Entain plc (LON: ENT), the global sports betting and gaming group, has reported Interim Results for the six-month period ended 30 June 2024).
· Total Group Net Gaming Revenue (NGR), including 50% share of BetMGM, up +6%, +8%cc2, and 0%cc2 on a proforma3 basis
o Online NGR (excluding US) up +9%, +11%cc2, +1%cc2 proforma3
· H1 results reflect underlying Q2 outperformance and stronger than expected win margins for Euros
o H1 Group EBITDA4 at £524m, up +5% vs prior year
· Improving underlying growth: Online NGR proforma3 performance improved from Q1 -2%cc2 YoY to Q2 +5%cc2 YoY (flat prior to start of Euros), with Brazil delivering +28%cc2 growth in H1
· Margin expansion: further Project Romer efficiencies identified, increasing net savings target to £100m for 2026 (from £70m)
· BetMGM accelerating performance in year of investment: delivering sequential quarterly revenue growth and stabilising market share, ahead of further expected investment in H2
· Appointment of new CEO: Gavin Isaacs joining on 2 September 2024, with leadership continuity as Stella David succeeds as Chair from 30 September 2024
· FY24 guidance upgraded: stronger than expected Q2 and revised regulatory implementation timing
o Expect low single-digit positive2 proforma3 growth in Online NGR (from low single-digit negative)
o Group EBITDA4 expected to be in the range of £1,040m-£1,090m
Stella David, Interim CEO & Chair Designate, commented:
“Entain’s H1 results are clear evidence that our hard work improving the Group’s operational performance is bearing fruit. Whilst there is more work to do, we are pleased with the progress so far and look forward to building further on these solid foundations in H2 and beyond.
Our focused execution underpins the Group’s performance so far this year, and we are excited by the opportunities ahead. I look forward to welcoming Gavin Isaacs as our new Chief Executive Officer and supporting him as we continue to build on the Group’s improving operational momentum.”
H1 2024 Trading performance:
| Net Gaming Revenue (NGR) | ||||||||
| Q1 | Q2 | H1 | ||||||
| YoY Rpt1 | YoY cc2 Proforma3 | YoY Rpt1 | YoY cc2 Proforma3 | YoY Rpt1 | YoY cc2 Proforma3 | |||
| UK & Ireland | (7%) | (7%) | (5%) | (5%) | (6%) | (6%) | ||
| International | 4% | (2%) | 10% | 7% | 7% | 3% | ||
| CEE5 | 124% | 11% | 127% | 13% | 126% | 12% | ||
| Total Group (ex US) | 4% | (3%) | 8% | 2% | 6% | 0% | ||
| Total Online | 7% | (2%) | 12% | 5% | 9% | 1% | ||
| Total Retail | (1%) | (6%) | 2% | (2%) | 1% | (4%) | ||
| Total Group inc 50% of BetMGM | 3% | (3%) | 8% | 3% | 6% | 0% | ||
Prior year performance displayed in new reporting structure available at: https://entaingroup.com/investor-relations/results-centre/
H1 performance highlights
· Total Group NGR including 50% share of BetMGM1, up +6%, +8%cc2, and 0%cc2 on a proforma3 basis
o Group NGR (exc. US) up +6%, +8%cc2, 0%cc2 proforma3
o Online NGR (exc. US) up +9%, +11%cc2, +1%cc2 proforma3, with active customers +13% proforma3
· UK & Ireland NGR down -6%cc2, in line with expectations
o UK&I Online -8%cc2 reflects prior year comparative regulatory headwinds, partially offset by improving player KPI’s driven by product and offering enhancements including greater simplification of our player journeys
§ Actives up +12% YoY and year-to-date stabilisation in spend per head
o UK&I Retail -4%cc2, in line with expectations, ahead of our next generation gaming cabinet rollout which completes in Q3
· International NGR was up +10%cc2, +3%cc2 on a proforma3 basis
o Brazil delivered strong double-digit revenue growth ahead of schedule, with H1 NGR +28%cc2
o Australia returned to flat2 year on year for H1 NGR, despite softness in underlying market
o Italy -3%cc2 (Online -3%cc2, Retail -4%cc2) with customer-friendly Q1 sports margins offsetting volume growth
· Entain CEE5 continued to perform well with NGR +12%cc2 proforma3 with SuperSport in Croatia performing particularly strongly at +17%cc2 YoY
· BetMGM delivered accelerating net revenue momentum through H1 and stabilising 13%6 market share
o Q2 NGR up +9%cc2 YoY and up +4%cc2 on Q1 driven by strong acquisition and retention metrics with improving app and product capabilities and successful engagement campaigns
o Encouraging results from Angstrom-powered MLB and NBA offerings; expansion into NFL offering expected ahead of 2024 season
o Reinforcing iGaming strength with expected marketing investment in H2
H1 financial highlights
· Group EBITDA4 at £524m, up 5% vs 2023; Online EBITDA4 £445m, +9%, Retail EBITDA4 £140m, -11%
· Group loss after tax was £47m
· Proposed interim dividend of 9.3p per share, +5% year on year
· Successful repricing of term loan debt and equivalent £600m add on
· Robust balance sheet with net debt of £3,329m and available cash of >£1.3bn, at 30 June 2024
· Project Romer efficiency programme progressing well, increasing annual net savings target to £100m in 2026
· FY 2024 Group EBITDA4 expected to be in the range of £1,040m to £1,090m
o Reflecting uplift from stronger than expected Q2 NGR performance, revised timing of regulatory implementation in Brazil and the Netherlands, offset by FX headwinds
H1 summary: 1 January to 30 June 2024
| Total Group (ex US) | Reported1 | |||
| 2024 | 2023 | Change | CC2 | |
| Six months to 30 June | £m | £m | % | % |
| Net gaming revenue (NGR) | 2,555.7 | 2,404.3 | 6% | 8% |
| Revenue | 2,520.3 | 2,377.6 | 6% | 8% |
| Gross profit | 1,534.6 | 1,457.7 | 5% | |
| Underlying EBITDA4 | 523.8 | 499.4 | 5% | |
| Underlying operating profit7 | 287.9 | 307.4 | (6%) | |
| Underlying profit before tax7 | 248.8 | 287.6 | (13%) | |
| Loss after tax | (46.9) | (502.5) | ||
| Continuing diluted EPS (p) | (6.8) | (83.9) | ||
| Continuing adjusted diluted EPS8 (p) | 12.4 | 21.6 | ||
| Continuing adjusted diluted EPS8 exc. US (p) | 21.0 | 29.7 | ||
| Dividend per share (p) | 9.3 | 8.9 | ||
Capital Allocation Committee
As per announcement on 21 May 2024, the Capital Allocation Committee (“CapCo”) concluded that Crystalbet is non-core to the Group and as such strategic alternatives would be considered. This review process is underway and updates will be announced as appropriate in due course.
The CapCo will continue to regularly review the Group’s strategic progress including significant aspects of capital commitments, with ongoing consideration to maximise shareholder value.
Appointment of CEO and Chair transition
As announced on 22 July 2024, Gavin Isaacs has been appointed as Chief Executive Officer, effective on 2 September 2024. To ensure an orderly transition, Stella David will succeed Barry Gibson as Chair on 30 September 2024.
Dividend
In line with the Group’s progressive dividend policy, the Board has proposed an interim dividend of c£60m (9.3p per share), a 5% year on year increase per share. The interim dividend in respect of the H1 2024 results is expected to be paid in September 2024 to shareholders on register on 16 August 2024.
Outlook
Entain’s performance in the first half of 2024 demonstrates our improving underlying growth and the clear progress made against our strategic priorities. As we look to the remainder of 2024, our expectations for the Group’s growth pathway remains unchanged, with the stronger than expected Q2 performance driving our upgraded NGR guidance. We now expect FY24 Online NGR growth on a proforma3 basis to be low single digit positive2, with the Group delivering FY24 EBITDA4 in the range of £1,040m to £1,090m. Building on the progress already made, we are confident that continued execution of our strategic priorities of organic growth, margin expansion and winning in the US will deliver value for all our stakeholders.
Notes
(1) H1 2024 reported numbers are unaudited and relate to continuing operations
(2) Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2024 exchange rates
(3) Proforma references include all 2023 acquisitions as if they had been part of the Group since 1 January 2023
(4) EBITDA is defined as earnings before interest, tax, depreciation and amortisation, share based payments and share of JV income. EBITDA is stated pre-separately disclosed items
(5) Entain CEE consists of our businesses in Croatia (SuperSport) & Poland (STS)
(6) Consolidated GGR market share consists of last three months ending May or June 2024 (as latest reported) for U.S. sports betting markets where BetMGM was active (online and retail), last three months ending June 2024 for U.S. iGaming markets where BetMGM was active, and last three months ending June 2024 for the Ontario market. Internal estimates used where operator specific results are unavailable
(7) Stated pre separately disclosed items
(8) Adjusted for the impact of separately disclosed items, foreign exchange movements on financial indebtedness and losses/gains on derivative financial instruments (see note 8 in the interim financial statements)
Presentation and webcast
Entain will host a 2024 Interim Results presentation and Q&A session today, Thursday 8th August at 9:30am BST, at: etc.venues, 200 Aldersgate St, Barbican, London EC1A 4HD.
Analysts and investors may attend in person, having pre-registered via the in-person registration link. Alternatively join the webcast approximately 15 minutes ahead of the event: online webcast link.
The presentation slides as well as a replay and transcript will be available on our website:
https://entaingroup.com/investor-relations/results-centre
