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GVC raises earnings guidance following strong Q3

| By Robin Harrison
GVC Holdings has reported a 12% year-on-year rise in net gaming revenue for the third quarter of 2020, strong growth from its offline business offsetting a weaker performance from its retail operations.

As a result the operator has raised its earnings guidance for the year, which it now expects to come in £50m ahead of prior expectations.

In a trading update for the three months ended 30 September, GVC said online gaming revenue was up 26% from the prior year, or 28% on a constant currency business.

During the period, sports recovered strongly from the disruption caused by the novel coronavirus (Covid-19) pandemic, with customer stakes up 25%, and revenue rising 24%. This was credited to a busy sporting calendar, with a number of football leagues and competitions completing their 2019-20 seasons during the quarter.

GVC picked out Australia as a particularly strong performer, noting that revenue was up 64% on a constant currency basis.

Gaming, meanwhile, saw revenue grow 27%, remaining ahead of pre-pandemic levels, ensuring the online division recorded its nineteenth consecutive quarter of online growth. This will be strengthened further by its acquisition of Portuguese operator Bet.pt, announced today.

For retail, performance was more muted, however. In Great Britain, on a like-for-like basis, revenue was down 5% year-on-year, with staking across its British estate down 9%. GVC said its stores opened as soon as government regulations permitted, and volumes had returned to “within 10%” of pre-Covid-19 levels, aided by strong volumes on self-service betting terminals. 

European retail, on the other hand, saw revenue rise 2% from Q3 2019, with a strong performance in Italy offset by slower recoveries in Belgium and the Republic of Ireland. Staking for the European estate was up 3% year-on-year.

“This has been another strong period for GVC,” chief executive Shay Segev said. “We have delivered our nineteenth consecutive quarter of double-digit online growth, along with market share gains in all our major territories. 

“The momentum that we are seeing across the group is a clear testament to the resilience of our highly diversified business model, the attractiveness of our brands and products, the power of our proprietary technology platform, and the hard work and dedication of our teams around the world.”

While GVC did not break out figures for its BetMGM joint venture with MGM Resorts, it said the business continued to make “great progress” in the quarter. It was on track to be the market leader in sports betting and igaming states, the operator added.

Having launched online betting in Indiana, Colorado and West Virginia in the first half, before adding igaming in West Virginia during Q3, it has grown market share to between 15% and 20% of revenue across these three markets. 

In New Jersey, BetMGM’s market share for igaming grew to 22% in August, meaning it has doubled since the start of the year. Its online betting market share in the Garden State grew to 10% for the same month, and its share of the retail market to 24%.

In Q3 the brand significantly expanded its partner roster, adding deals with the likes of the Denver Broncos, Detroit Lions and Las Vegas Raiders, and became the first sports betting partner of the National Football League’s Tennessee Titans.

This week will also see the brand’s single app launched, combing its betting and – where possible – igaming products in a single solution, with awareness to be driven by its King of Sportsbooks campaign, fronted by Oscar winner Jamie Foxx. 

This strategic progress, GVC said, meant that BetMGM was on track to deliver revenue of between $150m and $160m for the current financial year. Its share of the joint venture’s loss, meanwhile, is expected to be approximately £60m, which considering its 50% stake, suggests BetMGM is on track to post a £120m loss in 2020.

“GVC is primed for further growth. In the US, BetMGM continues to go from strength to strength as we roll out into new states, integrate further with our partners’ customer propositions and deliver innovative products and features,” Segev said. “With a market share of approximately 17% across our live markets, we are making great progress towards being the leading operator in the US.”

The operator’s performance in the year to date means revenue is only down 2% year-on-year, with a 21% rise in online revenue largely offsetting a 36% decline in GB retail, and a 32% drop in European shop revenue.

As a result the operator now expects earnings before interest, tax, depreciation and amortisation for the year to come in the range of £770m to £790m, or £50m above previous expectations. This, however, assumes the business faces no more material disruptions in the remainder of the year. 

“While the risk of further restrictions as a result of Covid-19 mean that we remain cautious on the short-term outlook, in the longer term we are confident of being able to continue delivering sustainable growth for all our stakeholders,” Segev added.

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