Bally’s posts $477m net loss in Q4 amid “unacceptable” North America Interactive performance
Bally’s Corporation suffered a net loss of $476.8m in Q4 2022, according to preliminary financial results posted by the operator today (13 February).
Topline numbers
Total revenue across the business came to $576.7m in Q4, representing modest 5.3% growth over the prior-year comparative period.
Of that total, $319.2m came from the company’s Casinos and Resorts business segment, up 14.9%.A further $231.2m came from Bally’s International Interactive division, down 8%, while its North America Interactive division delivered just $26.3m in revenue.
The latter division’s performance came in 41.6% ahead of Q4 2021, but still generated just 4.6% of overall group revenue.
Adjusted EBITDA for the quarter reached $145.8m, 22.8% ahead of Q4 2021.
Bally’s Q4 performance brought full-year 2022 revenue to $2.26bn, 70.6% ahead of last year, following significant year-on-year growth in the International Interactive segment ($946.4m vs. $251.3m).
Full-year adjusted EBITDA came to $548.5m amid an annual rise of 66.2%.
Widening losses
Bally’s staggering $476.8m net loss in Q4 was driven principally by non-cash goodwill and impairment charges totalling $464m during the quarter.
Of those impairment charges, $390.7m was the result of goodwill and asset impairment analysis relating to the North America Interactive division.
In particular, the charges related primarily to the firm’s acquisitions of Bet.Works and Monkey Knife Fight, both of which took place in 2021.
Bally’s recorded a further impairment charge of $73.3m in the International Interactive segment, relating to a longstanding trademark acquired as part of its acquisition of Gamesys, which is now being deemphasised for other newer brands in Asia and the Rest of the World.
No further impairment charges were recorded during 2022. Total net loss for the full year therefore came to $414.8m, according to the preliminary figures.
Management commentary
Bally’s announced earlier today that CEO Lee Fenton would stand down from his role at the end of March and be replaced by current president of its Interactive division, Robeson Reeves.
“As our businesses continue to integrate, we are pleased to achieve record results in both our Casinos and Resorts and International Interactive segments,” Reeves said of the results.“Our core businesses are generating fantastic cash flows. UK revenue grew 12% organically in the fourth quarter as regulations continue to play through, while in December, Asia saw positive year-over-year organic growth, proving that our initiatives to maintain a competitive advantage in that market are effective.”
The incoming CEO went on to recognise the challenges faced by Bally’s North American online business, however.
“Simply put, our North America Interactive results in 2022 were unacceptable,” he said.
“In response, through our announced restructuring plan of the Interactive business in January, we are taking a deep dive in our approach to North America to ensure that investments we make in sports have a near-term path to profitability.
Bally’s Corporation incoming CEO Robeson Reeves: “Simply put, our North America Interactive results in 2022 were unacceptable.”
“As part of the restructuring, we are evaluating multiple options, including leasing technology structures that integrate quickly and effectively with our world class iCasino and marketing tech stacks. We also expect our restructuring efforts to drive benefits in our International Interactive segment.”
With regards to the operator’s core Casinos and Resorts segment, division president George Papanier said: “Significant capital expenditures toward property improvements will decrease in 2023 as we focus on generating cash flows to invest in long-term growth opportunities for the entire Bally’s portfolio.
“Finally, business momentum continues strong into 2023, with no slowdown in the consumer as we continue to closely watch market macro dynamics.”
Current trading and outlook
Looking ahead to 2023, Bally’s estimates full-year revenue in the range of $2.5bn-$2.6bn, with adjusted EBITDAR between $660m and $700m.
Those figures account for rent expenses of some $124m and an EBITDA loss of between $40m and $50m from the North America Interactive segment, the operator said.The restructuring announced in January included plans to cut some 15% of the North America Interactive division’s workforce.
Outgoing CEO Fenton said at the time that the business was “acutely aware” of continuing macro-economic conditions and had to “adjust accordingly” to the challenging environment.
“Our North America business remains an investment market, where the returns will be reaped but we can now see that this will take some time to come to fruition, so we need to manage our cost base appropriately,” he added.