International betting tech firm Sportech has published its interim results for the six months ended 30 June. The figures, which came in lower year-on-year, reflect an ongoing period of transition for the company as it moves towards a more digitized business, while removing cost to increase efficiencies. Revenue growth in Racing, Bump 50:50 and Lottery were all, it said, offset by “venues’ challenges”.
Total group revenue for H1 came in at $39.5m versus $40.2m in 2018, with EBITDA before sports betting investments of $5.2m and Adjusted EBITDA of $4.1m (2018: $5.3m and $4.7m). The 2019 Adjusted EBITDA includes $1.1m of costs related to sports betting, up from $0.6m in 2018.
The firm told investors that positive decisions were taken to restructure the business in H1 resulting in exceptional cash outflows of $1.8m (2018: $2m). It added that management is focussed on extricating the group in 2019 from historical expensive strategies and delivering an efficient lower operational cost base going forward. Group net cash was $14.3m as of June 30, 2019, versus $17.8m on December 31, 2018.
Focusing on the US and specifically Connecticut, the firm noted that there has been extensive government and media relations conducted in H1 seeking to extend its pari-mutuel licence to deliver sports betting across the state.
“The situation remains complex and despite diligent efforts from numerous stakeholders, legislation was not passed during the regular legislative session, which ended in early June 2019” it said. “The group continues to work with state legislators and established state licensed gaming operators to seek a solution and deliver a comprehensive legal and regulatory framework for Sports Betting, either through a 2019 special session or in H1 2020.”
Turning to technology, it advised: “In 2018, we signed an agreement with Sportradar for sports betting data, trading, and risk management services and sought third party technology platforms. In H1, with the new talent acquired in digital development, we opted instead to develop our own proprietary technology platforms. Sportech now owns its own platform, still powered by Sportradar’s leading data and managed trading services, reducing costs and enhancing IP and client management.
“We commenced B2B marketing and technology integration efforts in a very competitive environment as we position our white label product, seeking to offer a competitive integrated sports and race betting solution.”
CEO Richard McGuire said: “2019 marks a year of transition for Sportech with a clear focus on challenging the predominantly ‘industrial’ culture, whilst driving efficiencies and delivering a range of products that enhance user experience.
“Sportech has made good progress in the period, with the group’s senior management team bolstered to help ensure accountability and increased effectiveness across every business line. Rigorous cost management remains a core focus for the group and the Board expects to see further benefits going forward from the measures already taken.
“Further digitization across existing and new business lines, the elimination of certain expensive strategies, the implementation of a lower operational cost base, and an enhanced global suite of products form the road map for H2, positioning the group for 2020 and beyond. Management remain committed to delivering a superior product range to our global clients and remain confident about the group’s future potential.”