New bet365 figures show annual growth of 2% as CEO earns £213m
Bet365 has reported full-year revenue of £2.85bn for the 52-week period ending 27 March 2022, representing a 2.3% increase on the prior year.
Sports revenue fell by 2%, although gaming revenue rose by 25%, which the company attributed to significant product improvements.
The numbers in context
“To a large extent, bet365’s underlying performance is far stronger than 2% revenue growth suggests, especially evidenced by a nearly 50% increase in global active users,” wrote Paul Leyland of Regulus Partners in his analysis of the results.
“In part, the anaemic revenue performance is due to unusually high sports betting margins during the comparable period, caused by lockdown and major events disruption as governments reacted to Covid-19, which implied a c. 15% revenue headwind, made worse by a bad run of results combined with aggressive bonusing during the latter half of FY22.
“We believe a c. 20% swing in sports betting revenue can be explained by margins and bonusing, suggesting a healthy underlying sports betting growth rate of 15-20% across the business,” he added.
Profits take a hit
Operating profit from gambling operations decreased significantly year-on-year to £41.7m, down from £341.4m a year prior.
This was primarily due to a £320m increase in administrative expenses, driven by costs related to marketing in new markets, as well as continued investment in technology and IT.
These new markets included the Netherlands and Buenos Aires, as well as Colorado in the US and Ontario in Canada.
Focus on product continues
Active customers for the period increased by 48%, compared to just 13% in 2021.
The bet365 sportsbook – long considered one of the best products in online gambling – made a series of product enhancements during the reporting period.
These included a new golf product with upgraded visuals, the extension of Bet Builder into Rugby League, NFL and Aussie Rules and the launch of Bet Boosts across various sports.
Compensation and contributions
Long-standing CEO Denise Coates was once again bet365’s highest paid director, taking home an annual salary of £213.4m. This actually represented a 14.5% pay reduction from the previous year, while the company also donated £100m to her charity.
Despite being a privately owned company, bet365 publishes its full-year financial statement on the UK government’s Companies House website each year.
The operator paid £8.1m in tax over the reporting period.
Summarising the performance, Leyland continued: “While the absolute results are solid, bet365’s competitive landscape is changing rapidly and 2% growth in this period implies a material loss in share. Whereas a decade ago, bet365’s main competition was a mix of badly run UK-led, dot com operators, monopolies and local businesses with little digital scale, most markets now contain ‘local heroes’ which are not bet365.
“Therefore, while bet365 is still likely to be the market leader in in-play led sports betting, it is far less likely to be a market leader in highly localised, multiples-led, pre-match-led, data-led, or gaming-led markets, which represents a dangerously expanding list,” he added.
Despite the warning from Regulus, boutique research firm Eilers & Krejcik Gaming (EKG) is predicting a big year for bet365 in the US, with the firm set to build on its Colorado launch.
In the latest edition of the EKG Line newsletter, analysts wrote: “The European OSB giant has been slow-burning the US market, but it’s on course to expand significantly in 2023 with multiple state launches, including in Ohio.
“In addition to that expansion, we think bet365 could surprise via M&A. At very least, though, we expect bet365—which, per our proprietary app testing, has the strongest product in the most competitive OSB market in the world (the UK)—to challenge for podium position in our US OSB app rankings as it further localises its US product.”