Greek Organisation of Football Prognostics SA
ATHEX:OPAP
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Q2-2025 Earnings Call
AI Summary
Earnings Call on Sep 4, 2025
Strong Growth: OPAP reported 6.5% growth in the first half of 2025, and management expressed confidence for the rest of the year.
Dividend Policy: The interim dividend was set at EUR 0.5 per share, lower than last year, to preserve flexibility for investments, but the full-year dividend policy remains unchanged with a commitment to distribute the bulk of profits and a minimum of EUR 1 per share.
Strategic Investment: OPAP completed the acquisition of the final 15% stake in Stoiximan, viewing it as a key strategic investment.
Online Momentum: Online casino grew 22% and online lottery 30% year-over-year in the first half, with management optimistic about ongoing digital growth.
Hellenic Lotteries Tender: OPAP confirmed progress to Phase B of the Greek State Lotteries tender, but declined to comment on competitive developments.
Margins & Expenses: Operating expenses are rising, mainly due to payroll and IT costs, but the company reiterates its mid-30s margin outlook for the year.
Management explained that the interim dividend was set at EUR 0.5 per share, lower than last year, as a prudent measure to preserve financial flexibility for the EUR 200 million Stoiximan acquisition and the upcoming Hellenic Lotteries license opportunity. However, they reiterated that the overarching dividend policy is unchanged, with a commitment to distribute the bulk of profits and a minimum full-year dividend of EUR 1 per share.
OPAP completed the acquisition of the remaining 15% of Stoiximan in Q2, viewing it as a strategic move to create sustainable shareholder value. Management stressed the importance of this investment and its impact on capital allocation decisions, particularly regarding dividends and preserving 'firepower' for further opportunities such as the Hellenic Lotteries license.
The company achieved notable increases in online casino (22% year-over-year) and online lottery (30% year-over-year) revenues in the first half of 2025. Management expects continued positive momentum in digital channels, citing ongoing digitalization trends. Growth rates may differ by vertical, but both OPAP's challenger brands and Stoiximan's leading position are contributing positively.
OPAP continues to operate both its own online platform and Stoiximan, believing the dual brand strategy is effective due to different licenses, dedicated teams, and distinct market propositions. Management emphasized that this approach allows for broader market coverage, with OPAP’s own online segment showing strong growth alongside Stoiximan’s established leadership.
VLTs delivered 7% growth in Q2 following machine upgrades, new games, and promotional activities that improved customer experience. The scratch and passives category returned to growth after launching a new family of annuity games, which became the top performer in the segment. Management noted ongoing efforts to revamp these products and highlighted the complexity of consumer preferences in this area.
OPAP confirmed it passed into Phase B of the Greek State Lotteries concession tender. While press reports suggested the remaining competitor may not have advanced, OPAP declined to speculate without official confirmation from the tender authority. The company remains focused on the process and sees it as a strategic opportunity.
Despite a strong start to the year, management expects gross gaming revenue (GGR) growth rates to normalize in the second half due to tougher comparisons and the exceptional impact from favorable Joker jackpots in the first half. Nevertheless, OPAP remains optimistic for solid full-year results and continues to target a mid-30s EBITDA margin, even as operating expenses rise.
Operating expenses are growing, primarily due to higher payroll and IT costs linked to innovation and digital transformation efforts. Sponsorship costs are also increasing due to market competition. Despite these pressures, management reiterated their margin outlook, expecting EBITDA margin to remain in the mid-30% range for the full year.
Ladies and gentlemen, thank you for standing by. I am Geli, your Chorus Call operator. Welcome and thank you for joining the OPAP S.A. conference call and live webcast question-and-answer session to discuss the second quarter 2025 financial results. Please note, a video presentation has been distributed and is also available on the OPAP Investor Relations website. [Operator Instructions] And the conference is being recorded.
At this time, I would like to turn the conference over to Mr. Jan Karas, Chairman and CEO of OPAP S.A.. Mr. Karas, you may now proceed.
Thank you, Geli. Good evening or good morning to everyone. I hope you all had an amazing summer and we are very glad to have you with us here today, to share with you the strong set of Q2 2025 results. Hopefully, you had a chance to review and enjoy the recorded video we have prepared for you and shared earlier today. In a nutshell, we are pleased with our 6.5% growth rate in the first half of the year and we certainly remain confident for the rest of the year. I particularly wanted to highlight the strategic investment in Stoiximan in the second quarter, targeting to create sustainable value for our shareholders, while at the same time, distributing EUR 0.5 per share as an interim dividend. I guess it's the best to jump straight in the Q&A to make our discussion more interactive.
Geli, over to you.
The first question is from the line of Draziotis Stamatios with Eurobank Equities.
Actually, 3 questions from my side, if I may and perhaps we can take them one at a time. So firstly, on the dividend policy, on the interim dividend, how should we interpret the cut versus last year? You talked in your presentation about, in essence, preserving firepower for upcoming investment needs. But I mean, just to put it plainly, if '25 profits end up higher year-on-year, should we expect the dividend to be high as well. So that's the first question.
Okay. I will take this one. Good afternoon from Pavel Mucha. Yes, indeed, it's somewhat lower, the interim dividend than what we could have distributed based on our half year profitability. But still, we opted for a more prudent distribution, taking into consideration the acquisition of the last 15% stake in Stoiximan, which is a strategic investment of around EUR 200 million and also taking into account prospective Hellenic Lotteries license, which is coming. So that's -- that is the reason essentially why slightly lower interim dividend. But for the total 2025 dividend per share, our dividend policy has not changed and indeed remains intact.
So Pavel, sorry, just to clarify. So you mean that the -- in essence, the bulk of profits will be distributed to shareholders? Is this what you're referring to?
Yes, yes, exactly. So we remain committed to distribute the bulk of our net profits with a minimum of EUR 1 dividend per share.
Okay. Got it. The second question because you mentioned the acquisition of the Stoiximan noncontrolling interest. Just from a strategic viewpoint, I'm basically wondering what the rationale is for continuing to operate OPAP online for nonexclusive gains operating separately from Stoiximan. So in essence, having 2 platforms, especially in sports betting, if you could share some thoughts on that, please.
Thank you for the question and I can comment. We certainly see a lot of reasons why to continue the dual brand strategy that we follow for several years and I believe the results confirm that being the right strategy. We are working with 2 different licenses. We have 2 teams dedicated and we have 2 different propositions to our customers. And while we are very happy with the market leadership of Stoiximan, the contribution of OPAP's own sports betting and casino vertical is certainly not negligible and showing exciting growth rates as we have shared with you with the presentation. So we believe the dual brand strategy is the right one and we certainly want to continue to pursue it further on.
Okay. Got it. And the last question has to do with Joker, which was -- I mean, has been the star performer really for the last few months. In your presentation, you talk about the long streak of jackpot rollovers on the second year running really. And you mentioned the revamp of the product late -- in late 2023. Just wondering, I mean, should we think about the too many back-to-back streaks of 2025 [ VARs ] and partial exception, let me say, put it this way. Or is it like a new trend in your view?
Well, it's a game of chance in the first place. But if that answers your question, certainly, the concentration of high jackpots has exceeded our expectations in its statistical occurrence. But as a game of chance, it's a bit difficult to predict how it will evolve going forward. As we have said, we have intentionally changed the structure of the game where the buildup of jackpots should be more likely than it was before, fostering a cycle in which increasing price amounts fuel greater participation and excitement. So essentially, the purpose of the change we have done and the ambition we had is being confirmed and we are very happy. What we will -- I would say, we will certainly need to wait much more time to be able to comment on any usual patterns of the new era, if I say.
The next question is from the line of Kourtesis Iakovos with Piraeus Securities.
My first question has to do with Hellenic Lotteries. You've announced along with the first half '25 results announcement passed in the second phase of the international tender for the concession of Greek State Lotteries. And however, there was press reports today that indicate that the other competitor, the other interested party, Brightstar Global Solutions Corporation did not pass in the Phase B. Do you -- could you comment on the progress of -- for the Hellenic Lotteries license? And if you can confirm if you have any information if Brightstar is, or not on the second phase of the international tender?
And the second thing has to do -- it's quite impressive, the growth rates you've recorded in the online. I can see that in first half '25, you have in online casino a 22% growth year-over-year and in [indiscernible] lottery, 30% growth year-over-year. Should -- I understand this is a growing market, should we expect this to continue at these rates, double-digit growth rates? And if you gain or not market share in the specific categories, please?
Thank you very much for your questions. Let me start with the Hellenic Lotteries question. Indeed, it has been confirmed to us that we are moving to Phase B or we are progressing to Phase B. When it comes to the other contender, the only thing we may refer to is anything that has been published officially by Super Fund. And to our understanding, so far, Super Fund has not commented or communicated in their channels, anything when it comes to the other contender, the Brightstar.
So at this moment, we can only speculate and I understand what articles you refer to but that's not an official communication from Super Fund. And it's only Super Fund that can provide any official information on that front. So I would like to abstain from any speculations about the program or not of the other contender. But certainly, again, confirm we are progressing to the second round and it's something that has been confirmed to us by Super Fund. Sorry, that your first question. Second, did I cover your -- I hope, with the first one, so I can progress to the...
Yes, please.
Progressing to the second question about the growth rates. So obviously, that's a little bit of a crystal ball thinking here as to what trends we will foresee going forward. We certainly believe this is -- that online is a growing segment. The nonexclusives in our case, sports betting and casino present certainly -- continue to present a great opportunity when it comes to growth. The same goes for online lottery because digitalization generally is the name of the game. So overall, I would say, we can expect positive trends to continue. What exactly will be the trends and how much the trend so far will continue or will accelerate or will slow down. I think the answer will differ per vertical.
And also very importantly and that comes back to the previous question of the dual brand strategy, it's also different being the market leader and defending its position versus being the challenger, which is the case of our OPAP nonexclusive proposition when it comes to growth. Growing from a single-digit market share, double digit -- in a double-digit rate is certainly easier than being the market leader with dominant position achieving the same. But we believe for both of our brands for positive continuation and continuation of the good momentum judging from the feedback from customers we have so far and activity -- positive trends in activities we have shared in our presentation.
The next question is from the line of Pointon Russell with Edison Group.
A couple of questions. First of all, on VLTs, you had very good growth in the quarter of 7% or so. You've been talking about a number of these changes in presentations over the last few quarters in terms of the cabinets, more games, et cetera. So what really kicked in, in the second quarter to get the growth so high?
It is indeed the result of our commercial initiatives, especially the machines upgrades, as you correctly noted. If you had a chance to see the difference before and after, you will probably understand why it certainly is a significant contributor to customers' activity as well as in our ability to attract new customers. The difference in customer experience is really significant. And it is something that is supported by various promotions and loyalty schemes that we are putting in place in engaging players. So I wouldn't necessarily highlight any specific action. It's a complex ecosystem of various elements that are influencing the performance of this vertical. But we are very happy to see that this year, we are seeing the growth that we are seeing because VLTs are certainly a gaming vertical where we still have seen and we continue to see opportunities to explore.
Okay. That's great. And second, on the Instant & Passives, again, you had very good growth in the quarter. And I think that's the first positive growth you've had in 2 years or so. And the presentation refers to you've expanded the family of tickets in scratch, et cetera. So I just really wanted to confirm that it was solely that, that led to the improvement or what else was happening within that revenue stream?
Well, honestly, if VLTs are a complex topic, then the scratch and passives even more. So to give you a little bit glimpse in the kitchen, last few years, we are putting an incredible effort and I would even say this proportional efforts compared to the other gaming verticals to try everything possible to revamp, boost and grow the scratch and passives category. For both of them, we believe there continue to be opportunities that we want to be exploring in many different areas and a lot of things have been tried. And the impact on customers' interest is a little bit mysterious. Sometimes we have customer research is indicating they want something that then later doesn't work and the other way around. So it's really interesting and a bit mysterious category for us.
Now when it comes to this year, referring to what I just said, it's certainly a result of continuation of the efforts across all the many different fronts of success, promotions, product, presentation at the point of sales, incentivizing the sales channels, et cetera, et cetera, that we in the 360 execution continue to focus on. If there is something to highlight that I believe impacted significantly this year, then it's really the new family that we have significantly impacted of the -- how is it called? So now I lost the English word, the annuity games, thank you, the annuity games, in other words, the chance to win money that you are receiving every month. So annuity games kick in. There was lesser interest in the previous year. This year, they seem to resonate well with the customers and they like it. And this very new family of scratch product became actually the start of our portfolio and has the highest and biggest share compared to all the other families, even the long-time superstar of Lucky Cats. So I hope that longer answer gave you some additional insights. It's really a complex category where a lot of focus is needed.
[Operator Instructions] The next question is from the line of Nekrasov Maksim with Citi.
A couple of questions on my side. The first is about the outlook for the second half of the year. Considering a very high base of last year, so how do you see the situation developing? And would you expect to have a positive growth despite the base and maybe how the trends have been shaping up so far in July and August? And also more of a traditional question, if there are any updates on the main concession that expires in 2030? So what's the current situation there?
Thank you very much for your question. We are very glad, obviously, about the performance so far at 6.5% year-over-year and we are optimistic going forward. So having said that, we continue to expect the normalization of our GGR growth rate versus -- in H2 versus H1 because of those tougher comparisons in the second half of the year. While also we need to keep in mind that H1 was positively influenced by the tailwinds from the favorable Joker jackpots that we have discussed before. But in any case, we remain very confident expecting solid full year performance. So that's on the outlook.
Now when it comes to the main licenses, there, I don't have any news for you at this moment. As we said many times, we are, of course, interested in extending our rights on our exclusive games licenses beyond 2030. We have publicly referred to this. However, the relevant discussions have not started yet. It is still too early or maybe not too early but still early for this. And should there be any development, we will, as always, inform you promptly and immediately. Thank you.
The next question is from the line of Grigoriou George with Wood & Co.
Leaning on to the [ discussion ] about the outlook. I've got a question on the outlook for the -- for your operating expenses. How you see that evolving in the second half? And how should we actually think about it for next year as well? If I'm not mistaken, you did 2 sponsoring as well agreements with 2 major football teams here in Greece have actually expired. So I was thinking that maybe that should -- would have an impact in your OpEx on the positive side, I mean.
Okay. So OpEx, indeed, is growing up year-on-year and year-to-date. It will continue to grow in the second half of the year versus last year. It's driven quite a lot by 2 main categories, really. First one is the payroll costs where it has a number of reasons. Those results and the growth in GGR doesn't come just by doing nothing, obviously. We are innovating a lot. There are many innovative agendas for which we need to attract new talent in the company, which is not cheap. So it's quite an expensive positions and increasing the head count. And also, we need to remain competitive in the market. Greek economy is doing very well. Everybody is hiring. There is a lot of competition. So obviously, the salaries have to be at competitive level. And so that's on the payroll. Also IT costs are growing because we are doing a lot of digital transformation activities both in online but also in retail. That's why we have so good GGR growth not only in online but also in retail. So also IT costs are increasing and that can be expected in the second year.
Indeed, there were some renewal of sponsorship assets at higher costs. And it's very competitive market with the [ online ] competition, it's quite tough. Competition for all these sponsorship assets and that drives the costs up. Nevertheless, our outlook remains the same, not only on the GGR side, as Jan just commented but also on EBITDA. And so overall, we reiterate our outlook that our margin should still keep in the mid-30s despite of the increase of operating expenses. So it shouldn't have any impact on overall margin and profitability.
[Operator Instructions] The next question is from the line of Puri Karan with JPMorgan.
I have a quick follow-up on the question on margin. So just based on your full year guidance of 35-ish percent margin, I'm just wondering if it's right to think there would be a pickup in H2 margin given that H1 was a bit below the 35% range. Is that the right way to think about it?
Yes, kind of. But really, I think what you should bear in mind that it will be in mid-30s, around 35%. That's pretty safe assumption for any modeling, I would say.
[Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Karas for any closing comments. Thank you.
Thank you very much, Geli and thank you very much to all of you for being with us today. It's been a pleasure, as always. Our Investor Relations team will be ready to address and happy to address any additional questions you still might have and explore your inquiries in more detail. We will be looking forward to talk to you again in November upon the Q3 results announcement. Thank you very much for being with us today and have a great rest of the day. Goodbye.
Ladies and gentlemen, the conference has now concluded and you may disconnect your telephone. Thank you for calling and have a good afternoon.