Lottomatica's strong 2023 performance and SKS365 acquisition drive optimistic 2024 projections

Lottomatica Group has reported robust financial results for the full year 2023, achieving its corporate objectives set for the year. The company, poised to become Italy's leading gambling operator through the acquisition of SKS365 Group, disclosed corporate revenues of €1.63 billion ($1.76 billion) for the year.

This marks a 12% increase from the €1.49 billion ($1.61 billion) recorded in the fiscal year 2022, surpassing the expectations set by its initial public offering (IPO) on the Euronext Milan exchange.

Throughout the eventful year, which included the aforementioned IPO in April, Lottomatica experienced a notable impact on its earnings. In the third quarter of 2023 alone, the company reported €2.8 billion ($3 billion) in gross gambling revenue (GGR).

The growth in headline revenues reflects Lottomatica's solid performance, with consolidated bets reaching €30 billion ($32.43 billion), marking an 18% increase across its primary units of Online, Sports Franchise, and Gaming Franchise.

For the full year, Lottomatica's units generated GGR totaling €3.86 billion ($4.17 billion), a 6% rise. Investors were informed of a key achievement of Lottomatica, as the company increased its share of the Italian online gambling market to 21.7%, representing a 3.7% increase from the proforma results of FY2022.

The retail units of the Sports Franchise and Gaming Franchise further contributed to the overall success, generating revenues of €368 million ($397.8 million) at an 8% increase and €743 million ($80.34 million) at a 3% increase, respectively. Lottomatica declared growth across all core business segments for the year.

For the fiscal year 2023, Lottomatica reported a 'normalized' EBITDA of €595 million ($643.43 million), surpassing the target guidance of €570 million ($616.4 million) outlined during the group's return to Borsa Milan in the first half of the year.

The company closed its fiscal year with adjusted net profits of €215 million ($232.5 million), reflecting a substantial 29% increase, as group operating cash flow reached €469 million ($507.17 million).

Looking ahead to 2024, Lottomatica is set to complete its acquisition of SKS365 Group for €640 million ($692 million). The company began acquiring SKS365 Malta in November 2023 for an enterprise value of €639 million ($691 million).

In the same month, Lottomatica announced plans to issue and sell €500 million ($541.75 million) in notes to fund the acquisition. The acquisition dealt a blow to Playtech, which had previously been in talks to acquire SKS365.

Lottomatica's 2024 full-year projections anticipate revenue between €1.80 billion ($1.94 billion) and €1.84 billion ($1.98 billion). Adjusted EBITDA is projected to fall within the range of €625 million ($675.8 million) to €645 million ($697.5 billion), with an estimated 53% generated by the online segment. Updated guidance is expected to be released after the completion of the SKS365 acquisition, slated for H1 2024.

“2023 marked a very strong year for our group, in which we consolidated our leadership position across all segments and brands. We exceeded expectations set at IPO and subsequent upgrades, with revenues of €1.6 million and Adjusted EBITDA of €596m at normalized payout (€580m actual)," Group CEO Guglielmo Angelozzi said.

"We continued to grow both organically, increasing market share for the fifth quarter in a row, and through M&A, signing the acquisition of SKS365 and executing our bolt-on strategy."