Tabcorp FY22 revenue dips 4% as business hails transformation following lotteries demerger
The continuing operations of ASX-listed operator Tabcorp generated A$2.37bn in revenue during the financial year 2022 (12 months ended 30 June), down 4.3% on the prior-year period.
Of the total, the vast majority came from the company’s wagering and media division, which generated A$2.18bn, down 5.1%, while its gaming services segment brought in a further A$193m, an increase of 5.3%.
Growth in the gaming services segment was driven by an increase in revenue from its venue services division, which generated A$119.3m, up 20%.
Meanwhile, revenue from its regulatory services division fell by 12.2% to A$73.6m, reflecting Covid-related closures in New South Wales, where 75% of the division’s business is located.
Tabcorp said its overall revenue reduction was a result of the continued impact of the Covid pandemic during the year, in addition to a record number of racing cancellations as a result of poor weather conditions.
Group EBITDA from continuing operations – excluding the lotteries and keno division – totalled A$381.6m, down 21.7% from the prior-year period, which the business said was reflective of external impacts including Covid-19.
Tabcorp managing director and CEO Adam Rytenskild: “We’ve made an urgent start to transform Tabcorp into a competitive and growing business. We have a clear strategy and a focused ambition to grow our customer base.”
The business reported group statutory net profit after tax of A$6.78bn, including a A$6.51bn gain resulting from the demerger of its lotteries and keno business, which completed on 1 June.
This meant like-for-like net profit was around A$262m, a reduction of 2.6% year-on-year.
Following the end of the period, Tabcorp reported it had increased group revenue by 14.6% year-on-year in July, while securing digital revenue market share of 25%.
Its new TAB app – whose upcoming release is one of the business’ key priorities at the moment – has been trialled by some customers, it added, and will be launched in September ahead of Australia’s spring carnival races. The overwhelming feedback from customers on the app has been positive, Tabcorp said.
Tabcorp is targeting a growth in costs of 3-4% on a pro-forma basis in FY23, with forecast capital expenditure of up to A$150m, alongside depreciation and amortisation of A$250m-260m.
Following a strategic review of its gaming services division, Tabcorp has also decided to sell off its eBet brand, and is currently negotiating terms with a preferred bidder.
The eBet business segment focuses on gaming systems, and develops and markets a range of networked solutions for electronic gaming machines.
According to an article published today (24 August) by The Australian, former Tabcorp executives Frank Makryllos and/or Tony Toohey are thought to be behind the forthcoming bid.
The eBet business generated EBITDA of A$4.4m in FY22, at a year-on-year growth rate of 37.5%.
Tabcorp managing director and CEO Adam Rytenskild: “FY22 results reflect a disrupted period – it’s a line in the sand and the end of old Tabcorp. We’re resetting our business and culture to focus only on customers and growth. I can’t wait to roll-out our new TAB app.”
Significant events during the reporting period included the retirement of former Tabcorp managing director and CEO David Attenborough retired, who was replaced in the role by Adam Rytenskild as of 1 June 2022.
Commenting on the company’s FY22 performance, Rytenskild said: “We’ve made an urgent start to transform Tabcorp into a competitive and growing business. We have a clear strategy and a focused ambition to grow our customer base.
“The hero metric for everyone in the company is digital revenue market share, without exception. I’m determined for us to be different and to be totally obsessed with creating products and experiences that Australia loves.
“FY22 results reflect a disrupted period – it’s a line in the sand and the end of old Tabcorp. We’re resetting our business and culture to focus only on customers and growth. I can’t wait to roll-out our new TAB app.”
Rytenskild added that the business is preparing for an “exciting” spring, and that it will also release two further new TAB digital products before Christmas, including a social betting feature and a “same race multi product”.
As of the end of the reporting period, Tabcorp boasts a strong balance sheet with net debt of A$20m, excluding lease liabilities and significantly restricted cash. Undrawn facilities of A$810m provide it with the flexibility and optionality to invest in growth initiatives, it said.