In what was another financially stellar year for Paf, the company experienced a notable increase in revenue, which went up by 6.9% year-on-year. The operator also celebrated a significant 23.0% rise in net profit, reaching €55.1m, marking another annual record for the company.
Despite the impressive financial performance, CEO Christer Fahlstedt issued a cautious note regarding future profit prospects. Fahlstedt pointed out that rising gaming taxes across various markets are likely to impact net profit levels in the forthcoming years. Specifically, he highlighted changes in tax rates in several countries which could potentially curtail future profitability.
In Finland, a temporary reduction on lottery tax has ended, leading to an increase in rates from 5% to 12%. Concurrently, Sweden’s gambling tax is set to rise from 18% to 22%. Estonia will see an increment from 5% to 6%, and Latvia’s gaming tax will climb from 10% to 12%.
“We can be happy and proud with the past year,” Fahlstedt remarked. “We have gained a larger customer base, and the number of active customers has increased by 27%, which explains part of our growth. However, we are also well aware that the temporarily low gaming taxes in Finland have positively influenced our results. The trend of increasing gaming taxes will continue.”
In addition to the tax fluctuations, Fahlstedt acknowledged the impact of what he described as “much needed” demands for enhanced responsible gaming measures. Striving to maintain ethical operations, Paf recently decided to further reduce loss limits for players aged between 20 and 24 to €8,000. This initiative follows Paf’s overhaul of its mandatory online loss limit in April 2023, lowering it from €20,000 to €17,500.
“The changes will result in reduced profitability, and many operators will find it more difficult,” Fahlstedt stated. “But Paf is well prepared for the times ahead.”
Analyzing revenue performance for 2023, it’s evident where Paf’s growth has originated. Revenue from its online business escalated by 8.2% to €153.8m, with noted strong growth across Sweden, Spain, and Latvia. Particularly, Paf’s acquisition of Latvia-facing William Hill Latvia SIA and SIA Mr Green in June 2023 bolstered the revenue. These deals collectively generated an additional €5.1m in online revenue.
Paf also reported a remarkable 27.3% increase in registered online customers, reaching a record 615,557. The operator expects this number to continue growing in 2024, supported by ongoing marketing efforts.
Conversely, Paf’s land-based and ship segment faced a slight decrease in revenue, slipping by 0.9% to €23.
.3m. This was despite a 4.0% increase in the total number of ship passengers in 2023. Paf formed new agreements with Tallink Group and Eckerö Linjen while welcoming Finnline’s new ship, M/S Finnsirius. Moreover, Paf launched its first land-based GameRoom in collaboration with Pikseli in Helsinki. The GameRoom concept offers a blend of amusement games and entertainment.
Paf also noted an uptick in cashless payments, with all amusement games and nearly half of the money slot machines now offering cashless options. This shift aligns with customer demand for smoother payment processes.
“Through these actions and innovations, we look forward to continued growth and enhancement of our services and offerings,” Paf stated.
Turning to costs, materials, and services expenses increased by 7.9% to €42.6m. Staff costs remained stable at €24.2m, while depreciation and impairment saw a minor increase, reaching €10.6m. Other operating expenses were reduced by 2.0%, bringing them down to €52.9m, and Paf enjoyed a slight boost of €723,605 in net financial income.
As a result, Paf ended the year with a pre-tax profit of €60.0m, marking a significant 27.9% year-on-year increase. After paying €5.2m in tax and accounting for €305,468 in deferred taxes, net profit for 2023 grew impressively by 23.0% to €55.1m.
Furthermore, the increased revenue and profit enabled Paf to distribute €31.4m in funds during 2023. These funds, used for the betterment of society, support third-sector organisations engaged in social activities, culture, youth work, sports, environmental activities, and more.
“It’s undeniably great that Paf is achieving such an impressive result, allowing us to distribute a total of €31.4m,” Chairman Jan-Mikael von Schantz said. “The employees have done a phenomenal job over the past year, and the board would like to extend thanks to all Paf employees who have made this possible.”
