Intralot’s loss in Q3 and what to expect from last quarter in 2020

Article by : Helen Dec 28, 2020

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Intralot, a Greek company that provides game content and sports betting, acts as a lottery vendor and a lottery operator at the same time. Thanks to the resuming of gambling venues in Australia, the gaming company hopes to recover in the Q4 of 2020 while the third quarter has suffered because of the Covid-19 pandemic. The first half of the current year showed a 55.5% decline in revenue compared to 2019.

Sokratis Kokkalis, who takes over as a chairman and chief executive from Christos Dimitriadis, said that the business has worked to alleviate the Coronavirus consequences. The third quarter of 2020 brought some difficulties to the company as far as it lost the Inteltek sports betting contract and Bulgarian license. These two obstacles have led to a slow-down in growth during this year. As far as the company lost the tender, it couldn’t continue servicing IDDAA, the betting monopoly. It happened after Turkey’s Sportoto Organisation had granted the license to Sans Girisim. The following restructure meant Intralot lost a substantial asset that generated 40% of corporate revenues.

Talking about the Bulgarian license, in February 2020, a change in gambling law led to the loss of license by Intralot’s Bulgarian subsidiary Eurobet.

Intralot will immediately set in motion a plan in order to operate through new licenses and transform its corporate presence in the Bulgarian gambling market, within the provisions of the new Gambling Act across KENO, retail and online Betting markets.

The revenue received during the third quarter declined by 44.9% or $118.6 million compared to the Q3 of 2019. It was down even after the company had seen better performance in the USA. Moreover, Intralot had sold a piece of equipment and services in the Netherlands. Though the revenues from licensed (B2C) activities fell by 44.9% (€33.9 million) compared with its 2019 level, technology sales managed to bring €55.2 million, meaning it is higher than the previous year. Game operations continued to struggle in the third quarter, and its revenue was down 38.7% year-on-year at €8.7 million. Cost of sales fell to €76.9 million, and it led to the gross profit decline of 28.7% or €20.9 million.

Despite €16.8 million in administrative expenses, earnings before interest and tax in Intralot were €1.2 million for Q3. Just for comparison, the same period of 2019 brought a 1.1 million loss. The operating loss in the company increased from €5.4 million in 2019 to €14 million. However, earnings before interest, tax, depreciation, and amortization (EBITDA) didn’t face a significant change and slightly declined to €18.5 million.

In Q3 of 202, Intralot’s net loss after paying €5.4 million of income tax was €19.4 million. Starting from January 2020 and ending on 30 September, the company’s revenue fell by 52.1%, meaning it lost around €266.1 million. Game management revenue declined by 64.6% (20,6 million), B2C revenue saw a 73% sharp reduction, and technology sales were down 2.5% to €153.9 million. For the nine months, EBITDA was down 42.6% to €45.2 million. Taking into account the company’s loss from non-controlling interest and income tax, operating loss increased to €63.5 million.
Not to mention that in October, Fitch Ratings confirmed Intralot’s Long Term Issuer Default Rating at “CC.” It shows “a lower amount of Intralot’s priority debt following the expiry of the company’s USD40 million US revolving credit facility.”