9% lower at €3.2m.
EBITDA was also down 18.3% to €28.4m in the quarter, while earnings before interest and tax dropped 50.7% to €9.1m.
Future prospects
Looking to how Intralot has started 2024, the group has been boosted in recent weeks by a series of contract announcements with existing partners.
Among these is a renewed deal with Malaysian gaming company Magnum Corporation. Agreed in March, this will extend the partnership past the 17-year mark. Other recent deals include an extension with Morocco’s La Marocaine des Jeux et des Sports.
These follow deals struck during 2023, such as a new sports betting partnership with the British Columbia Lottery Corporation (BCLC). Kokkalis’s comments on pursuing “significant business opportunities” suggest more deals could be in the pipeline for Intralot.
As for other activity, Intralot recently completed the merger of its wholly owned subsidiary under the name ‘Betting Company Single Member S.A.’
However, there are questions about how the group reported receivables in the results. Receivables is a method of recognising revenue before a business actually generates the revenue.
When detailing receivables for 2023, Intralot noted an €18.5m increase, compared to €6.8m in the previous year. Trade and other short-term receivables were also higher at €119.9m, in comparison to €109.9m in 2022.
As for other financing, Intralot dealt with its capital concerns by paying off 5.250% senior notes due in September this year. This was achieved using a €130.0m bond issuance and €100.0m bond loan from a consortium of five Greek banks.
On the same day of the trading of bonds, Kokkalis purchased 400,000 common registered shares, plus another 420,000 the following day. This signals confidence in the future of the company.
Original article: https://igamingbusiness.com/finance/full-year-results/intralot-posts-revenue-decline-in-2023/
