Playtech PLC (PYTCF) (H1 2026) Earnings Call Highlights: Adjusted EBITDA Surges 77% as Free ...

Negative Points

• The UK market was impacted by customer-specific changes and increased remote gaming duty, leading to lower performance in the region.

• The contribution from Hard Rock Digital is expected to trend toward a lower but more sustainable level in H2 2026 as they introduce other third-party suppliers in Florida.

• Adjusted EBITDA in H2 2026 is expected to be lower than H1, and there will be a normalization in EBITDA margin, indicating a temporary rebasing of financial performance.

• The company faces regulatory uncertainties, including potential changes to gaming machine taxes in the UK and political sensitivities in Brazil that have delayed the conclusion of an agreement.

• Exceptionals remain high, with a significant portion related to the Snaitech sale, and some remaining amounts will impact H1 2027, affecting the clarity of underlying performance.

• The live vertical's growth in non-US regulated markets was not as strong as expected, with only 12% growth overall, and management expressed dissatisfaction with the current pace.

• The Caliente stake is not revalued upwards regularly and is subject to mechanical accounting, which may not reflect its true market value, potentially limiting balance sheet upside.

• Consolidation among operators could pose short-term challenges, although it is generally seen as an opportunity in the medium to long term, depending on the parties involved.

Q & A Highlights

Q: Chris, you said that you'll revisit targets in the new year. But it'd be really interesting to hear you talk about why it is you have -- you're so far ahead of delivering on those targets in terms of time? A: Chris McGinnis (CFO): We announced our 5-year targets at the full year results in 2025, but they were set internally in 2024. To be 18 months into those targets and be well on track to meeting them is very pleasing. In terms of being so far ahead, we've had some amazing execution across the business, and some of the investments we've made, like Hard Rock Digital, have even surpassed their own lofty expectations.

Q: Can you just talk about the valuation of the assets at the first half? What about the valuation of the Caliente stake? Is the Caliente stake book value anything like a market value? A: Chris McGinnis (CFO): The Hard Rock stake gets revalued every six months by a third-party firm, factoring in the current state of the business and future projections. The fact that the Hard Rock investment has effectively tripled in value since we made it just over three years ago shows the phenomenal success of that business. The Caliente valuation is different from an accounting perspective and is quite mechanical now, based on the value when the new structure came into place in April 2025. It is not revalued every period in the same way as the Hard Rock digital stake is.

Q: On the cost containment side in B2B, it was clearly great. I was wondering to what extent the games evolution and the evolution of revenue at Hard Rock Digital helped in H1. And therefore, what kind of margin should we expect more normalized from H2 onwards? A: Chris McGinnis (CFO): We removed EUR20 million of annual costs from the business in the first half of the year. We see more opportunities for cost efficiencies going forward. On the Hard Rock Digital and the games powered by Parx Motor Racing product, we incurred a lot of the investment in developing that product in 2025, absorbing the costs without any revenues. What's happened in 2026 showcases the beauty of the Playtech business model: once you go live with the product, most of the upside from revenue flows through to the EBITDA and free cash flow. There will be a normalization in the EBITDA margin in H2 and into 2027, but once it's rebased, we expect continued revenue growth, EBITDA growth and further margin expansion.

Q: On Brazil, what's the presumable evolution there? And the fact that you haven't yet concluded the agreement we've been talking about for a while, is it also related to the political and therefore, regulatory uncertainties? A: Mor Weizer (CEO): I'll be very open. There were certain concerns because it is an election year. Given the sensitivity around that, we were kindly asked to collaborate with the government and the prospective customer we are in discussions with to wait until the elections. However, the expectations remain the same to enter into an agreement and launch some time at the beginning of next year.

Q: Caliente obviously very strong this year. Could you say how much the contribution from roughly the World Cup was both in H1 and also presumably you know how it's in H2, just so we can see the sort of underlying run rate? A: Chris McGinnis (CFO): The most important KPI from Caliente's perspective is customer acquisition, and by all accounts, that was incredibly successful. In terms of how it impacts the numbers short term, there was significant marketing around June and July. On a P&L basis, the results for those months would be lower given the significant marketing investment. On a cash basis, we received dividends on a monthly basis, and both the June and July dividends will fall into H2. So on a cash flow basis, I would expect H2 to probably be lower than H1, all else being equal.

Q: On the PMR product, it's clearly massively successful in Florida with Hard Rock Digital. Can you leverage that product in other states with other licensees in States, which don't have online gaming? A: Mor Weizer (CEO): We have been investing into this product for more than a year, working closely with Hard Rock Digital to turn it into reality online for the first time. It's early days, but it operates successfully and delivers very strong results for both Hard Rock Digital and Playtech. We started looking into different other states and countries. More than one regulator in the US has already approached us about the PMR, looking to innovate in their own states. It's not only restricted to the US; where gaming is not allowed and only sports is allowed, this is a new format alongside sports betting that can be very compelling.

Q: Just wondering if you could possibly provide some color around how the success of the agreement in Brazil would impact your medium-term guidance? A: Chris McGinnis (CFO): When we set the medium-term guidance 18 months ago, the Brazil opportunity wasn't specifically factored into the guidance. As we're now approaching the targets, I think the Brazil opportunity should only enhance those. We'll revisit the targets at the full year results, and that would probably be the logical time to more explicitly factor Brazil into any revised targets.

Q: We're seeing a large amount of consolidation among operators. I was just wondering how you expect that to impact your business as a supplier? A: Mor Weizer (CEO): We have gone through a consolidation process for a long time now. It's really hard to say from the outset how it evolves in the short term because it depends on the arrangements we have with the respective parties. In some cases, it's a real opportunity for us, like in the case of Evoke. On the medium to long-term basis, I will say it's a fantastic opportunity for us. We have a bigger group to work with, they like the sophistication of Playtech's products, and they have more firepower to invest into marketing and expand internationally.

Q: If US Live was up 25%, what was the rest of regulated live, and you talked about improving margins. So it doesn't feel like as much top line growth as there should have been given what's happening in the market. What does the future look like for live? A: Chris McGinnis (CFO): We did change the live management team roughly 12 months ago, so there's been some optimization and efficiency measures in that business. But to be clear,

For the complete transcript of the earnings call, please refer to the full earnings call transcript .