Intralot Reports Earnings Decline in 2023 but Remains Optimistic About Future Expansion

Although Intralot experienced a decrease in earnings in 2023, the company remains hopeful about future expansion.

Intralot states that, while annual income declined, the reduction in net liability in 2023 will enable the company to pursue “substantial” business ventures worldwide.

Intralot, despite a 7.3% drop in earnings in 2023, remains positive about future expansion.

Earnings for the 12 months ending December 31, 2023, were €364 million (£311.3 million/$390.5 million), down 7.3% year-over-year. Intralot attributed this primarily to the termination of its Maltese permit.

Intralot also increased spending throughout the year. This, coupled with the decrease in income, resulted in a decline in net profit, although EBITDA increased year-over-year.

Chairman and CEO Sokratis Kokkalis expressed general optimism in his review of the year. He emphasized the “stable growth” in operating profitability and mentioned the reduction in debt – which fell by 32.1% to €332 million.

Kokkalis added that the lower debt would enable Intralot to pursue new ventures to support its future expansion plans.

“2023 was a year of stable growth in operating profitability, robust cash flow and the achievement of strategic goals of margin expansion, deleveraging and debt reduction,” Kokkalis stated.

A significant achievement was the successful completion of the capital increase and debt restructuring plan. This enabled the company to capitalize on global business opportunities, leveraging its modern and competitive technology.

Intralot’s consumer-facing business experienced a downturn in 2023, primarily due to a decrease in consumer revenue. Revenue from licensed operations declined by 68.2% to €28.4 million, accounting for 7.8% of total revenue.

The expiration of the Maltese license in early July 2022 was a key factor in the consumer-facing decline, resulting in a €43.9 million revenue drop.

Intralot also observed a decrease in consumer revenue in Argentina, totaling €17 million. This was attributed to economic reforms in the country and the new administration’s decision to devalue the peso by over 50% in late 2023.

Business-to-business growth couldn’t compensate for the consumer-facing decline.
Intralot witnessed growth in both of its business-to-business segments (management and technology, and support services). However, this wasn’t sufficient to offset the consumer-facing decline, leading to a decrease in overall revenue.

Management revenue in the consumer-facing segment increased by 43.2% to €72.4 million, driven by growth in Turkey. Intralot emphasized the expansion of the country’s online gambling business and its success in the local sports betting market. Revenue from Morocco and the United States also increased year-over-year.

Technology and support services, which remain Intralot’s core operations, saw revenue grow by 4.1% to €263.3 million.

A Greek firm, Intralot, has declared that its earnings in Croatia have gone up, and it has also observed a minor improvement in the United States.

Intralot has also recorded a 9.8% revenue boost in other areas, due to a new agreement signed with Taiwan’s lottery in the middle of 2023. However, Intralot also mentioned that income in Australia has dipped slightly due to unfavorable exchange rates.

The Americas remain Intralot’s main market.
Intralot continues to refine its geographical analysis, revealing that the Americas remain its primary source of income. In 2023, the region generated €210.3 million in revenue, even though this was a 10.6% decrease from 2022.

Earnings in Europe also decreased by 6.0% in 2023, reaching €116.1 million. However, revenue from other markets increased by 30.7%, reaching €91.4 million, partially offsetting the decline in other regions. Intralot recorded a €53.7 million write-off in cross-segment revenue, resulting in total revenue of €364 million.

In terms of gambling types, 53.4% of total revenue in 2023 came from lottery games. Sports betting accounted for 20.5%, video lottery terminals for 11.8%, and the remaining 14.3% came from IT products and services.

Net profit dropped by 7.6%.
In terms of costs, operating expenses increased by 14.3% in 2023, reaching €114.1 million. However, not all the news was negative on the expenditure front, with costs in other areas decreasing.

This includes depreciation and amortization, which decreased by 3.1% to €67.9 million; interest and related expenses decreased by 2.9% to €35.7 million.

As a result, pre-tax profit was €33.6 million, a decrease of 12%.

In the previous fiscal year, Intralot witnessed an 8% upswing in earnings. Although they didn’t divulge the precise amount of taxes paid, they did disclose that their net income after taxes and minority interests (NIATMI) experienced a 7.6% year-over-year decline, reaching 5.8 million euros.

However, not all the news was bleak. EBITDA saw a 5.4% increase, reaching 129.5 million euros, and earnings before interest and taxes (EBIT) rose by 19.3% to 61.6 million euros.

Intralot encountered a deficit in the final quarter.
During the last three months of the year, Intralot’s financial performance was less than ideal. Revenue dipped by 7.7% to 84 million euros, primarily due to alterations in the Argentinian economy.

Operating expenses rose by 27.2% to 37.6 million euros, while depreciation and amortization costs climbed by 18.8% to 19.4 million euros. However, interest and associated costs saw a minor reduction to 7.7 million euros.

This resulted in a pre-tax profit of 1.4 million euros, a substantial decrease of 86.1% compared to the previous year. Tax specifics were not revealed, although Intralot stated that the fourth quarter NIATMI dropped by 125.9% to 3.2 million euros.

EBITDA for the quarter also declined by 18.3% to 28.4 million euros, while EBIT fell by 50.7% to 9.1 million euros.

Looking Ahead
As Intralot sets its sights on 2024, the group has been invigorated by a series of contract announcements with existing partners in recent weeks.

These include a renewal agreement with Malaysian lottery operator Magnum Corporation. The agreement, reached in March, extends the partnership for over 17 years. Other recent deals include a renewal agreement with La Marocaine des Jeux et des Sports in Morocco.

These agreements were reached in 2023, including the new sports wagering collaboration with the British Columbia Lottery Corporation (BCLC). Kokkalis’s discussion about seeking “significant business opportunities” indicates that Intralot might have more arrangements in the pipeline.

Concerning other operations, Intralot recently finalized the amalgamation of its wholly owned subsidiary under the name “Betting Company Single Member S.A.”

Nevertheless, inquiries persist regarding how the organization reports accounts receivable in its financial statements. Accounts receivable are a method of recognizing income before a company actually earns it.

When outlining accounts receivable for 2023, Intralot mentioned that they rose by €18.5 million compared to €6.8 million in the previous year. Trade and other short-term receivables were also elevated, at €119.9 million compared to €109.9 million in 2022.

Regarding other financing, Intralot addressed its capital requirements by repaying its 5.250% senior notes due in September of this year. This was accomplished by issuing €130 million in bonds and securing a €100 million bond loan from a group of five Greek banks.

On the same day as the bond transaction, Kokkalis acquired 400,000 common registered shares and another 420,000 shares the next day. This suggests confidence in the company’s outlook.

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