Paf hit a peak in earnings, reaching €177.1 million (£150.8 million/$191.4 million) in 2023. However, the Nordic company cautioned that increased gaming levies could affect future earnings.
The Nordic company experienced another financial triumph in 2023, with revenue growing by 6.9% annually. Paf’s net profit also saw an uptick of 23.0% to €55.1 million, establishing another yearly record.
Despite celebrating the news and commending Paf’s performance, CEO Christian Fahlstedt voiced worries about future earnings potential. Fahlstedt specifically highlighted the rise in gaming taxes in several markets in the coming years, which could impact net profit levels.
In Finland, a temporary reduction in lottery tax has concluded, and the rate has now climbed from 5% to 12%. Meanwhile, Sweden’s gambling tax has increased from 18% to 22%, Estonia from 5% to 6%, and Latvia from 10% to 12%.
“We are pleased and proud of the past year,” said Fahlstedt. “We have attracted a larger customer base, with the number of active customers increasing by 27%, which explains part of it.
“However, we are also acutely aware that the temporarily lower gambling tax in Finland contributed to this outcome. The trend of increasing gaming taxes will persist.”
Fahlstedt also highlighted the influence of the demand for enhanced responsible gambling rules, which he characterized as a “critical need,” and this influence cannot be disregarded. Interestingly, Paf decided this month to further lower the loss limit for players aged 20 to 24 to €8,000. This follows Paf’s complete revamp of its mandatory online loss limits in April 2023, reducing them from €20,000 to €17,500.
“The changes will result in a decrease in profits, and many operators will find it more challenging,” said Fahlstedt. “But Paf is prepared for what lies ahead.”
Paf’s online business expansion drives revenue growth
Examining the revenue performance in 2023, it’s evident where Paf’s growth originates. Revenue from its online business increased by 8.2% to €153.8 million, with Paf pointing to robust growth in Sweden, Spain, and Latvia.
The latter benefited from the acquisition of Latvian-facing William Hill Latvia SIA and SIA Mr Green in June 2023. Paf stated these deals generated an additional €5.1 million in online revenue.
Paf also reported a 27.3% rise in the number of registered online customers, reaching a record 615,557. The operator anticipates this figure to continue to increase in 2024 and will be supported by ongoing marketing initiatives.
Regarding Paf’s other ventures, revenue from the land-based and ship sectors declined by 0.9% to €23.3 million. This is despite a 4.0% increase in the total number of ship passengers in 2023.
Here, Paf established new agreements with Tallink Group and Eckerö Linjen and welcomed Finnline’s new vessel M/S Finnsirius.
Paf and Helsinki’s Pikseli have joined forces to develop the first land-based gaming space. This gaming room concept seamlessly blends entertainment games with recreational activities.
Paf has also observed the growing trend of contactless payments, with all entertainment games and nearly half of the slot machines now offering cashless payment options. Paf states this move satisfies customers’ desire for more convenient payment methods.
“With these initiatives and innovations, we anticipate continued growth and ongoing improvements to our services and offerings,” stated Paf.
The rise in net profit was driven by increased income.
Operational costs, materials, and service expenses rose slightly by 7.9% to €42.6 million. Employee costs remained stable at €24.2 million, while depreciation and impairment charges only increased marginally to €10.6 million.
Other operating expenses decreased by 2.0% to €52.9 million, while Paf experienced a slight increase in net financial income of €723,605.
Consequently, its pre-tax profit was €60 million, an increase of 27.9% year-on-year. After paying €5.2 million in taxes and accounting for the impact of deferred taxes of €305,468, net profit for 2023 increased by 23.0% to €55.1 million.
Paf also noted that higher revenue and profits allowed it to allocate €31.4 million in funds in 2023. These funds were used for social good, including third-sector organizations committed to promoting social activities, culture, youth work, sports, environmental activities, and more.
“It’s certainly reassuring that Paf’s outstanding performance has enabled us to allocate a total of €31 million.”
Four meters,” declared Chairman Jan-Mikael von Schantz. “Our staff have performed exceptionally well this past year, and the board wishes to convey our heartfelt appreciation to all Paf employees who made this accomplishment possible.”
Sign up for the iGaming news bulletin.