Publishing a trading update with preliminary Q3 results, figures show growth across almost all areas of the business – backing up an earlier update released in September.
The 8% net gaming revenue (NGR) increase includes Entain’s 50% interest in the BetMGM joint venture with MGM Resorts. Excluding US earnings, revenue is still up 7% year-on-year.
As for proforma constant currency revenue – which includes all 2023 acquisitions as if they had been part of the Entain business since the start of last year – revenue still increased 6%.
Focusing on figures excluding BetMGM, online NGR for Q3 was up 9% year-on-year and ahead of expectations. Meanwhile, revenue from the retail business dropped 1%.
“Entain is already on a path of strategic and operational improvement, with the strong Q3 performance demonstrating the progress achieved so far,” said Gavin Isaacs, who began his tenure CEO at Entain last month.
“We are at the beginning of the journey. I’m looking forward to accelerating our progress, leading the business in our next growth chapter and capturing many exciting opportunities ahead.”
UK and Ireland online growth offsets retail decline for Entain
Looking first at the UK and Ireland, both reported and proforma revenue have risen 2% on the previous year. Within this business, online revenue is up 6% with retail staying flat (-2%).
Breaking this down further, proforma gaming revenue is forecast to be up 3% overall, helped by an 8% rise in online. However, sports betting revenue is likely to dip 1%, due to a 2% drop in retail revenue and sports wagers remaining flat.
Entain CFO Rob Wood said he was pleased to report the company’s recovery was continuing. “We’ve beaten our expectations again in Q3,” he told analysts this morning.
“Online growth is back to being broadly inline with market growth. Which of course is where we should be. We are now delivering growth in all our core markets of Brazil, UK and US.
“Let’s remember the path to getting here. Following regulatory changes last summer, pro forma online revenue growth fell into decline in Q3 and Q4 last year were both down 6%. Recovery restarted in Q1 and Q23 saw further improvement to flat excluding the Euros and now in Q3 has stepped up and we’re back to where we should be,” Wood said.
International: Betting benefits from sports margin increase
Turning now to the international segment, reported group revenue increased 6%, with proforma revenue up 9%. Again, this is driven by online growth, with reported revenue up 7%, versus a 1% decline in retail.
Gaming saw the most growth in the international business, which covers countries outside the UK and Ireland, Central Eastern Europe (CEE) and US reporting segments. This includes Australia, Italy, Brazil, Netherlands, Georgia, New Zealand and Germany.
Proforma gaming revenue is 9% higher across the entire region, with online seeing a 9% rise and retail 7%. Sports betting revenue is also up 8%, with a 10% online rise offsetting a 1% dip in retail. Interestingly, Entain saw more growth (6%) in retail wagers compared to online (3%).
Online sports margins during the period proved a benefit, up 0.4% year-on-year. This helped drive online betting figures.
Wood told analysts: “Most markets for online were up year-on-year in the quarter, but there were some that were down, including Italy, Belgium and Poland, all of which have retail estates. That’s the geographic mix that’s driving retail down.”
Brazil surpasses expectations
Entain noted success in Brazil in particular, where it continues to surpass expectations. For Q3, revenue was ahead by 48%.
Wood said he expected this growth to slow next year as the regulated Brazilian market opens in January and is flooded with new competition. The CFO noted marketing spend for the region would increase next year as Entain seeks to acquire new customers.
Answering questions on Italy and where the recent consolidation by Flutter, in acquiring Snaitech, had left Entain within the market, Isaacs said Entain was still inline with its peers in terms of growth.
“Italy is a very strong market and we have a strong presence there, the consolidation has meant that the first and second players have led the way in size but we’re certainly in line with our peers in relation to growth.
“I can’t tell you right now whether we’re a buyer or a seller but it’s an important market and right now we’re assessing it,” he said.
Crystalbet to remain under the Entain umbrella
Isaacs said the company had decided against selling off its Georgia-facing Crystalbet brand, after a strategic review in May last year concluded the operation was “non-core” to the group.
The CEO said the offers they had received for the business were too low to consider selling. “It’s a good-performing business and its low maintenance. We won’t give our businesses away,” Isaacs insisted.
But Isaacs did say the group would continue to assess its portfolio on an ongoing basis.
CEE success as Entain reported 53% revenue increase
In terms of Entain’s CEE joint venture with Czech investors Emma Capital, this segment saw the most growth. Group reported revenue here rose 53%, with online up 55% and retail 43%.
This was helped by the acquisitions of STS in Poland and Croatia’s SuperSport during 2023. In proforma terms, however, revenue was only 11% higher on the whole.
Digging deeper, proforma gaming revenue in CEE is 19% higher than last year, with online growth outshining flat retail. As for sports betting, revenue is 8% ahead of Q3 2023, again due to a rise in online.
What about BetMGM in the US?
As for BetMGM, though Entain did not offer as much insight into this business, it did set out some details for Q3, including that revenue is 18% higher than last year, which Entain said reflects “improved product and increased investment in player acquisition”.
Entain also makes reference to US market share stabilisation at 15%. For igaming, this will be around 22%, heled by record revenue for this segment during Q3.
In terms of sports betting, market share is estimated at around 8%. Entain said it continues to benefit from its betting tech Angstrom’s capabilities across core sports including the MLB, NBA and NFL. This, it says, is driving increased parlay bet mix and revenue hold.
Isaacs said the key for BetMGM this quarter was it had not lost anymore market share and was remaining steady in its position in the US. As the Angstrom tech was proving successful in improving the JV’s performance, Isaacs said the business would next look at improving the player interface and experience.
“We’re not yet on an upwards trajectory but we do have stability, holding market share is step one after many quarters of seeing it slip away,” he added.
On track for full year growth
As a result of a stronger than expected Q3, Entain is forecasting positive results for the full year. This includes online proforma net revenue now set to be mid-single-digit positive on a constant currency basis.
On top of this, FY24 group EBITDA is expected to be towards the top end of the £1.04bn to £1.09bn guidance range.
“My first few weeks as CEO of Entain have reaffirmed my view that this is a very good business operating in a highly attractive global industry,” Isaacs said. “Entain has great brands, an enviably diverse global portfolio and is bursting with talent, ambition and opportunities.”
Entain is expected to publish its Q3 results in full during the coming weeks.
Original article: https://igamingbusiness.com/finance/quarterly-results/entain-q3-revenue-up-group-back-to-growth/
