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IN-DEPTH 25 February 2016
Mor Weizer exclusive: Playtech CEO reacts to firm's 2015 full-year results
Following the announcement of provider Playtech's full-year results, company CEO Mor Weizer spoke exclusively to Gambling Insider to offer reaction to the figures.
By Gareth Bracken

What is your reaction to today's results?
It was very important that following our acquisition of Markets Limited we showcased the strength of Playtech and sent a very clear and strong message that our gaming division, which is the vast majority of our business, continues to grow, and that our entry into the financial vertical was not to compensate for a lack of growth. I think this morning's numbers are evidence that our gaming division is doing very well, outperforming most if not all of our peers in the market. Revenues grew by 38% – significant growth driven by a combination of the growth of existing licensees and extensions into new markets, products and customers, with a strong focus on regulated markets.

Casino was the best performer in your gaming division – why do you think it did so well?
I think because this is where most operators put their efforts these days. Most sports-betting operators will focus on sports and quality of product in order to attract customers, but will then cross-sell to other gaming formats where the margins are higher and where people do a lot of business and entertain themselves.

We deployed our omni-channel solution that connects retail and online around VLTs and FOBTs to start with. It's now extended beyond that to SSBTs and over-the-counter, but we started with FOBTs connecting the wallet in the retail environment to online, which obviously supported the growth of some of our licensees and allowed Playtech to accelerate its growth. So I think when you combine the omni-channel approach with the focus of operators on the casino channel, and the fact that we have casino games within bingo and poker that are accounted for under casino, this is how we managed to grow casino so much.

The figures also show the effect of point-of-consumption in the UK – was that impact as you expected?
Yes, the PoC tax was as expected, but more than compensated by the fact that our customers continue to grow in the UK and are some of the most well-established in the country. In other words, they had enough firepower to take market share from small and mid-sized operators.

How do you feel about the performance of your financials division?
We feel very comfortable and confident about the growth prospects for this vertical. It was as expected. We have made a lot of changes, which were necessary in order to ensure that we improve the quality of the business, and in order to ensure that we accommodate the changing dynamics in the market and changing regulation. We believe Playtech is well positioned. We have more capacity and more resources to accommodate the changing regulations, which will put us in a better position compared to other online CFD brokers. Medium- to long-term we definitely expect to be one of the largest online CFDs in the market.

You've increased your revenue from regulated markets to 41%. Why is that important to Playtech?
It is important for both the industry and Playtech as it represents quality of earnings. The 41% is only for the gaming division, if you include Markets.com it's approaching 50%. Given the transition the whole industry is going through, I think that for shareholders and in terms of value it's very important that we send a very clear message that quality of earnings are important for us, and that we believe the future lies with regulated markets and regulated income and profit streams. It grew nicely from 2014 to 2015, and in the longer term given our level of effort and investment, we definitely believe this trend will continue. We definitely believe the growth we see in regulated markets, given the opportunity in those markets, will continue positively in the coming years.

You have large cash balances, and potential acquisition discussions are mentioned in your results report. How likely is it that Playtech will make a major acquisition this year?
Our policy is not to comment on specific opportunities, but there are many opportunities for further growth in the gaming and financial verticals. Our outlook is very strong and we expect more M&A activity.

What sort of firms might you be interested in acquiring?
We always look at diversifying our gaming portfolio and strengthening existing product lines within the business. I can't say more than that.

The report also mentions organic growth – what sort of opportunities do you see there?
We definitely see a lot of growth in the UK, Italy, Finland, Mexico, where we are already very well established. We're well established with the most recognised names in each and every market and therefore believe that they will be the ones which will grow faster than any other operator in the market. Industry growth will accelerate off the back of certain changes in regulation across Europe and elsewhere, which will lead to organic growth from existing customers. If you add to that the potential of omni-channel for Ladbrokes, Caliente, Coral and others, we definitely believe that this will support growth and create organic growth opportunities for Playtech.

How do you expect the merger of Ladbrokes and Coral to affect Playtech's results moving forward?
If the merger is approved, given the fact that Playtech is a key supplier to both I believe that we will play a key role in the future success of the combined group. I definitely understand the rationale of various companies talking about scale and increased firepower in terms of marketing. I definitely see Playtech playing a key role, assisting these operators, whether it is Betfair and Paddy Power or potentially Ladbrokes and Gala Coral coming together. We see a lot of opportunities for us and growth opportunities for them and for Playtech.
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