Online gaming and financial trading systems giant Playtech PLC (LON:PTEC) has announced its results for 2016, which showed significant improvement across the board in Revenues (up 12% over 2015), EBITDA (up 20%) and Net Profit (up a tidy 42%).
The second half of 2016 also saw a nice turnaround, or at least a stabilization, at Playtech’s Financials division, which comprises mainly the Retail Forex brokerage Markets.com, and the B2B Forex services company CFH Group which was acquired for $120 million as of November 30. (So, just one month worth of CFH figures are included in the 2016 results).
We had reported back in August that a restructuring at Markets.com at the beginning of 2016 led to a sharp decrease in activity and revenue. After being rejected by regulators in its attempts to buy rivals Plus500 Ltd (LON:PLUS) and AvaTrade in late 2015, Playtech decided to remake the operations of Markets.com, and move to a much more automated model with automated funnels for customer acquisition and retention initiatives.
The company decided to sever ties with and reliance on IBs and Affiliates, in an effort by Playtech management to automate the operations of Markets.com. Playtech even went as far as changing compensation internally, to do away with salesman commissions in favor of fixed salaries. Not surprisingly, many higher-performing sales people left, as they could no longer earn large commissions.
Markets.com revenues fell by 37% in the first half of 2016 to €31.3 million, down from €49.4 million in the second half of 2015. A good chunk of the drop was what in what Markets.com calls ‘B2C indirect’ – namely IBs and Affiliates – which went from €18.4 million in 2015 to zero in 1H-2016.
But second half 2016 revenues at the Financials Division of Playtech stabilized and rose to €34.3 million, up about 10% from 1H levels. More than half of the second half increase, or €1.8 million, was due to the inclusion of one month of CFH Group revenues. But even without CFH’s contribution, revenues were up (although slightly) at Markets.com.
According to the company, the second half of 2016 saw a material improvement in performance at Markets.com with encouraging KPIs. Total actives CFD customers were up 10% in H2 2016 with total first time CFD depositors up 37%.
Markets.com also announced a change in senior management earlier this year, with Playtech CFO Ron Hoffman taking over full time as CEO of the Financials Division. Mr. Hoffman had effectively overseen the restructuring at Markets.com over the previous year.
Playtech’s full results report for 2016 can be seen here.