Online gaming solutions giant Playtech has issued its second profit warning in eight months on the back of ongoing struggles in Asia, where 2018 revenue is expected to come in around €70 million lower than original expectations.
In a Monday announcement, the London-listed company said that its average daily revenue in Asia “continues to be impacted by an increasingly competitive backdrop.
“Towards the end of the first half, this market has seen a particularly aggressive pricing environment from new entrants to the market and this has impacted revenue,” it added.
“The management team continues to take steps to protect Playtech’s position in the region and to drive revenue generation. However, given the recent decline and in the absence of any change in market dynamics, we expect a significant impact on revenue throughout the rest of the year.”
The latest profit warning, which saw share prices tumble by more than 20% on Monday, follows an earlier profit warning last November sparked by a Malaysian government crackdown on its citizens accessing online gambling sites.
Playtech said on Monday that, assuming there was “no material improvement in Malaysia” for the remainder of 2018, its shortfall would reach the €70 million mark.
“Given that the downturn in Asia has been relatively sudden and taking into account Playtech’s centralized cost base, the vast majority of this revenue loss will drop through to adjusted EBITDA,” it said, predicting group adjusted EBITDA in the revised range of €320 million to €360 million.
Commenting on the company’s Asian woes, which also include increased competition from Chinese start-ups, CEO Mor Weizer said, “Clearly the recent trading performance in Asia is disappointing. We have taken steps to further support our partners in the region and we will continue to work to preserve our position in the face of an increasingly competitive environment.”
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