Allwyn to post €2bn quarterly revenue after becoming National Lottery licensee

Allwyn International expects to post Q1 revenue of more than €2bn (£1.70bn/$2.17bn) when it publishes its first quarterly results since becoming the UK’s National Lottery licensee.

In a trading update, Allwyn said gross gaming revenue (GGR) for the period to 31 March 2024 could be as high as €2.05bn. The lower range of €2bn is still almost $500m more than the Q1 figure during 2023.

Allwyn acquired UK National Lottery operator Camelot in March 2023 and became the UK National Lottery licensee on 1 February 2024. That acquisition helped Allwyn to achieve a 97.5% surge in GGR in 2023, totalling €7.87bn.

As well as the UK contribution in Q1 2024, the group also outlined solid GGR momentum across most markets. Allwyn said this reflected its continued focus on driving organic growth.

In Austria, GGR continued to progress year-on-year during the quarter, driven by a strong performance in igaming. In the Czech Republic, GGR growth was up a double-digit percentage year-on-year on a constant foreign exchange (FX) basis. This was due to growth across all major products. However, FX represented a headwind of six percentage points, resulting in mid-single-digit percentage growth on a reported basis.

In the UK, GGR was flat year-on-year on a constant FX and comparable presentation basis, with Numerical Lotteries outperforming.

Marketing costs constrain Allwyn’s earnings growth

Adjusted EBITDA will be in the range of €355m-€365m when its preliminary unaudited financial results are released on 7 June. This would be up slightly on the 2023 figure of €346.7m.

Adjusted EBITDA growth was supported by a strong rise in the contribution from equity method investees. This boost was partially offset by higher costs in marketing for new product launches and higher personnel costs.

In the UK, the result reflected strong performance in January, which was the last month of the previous licence. Allwyn saw substantially lower profitability from 1 February due to the introduction of a new profitability mechanism.

CAPEX was €45.0m in Q1 2024, which was €20.5m higher year-on-year. The increase related to higher investment in the UK. This was in support of Allwyn’s plans to transform the UK National Lottery, with other segments’ CAPEX flat.

Allwyn “well positioned” says CEO

Robert Chvatal, Allwyn CEO, said the first quarter had set Allwyn up for success in 2024.

“2024 has started well, with trading broadly in line with our expectations,” he said. “This reflects good operational and financial performance and our ongoing focus on the delivery of our growth strategies.”

“Solid momentum in GGR growth continued in the first quarter. Allwyn successfully started the next 10-year licence period of the UK National Lottery. We have delivered further progress in adjusted EBITDA. Allwyn remains well positioned for 2024 and for the next chapters of its growth story.”

During Q1, Allwyn entered into an agreement to purchase a 70% stake in online content developer Instant Win Gaming (IWG).

IWG supplies online instant win games to more than 25 national and state lotteries around the world. The IWG portfolio of content currently includes over 250 titles. For the year ended 30 April 2023, IWG posted £18.2m (€21.3m/$22.9m) in EBITDA.

$450m loan offering announced

Meanwhile, Allwyn International has also announced the launch of an offering of a Term Loan B by Allwyn Entertainment Financing. The principal amount is $450m.

The proceeds from the offering will be used to redeem in full the €400m in aggregate principal amount outstanding under the Floating Rate Notes due 2028 issued by Allwyn Entertainment Financing (UK) plc. This will pay costs, fees and expenses incurred in connection with the offering and for general corporate purposes. A substantial portion of the proceeds is expected to be swapped to floating rate EUR.