Tabcorp keeps faith in business transformation after 1H23 rebound

Tabcorp’s market leadership position in Australia remains steady as the company reported a small increase in revenue in the second half of 2022, softening the blow of retail closures during the first six months of the year.

Issuing an update to its ASX investors covering H123 (30 June-31 December 2022), the betting, gaming and media group reported a 10.6% increase in revenues to A$1.27bn (A$1.15bn).

EBITDA from continuing operations – referring to the group’s Wagering and Media division and Gaming Services segment – also rebounded from H222 difficulties to A$196.6m (H122: A$159m).

A major reorganisation of Tabcorp’s business model last year saw the divestment of its Lotteries and Keno division to list on the ASX separately as The Lottery Corporation, retaining its Wagering and Media unit and Gaming Services division.

The results mark a substantial improvement on trading during the first half of 2022, which saw retail closures in New South Wales (NSW) and Victoria, as well as the impact of wet weather conditions on racetracks negatively affecting group performance.

Revenue from continuing operations for the full financial year closed at A$2.3bn, a 4.3% decline on the previous year’s AA$2.4bn, whilst EBITDA also fell by 21% to A$381.6m ($487.2m).  SBC News Tabcorp keeps faith in business transformation after 1H23 rebound

Tabcorp Managing Director and CEO, Adam Rytenskild, said: “Today’s results highlight that our transformation strategy, which commenced on 1 June 2022, is working. 

“Our business has rebounded strongly from a COVID impacted first half last year to experience strong growth in Group revenue and EBITDA. 

“The COVID lockdowns presented an opportunity for digital only operators, but our retail customers have quickly returned and our digital transformation is amplifying that opportunity.”

Keeping faith in its business transformation, Tabcorp also remains confident in the capabilities and popularity of its newly launched TAB app, which it asserts has seen off competition from a ‘new entrant’ in the Australian market – most likely referring to NTD’s Betr.

H1 developments also saw the company purchase a 20% stake in sports betting start-up Dabble, as it seeks to focus on revamping its digital offering for an increasingly web-driven wagering market.

Regarding this, the firm turned down the opportunity to buy the WA TAB retail betting operation from the Western Australia government, which Rytenskild stated demonstrated ‘capital discipline’, as Tabcorp remains focused on its digital commitments.

He continued: “Tabcorp is doing what we say we will do – we have unshackled ourselves post the demerger with a new energy, capability and offers for our customers. We will continue to build on that.”

Looking ahead, the group has announced its ‘TAB25’ set of objectives to be achieved for 2025, targeting a reduction in operating costs to between A$600m and A$620m as it continues its business transformation strategy.

In line with its digital ambitions, Tabcorp reported digital revenue market share of 25.1% at the end of the six month period, with the TAB brand holding digital share ‘for the first time since 2019. 

When coupled with the group’s retail operations, total betting market share stood at 34.8%, rising from 31.2% the previous year.

Projecting that cost discipline will result in stronger results for its shareholders, the firm aims to create a ‘simpler’ and ‘more agile’ operating model, whilst also lauding the implementation of a ‘level playing field’ across different Australian states.

Rytenskild remarked: “With the successful implementation of a level playing field in Queensland, Tasmania and the ACT we now seek to have a level playing field in every state and territory.

“This will ensure greater investment in the racing industry and its participants. It will also allow TAB to invest more in our customers and products. “I said in our FY22 results that we had drawn a line in the sand and we have. We are delivering on our actionable priorities for FY23.”

To keep track on its business transformation, Tabcorp’s Genesis plan has placed a focus on digital enhancement, capital optimisation, a reorganisation of the Sky Racing brand, direct and indirect cost cutting and development of a low cost omnichannel retail network.

Following the positive results reported in H123, the company has updated its guidance to 2.3% growth against the prior year, coupled with the aforementioned operating expenses reduction target.

Tabcorp’s CEO concluded: “Our revenue and EBITDA has rebounded from the challenges of COVID, our new TAB App is live and the strength of the product ensured we retained digital revenue market share for the first time in four years. This rapid transformation shows our strategic direction is the right one.”

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