Sparks - Allwyn

Allwyn reported strong overall growth in Q226 with net revenue growth of 27% and adjusted EBITDA growth of 29%, which was helped by the acquisition of PrizePicks. On an underlying basis, excluding M&A and adjusting for higher gaming taxes introduced in Austria, revenue growth of 5% was unchanged versus Q126 while adjusted EBITDA growth of 9% slowed a little versus Q126’s growth of 11%.

Digital continues to take share, with online net gaming revenue at 52% of the group versus 37% a year ago, and iGaming and Sports Betting provided strong growth.

The UK showed a meaningful improvement in profitability following completion of its technology transformation, with adjusted EBITDA increasing from €6m in Q225 to €23m in Q226 and a large reduction in capex improving cash flow. However, net revenue growth of 2%, including a constant currency decline of 14% in gaming activities, led management to now expect lower growth in the year than previously.

In North America, PrizePicks showed strong player growth and engagement but higher strategic marketing investment contributed to a 26% y-o-y reduction in adjusted EBITDA.

Continental Europe’s adjusted EBITDA declined by 3%, mainly because of the higher gaming taxes in Austria and the higher amortisation costs of the renewed licence in Austria. On a reported basis net revenue grew by 4%, which was a little below Q126’s 5% growth.

With respect to the outlook, management has reaffirmed its guidance for net revenue growth of mid-to-high 20% before identified one-off impacts and an adjusted EBITDA margin of 20%.

There is an interim distribution of €0.20 per share.