Entain H1
The top line
Net gaming revenues were up 11% to £1.79bn ($2.48bn) while revenue of £1.77bn was up 12%. Underlying EBITDA up 12% to £401.1m.
Online revenue up 29% to £1.56bn (the 22nd quarter of consecutive growth). Ex-Germany, online growth was 38%. Retail was down 46% to £191.3m with continued Covid-related closures.
BetMGM achieved H1 revenues of $357m while Q2 revenues of $194m were up 19% QoQ. As already trailed by JV partner MGM Resorts International, BetMGM achieved 22% market share overall in Q2 and 30% in igaming.
Best yet: For all the moving parts in the Entain business, the focus of the H1 results was very much on the US. As CFO Rob Wood said in his opening remarks, “investing in BetMGM will probably be the best investment we ever make.” Noting the market share differential between sports-betting (17%) versus igaming (30%), Wood was keen to emphasise how BetMGM was doing better in states where it was there from the start; where the percentage goes up to 22% versus market where it has come to market late. Asked about potential acquisitions in light of the DraftKings/GNOG deal, Wood said they were “comfortable with the complement of brands at our disposal.”
A Europe divided: If you were looking at buying Entain for more than just its share of BetMGM, the picture is bright overall albeit with the blot of Germany looming large. Online was up, driven by sport (up 55%) and new acquisitions Enlabs in the Baltics and Bet.pt in Portugal while further afield Brazil was the standout (up 155%). But Germany was the issue; while sport NGR was up 53%, gaming was down 34%.
“The biggest impact has been on gaming with the lack of policing creating an uneven playing field,” said CEO JetteNygaard-Andersen. She added that suppliers in particular were “not differentiating between compliant and non-compliant.”
Yin and yang: While the budget for new innovations – particularly in esports – is set for £100m over the next three years, the company is also looking at cost savings in both retail and online of c.£100m annually from 2023. One area of innovation already underway is the development of its in-house SSBTs in the UK retail estate.
“The golden rule we have as a group is that the priority is always customers and revenue over costs,” said Wood. “So we wouldn’t deploy new betting terminals just because it was cheaper. We are in trials at the moment and we have over 100 shops right now (with new machines) with rollout planned for the second half of next year.”
A Baltic base: Nygaard-Andersen said the company would remain disciplined when it comes to M&A. “We have a very strong pipeline and in terms of countries we are looking at the usual suspects,” she said. “We’re looking at building our central and Eastern Europe presence, building on Enlabs and we’re looking at opportunities in LatAm,” Nygaard-Andersen added. “Plus there are potential opportunities in adjacent areas. But every time we consider M&A we are really disciplined and we buy really smart.”
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