Entain has announced a strong start to 2023 after reporting record levels of active customers and online NGR in Q1.
Topline numbers
Group NGR rose by 11% on a constant currency basis, or by 17% when including Entain’s 50% share of US joint venture BetMGM.
Online NGR climbed by 11%, or by 1% on a pro forma basis when excluding for acquisitions. Entain said that pro forma figure would have been closer to 6% when disregarding regulatory impacts from across the UK and Germany.Online sports NGR increased by 2% amid a sports margin of 13.5%, which CFO Rob Wood said reflects the firm’s increasingly recreational customer base, as well as fixture results and the addition of Croatian operator SuperSport, which is a higher margin business.
Online gaming NGR rose by 20%.
Retail revenue came in 13% higher than the same period of last year.
Finally, the operator reported record levels of active customers in Q1, up 19% versus the prior-year period or 14% on a pro forma basis.
News nugget
Looking specifically at the US, BetMGM Q1 revenue soared by 76% year-on-year to around $470m.
“In the US, BetMGM continues to grow in line with expectations and enjoyed a successful quarter which included the Super Bowl and March Madness,” said CEO Jette Nygaard-Andersen.
Andersen said the brand had retained its leadership position in US iGaming with an estimated 28% market share, while all key metrics point to positive EBITDA in the second half of this year.
Best quote
Entain CFO Rob Wood: “Germany continues to be our most challenging market, with the ongoing lack of regulatory enforcement seeing us unable to rebuild yet.”
Providing a further geographic breakdown, Wood said Entain continued to take market share in Australia and that Italy was growing “very well”, while the Baltics were back to growth after benefitting from softer comparative conditions.
Brazil delivered a record quarter for active customers in Q1, while recent acquisitions in both Croatia (SuperSport) and the Netherlands (BetCity) are performing in line with expectations.Best question
Morgan Stanley analyst Ed Young opened the call with a flurry of questions for the Entain management team, including one on the recent $160m acquisition of 365scores.
“Should we think of this as an affiliate business or is it something a bit different?” asked Young, before adding: “Do you think the accumulation of some of the smaller deals you’ve done precludes you from doing something larger in terms of using capital for M&A or returns to shareholders?”
In response, Nygaard-Andersen said there was an “important distinction” to make between 365scores and the broader segment of affiliate business.
“We are acquiring a live score apps business and a content business here,” she said.
The CEO suggested it was a top-three brand in Brazil and a top-five brand globally for the popular live scores segment, which can bring additional benefits for Entain.
“Scores apps are a really important vertical when it comes to sports betting,” said Nygaard-Andersen. “It is a highly engaged audience of avid sports fans and a highly scalable business.
“The strategic rationale here is how we continue to engage our customers, especially on the broader recreational side,” she added, reiterating the business was already profitable.Current trading and outlook
Despite the strong Q1 performance, BetMGM revenue guidance for 2023 remains unchanged at between $1.8bn and $2bn.
London-based brokerage Peel Hunt pointed to Entain’s recent partnerships and acquisitions and reiterated its Buy rating and 1,900p target price for the stock.
“This constant recycling of cash into expansion and diversification is undervalued by the market in our view,” said Peel Hunt.