Entain to repay furlough cash as online NGR rises 12% to break £3bn barrier in full-year 2021
Entain has reported a 12% increase in annual online net gaming revenue to £3.07bn for full-year 2021 to mark a ninth consecutive year of double-digit digital growth.
Underlying EBITDA for the online division also climbed by 12% year-on-year to £899m, reflecting double-digit growth in all key markets except for Germany and the Netherlands.
Online sports betting revenue came in at £1.44bn amid a rise of 21% and a sports margin of 12.7%, while online gaming revenue increased steadily at 4% to £1.6bn. Online B2B revenue rose by 65% in 2021 but contributed just £26.3m to the bottom line.
“Our full-year results demonstrate yet again that Entain is a business with growth built into its business model,” said Entain CEO Jette Nygaard-Andersen.
Entain continued to take market share in the UK last year with overall online NGR for the market up 10% on 2020 figures, with sports 12% ahead and gaming up by 9%. Ladbrokes was the standout performer in sports, driven by a refreshed marketing campaign and the launch of recreational football betting product 5-a-side, while its Foxy brand shone in iGaming, reporting annual growth of 46% on a constant currency basis.
Outside the UK, the FTSE 100 operator reported strong online NGR growth in Brazil (111%), Australia (20%), Georgia (26%) and Italy (31%).
Online sports NGR also excelled in Germany growing 22% year-on-year, but gaming plummeted by 61% due to tolerance regime restrictions and market share being lost to non-compliant operators. The Netherlands fell to zero revenue after Entain withdrew its services to players in the market. It has since applied for a licence to enter the country’s regulated market.
In the US, Entain’s BetMGM joint venture with MGM Resorts continued to perform strongly, recording full-year 2021 NGR of approximately $850m, a near fivefold increase on 2020.
In Q4 2021, the brand delivered an overall market share of 23% in the markets where it operates, split by a 29% share for iGaming and an 18% share for sports betting.
During the year, BetMGM went live in nine markets and a further four jurisdictions after the end of the reporting period, taking its total of US operational markets to 21. It is live with iGaming in four regulated states and online sports betting in 15.
“BetMGM in the US has delivered a five-time increase in net gaming revenue versus the previous year and is ready to challenge for the number one position across the markets in which it operates,” said Nygaard-Andersen.
Looking at the overall business in 2021, including retail, full-year NGR increased by 7% to £3.89bn as underlying EBITDA jumped by 5% to £881.7m.
Entain’s retail business – which encompasses land-based venues in the UK, Ireland, Belgium and Italy – delivered 2021 NGR of £791.1m, down 8% on last year due to national lockdowns and Covid-19 restrictions, particularly in H1.
The UK reopened for business in April and Entain has pledged to repay the £44m it claimed in furlough cash during 2021 under the UK government’s job retention scheme. The operator borrowed a further £62.9m in 2020, which has not been repaid.
Nygaard-Andersen said: “Our retail business has recovered strongly and volumes have now returned to 90% of pre-Covid levels as restrictions have eased and customers have returned to our shops.
“Given the quality of our people, the ongoing broad-based growth of the business, its continuing momentum and the investments that we are making in innovation to support our future expansion, we remain confident in our financial performance for full-year 2022 and beyond,” she added.
Entain’s share price has increased by 3% to 1,607p per share on the London Stock Exchange at the time of writing.
Peel Hunt analyst Ivor Jones reiterated his Buy rating for the business and 2,400p target price.
He said: “Entain has not declared a dividend today (although, laudably, it has announced it will repay the CJRS support received). Today’s in-line results statement is peppered with references to acquired and early-stage businesses which are delivering strong growth.
“Entain has a good track record with investment (a #2 position in the US achieved without burning cash on Daily Fantasy Sports is an excellent example) and we interpret the dividend decision as an indication that there is more investment in growth to come,” he added.