Entain reiterates FY23 growth targets despite Q3 slowdown

Entain remains confident in achieving its full year revenue expectations despite experiencing ‘mixed’ trading during the third quarter, according to an update this morning from FTSE100 gambling group.

The company is due to announce its Q3 trading update on 2 November, but detailed to investors that some aggravating factors have posed hurdles in Q3, including ‘adverse sporting results’ impacting sports betting margins in September.

Meanwhile, adoption of safer gambling measures and regulatory difficulties have been ‘persisting longer than expected’. This has been particularly the case in the UK, Entain asserted, where it is highly active via the flagship Ladbrokes and Coral online and retail operators.

The UK betting market is currently adjusting to the recommendations of the Gambling Act review, with many operators upping the ante on responsible betting whilst also engaging in consultations with the UK Gambling Commission (UKGC) and DCMS.

Meanwhile, in Australia – where the firm’s Ladbrokes Australia and NEDS brands hold substantial market share – and Italy – one of the core markets for its bwin brand – Entain has reported ‘slower growth than expected’.

The company had previously warned investors of ‘macro economic headwinds’ in its Q1 2023 trading update, and in its Q2 statement reiterated these concerns as online NGR dropped 7% for the first six months of the year.

SBC News Entain reiterates FY23 growth targets despite Q3 slowdown
Jette Nygaard-Andersen, Entain CEO

Jette Nygaard-Andersen, CEO of Entain, said: “We continue to see good underlying growth in our online business and are reiterating our EBITDA guidance for the year despite softer than expected revenue growth in Q3 and the ongoing roll-out of industry-leading safer gambling measures. We continue to attract more customers than ever before to enjoy our products and services.”

On a more positive note, online growth has continued for the business – although the firm did note this was excluding regulatory impacts – and was demonstrated by an increase in active customer numbers.

The group’s retail performance remains ‘robust’ despite the headwinds of the UK. This business segment likely benefited from a general bounce back for the UK retail sector post-COVID, as sector GGY rose 6% to nearly $585m as of Q4 2022/23.

Internationally, recent acquisitions such as SuperSport have continued to perform strongly. The takeover of Croatia’s SuperSport formed the core of Entain’s expansion in Central and Eastern Europe (CEE), with the group’s ambitions in this region further bolstered by the acquisition of Poland’s STS Group in June.

In the US, BetMGM remains on track to deliver positive EBITDA in H2 2023 with full year net gaming revenue expected to be ‘at the upper end’ of $1.8bn-$2bn. 

The joint venture with MGM Resorts is on the verge of achieving profitability after establishing itself as the US’ third biggest igaming firm in terms of market share since launching in 2019.

Nygaard-Andersen said: “BetMGM remains on track to deliver positive EBITDA in H2 and a full year NGR performance at the top end of our expectations, and we are particularly excited about the product improvements that we are rolling out over the NFL season.”

Entain further detailed that it will unveil more on its long-term growth strategy as it targets an online EBITDA margin of 30%. Group-wide revenue is expected to reach £1bn-£1.02bn, with full year online NGR projected in the ‘low double-digit percent’ but proforma NGR down ‘low single digit percent’.

Measures unveiled so far include optimisation of capital allocation priorities, simplification of group structures and operations for greater operational leverage and cost reduction and migration of acquired businesses – such as the aforementioned CEE holdings – onto Entain’s own tech platform.

Entain’s CEO concluded: “We have made significant changes to the Group over the last three years. Our focus now is on accelerating the actions we are taking to drive sustainable organic growth, expand our margins, capitalise on the US opportunity and deliver long-term returns for our shareholders.  

“We remain confident in our ability to deliver on the vast opportunities ahead of us, and look forward to sharing more detail about the changes that we are making alongside our Q3 trading update in November.”

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