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Covid-19 disruption pushes Tabcorp revenue down 5.7% in Q1

| By Robert Fletcher
Australia’s Tabcorp has reported a 5.7% year-on-year decline in revenue for the first quarter of its financial year, primarily due to disruption caused by the novel coronavirus (Covid-19) pandemic.

The operator did not release full financial figures for the period, but said in a trading update that revenue for the three months to 30 September were down in all but one of its business areas.

Revenue from lotteries and keno – Tabcorp’s largest business – fell by 6.9% on a year-on-year basis, despite strong jackpot sequences in the period. The operator also said jackpot sales were up between 15% and 30% in jackpot game sales, compared to pre-Covid-19 levels.

Elsewhere, gaming services revenue declined 55.2%, as Tabcorp was hit by the enforced closure of licensed venues across Australia. The operator said that the extended period of closure in Victoria had a particular impact on this area of the business.

However, despite declines in these two segments, Tabcorp did see a 2.9% year-on-year rise in wagering and media revenue. There was a drop in both retail and reduced net yields, while wagering account revenue fell 47%.

Looking ahead, the operator said it believed it remained “well placed”, thanks to a “resilient, diversified earnings base and strengthened balance sheet”.

The balance sheet was strengthened significantly recently, with Tabcorp last month agreeing to sell its 11.6% stake in online lottery business Jumbo Interactive for AUS$97.8m (£53.2m/€58.5m/$68.9m).

At the time, Tabcorp managing director and chief executive David Attenborough said there was no longer a need for his business to hold a stake in Jumbo after it formalised a long-term extension of its reseller agreement until August 2030.

September month also saw Tabcorp raise $600m through an accelerated entitlement offer, comprising $371m from institutional investors, and a further $230m from a separate retail component.

During its 2021 financial year, it will focus on driving digital opportunities across its lotteries, keno, wagering and media segment, as well as improving performance in wagering and media, and delivering the gaming services turnaround and the business-wide optimisation program.

In addition, Tabcorp said that it would commit to further investment to support its ‘Excitement with Integrity’ mantra, citing key initiatives such as its risk and compliance systems and customer care technology.

Publication of the Q1 trading update came at Tabcorp’s Annual General Meeting, where David Attenborough spoke for the final time as its chief executive at an AGM before he steps down from the role.

Attenborough announced in July this year that he would retire as chief executive and managing director during the first half of 2021, and though the operator is yet to announce a permanent replacement, a global search is ongoing.

“It has been a privilege to be the CEO of such an extraordinary Australian company and I remain committed to ensuring a smooth transition to the next CEO in 2021,” Attenborough said at the AGM.

“I am proud to leave behind a company that has been substantially transformed into a diversified, resilient, purpose-led organisation. We have done a lot of work to integrate leading inclusion and diversity practices into our operations, to ensure diversity of thought and drive commercial success.”

Chairman Paula Dwyer, who will also step down both from her role and from the Tabcorp board, added: “David has been an inspiring CEO of Tabcorp having led through the enormous complexity that goes with our licensed gambling operations and the significant events that have shaped the company.

“On behalf of the board I would like to thank him for his hard work and professionalism over many years.”

The AGM also saw reference to Tabcorp’s performance in its 2020 financial year, where, again as a result of Covid-19 disruption, revenue was down 4.8% year-on-year to Au$5.2bn.

The wagering and media arm saw revenue fall 10.1% to $2.08bn, while gaming services revenue also fell 27.3% to $221m, though lotteries and keno revenue was up 1.8% to $2.12bn.

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