Entains online earnings for the third quarter fell short of projections, as per a current report from iGB.
The firm’s performance was impacted by several factors, including tighter gambling rules, slower expansion in key markets such as Australia and Italy, and unfavorable sporting outcomes. Although Entain still anticipates growth in the third quarter, it will be less than predicted.
Despite these hurdles, Entain emphasized some positive aspects of its operations, including strong growth in active users, a solid retail performance, and ongoing success with BetMGM in the US. The company also profited from recent acquisitions.
This encompasses the Croatian SuperSport, which Entain procured at the close of 2022. Entain also recently obtained Polish sports wagering operator STS Holding.
While a reduction in online expansion will likely influence full-year income results, Entain asserts that earnings before interest, taxes, depreciation, and amortization (EBITDA) are unaffected. Full-year EBITDA for 2023 is projected to be between £1 billion (€1.15 billion/$1.22 billion) and £1.05 billion.
“We continue to observe robust fundamental growth in our online operations, even though third-quarter revenue expansion fell short of anticipations, and we are implementing industry-leading safer gambling practices, we are reaffirming our EBITDA guidance for the year,” Entain CEO Jette Nygaard-Andersen stated.
“We continue to attract a larger customer base than ever before to enjoy our offerings and services. BetMGM remains on course to achieve positive EBITDA in the second quarter, with full-year net gaming revenue (NGR) performance at the upper end of our projections. We are particularly enthusiastic about the product enhancements introduced for the NFL season.”
Entain is optimistic about its long-term development objectives.
In the same update, Entain also alluded to the “substantial strategic transformation” the organization has undergone over the past three years. It indicated that this is intended to enhance earnings quality and align operations to deliver long-term shareholder value.
Entain will furnish more details on this strategy in a more comprehensive trading update on November 2.
This will encompass details of a thorough market analysis, with an emphasis on long-term sustainable organic development.
The organization will also simplify its structure and operations and will outline plans to transfer its acquisition business, optimize capital allocation priorities and progress toward its 30% online EBITDA margin goal in its November trading update.
“Over the last three years, we have made substantial changes to the group,” said Nygaard-Andersen. “Our focus now is to speed up the actions we are taking to drive sustainable organic growth, expand our margins, grab opportunities in the US and deliver long-term returns for our investors.
“We are confident in our ability to realize the significant opportunities ahead of us. We look forward to sharing more details about the changes we are making in our third-quarter trading update in November.”
Record initial half
The update comes after Entain reported record initial half results. Net gaming revenue increased 14% year-on-year to £2.4 billion, driven by record online active player figures in the second quarter.
Online revenue led the way in the initial half, reaching £1.68 billion, up 145% from £1.47 billion in the same period last year. Entain said strong underlying trading and acquisitions-led NGR outweighed continued regulatory obstacles. This was primarily in the UK and Germany. It also highlighted the success of its focus on recreational customers.
Retail revenue rose 11% year-on-year to £709.3 million.
Entain has highlighted that the termination of COVID-19 limitations was a key factor in the surge in earnings. These final measures were removed early in 2022.
In the United States, BetMGM’s income reached $944 million, marking a 65% rise compared to the same period in the previous year. Entain also declared that the division is on course to achieve revenue between $1.8 billion and $2 billion for the entire year.
Entain has allocated £585 million in provisions related to the UK’s HMRC inquiry in Turkey. Alongside the half-year outcomes, Entain also disclosed that it has set aside £585 million in provisions for a deferred prosecution agreement (DPA) in discussions with the UK’s Crown Prosecution Service (CPS). This pertains to the company’s past operations in Turkey.
The operator cautioned in May that it faced a “significant” penalty after reaching a DPA with the CPS.
Entain stated that DPA negotiations have progressed to a point where a resolution can be reached with the HMRC investigation. The company is assured in the calculation of the £585 million settlement amount, which is anticipated to be paid over a four-year period.
Any settlement is subject to judicial approval. Entain anticipates HMRC to seek approval in the final quarter of 2023.
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