Entain meets expectations in Q1 as revenue rises 3%

In a trading update published today (17 April), Entain set out its preliminary figures for Q1. Reported revenue, including its 50% stake in the BetMGM joint venture, was up.

On a constant currency basis, this increase was higher at 6%. However, on a proforma basis – assuming all acquisitions last year were part of Entain since 1 January 2023 – and at constant currency, revenue was 3% lower.

Breaking down the figures, the primary reason for the year-on-year increase was growth in Central and Eastern Europe (CEE). Here, reported revenue climbed 124%, helped by the acquisitions of STS in Poland and Croatia’s SuperSport during 2023. Entain said SuperSport performed particularly well during Q1.

Reported online revenue was 128% higher year-on-year, while reported retail revenue was also up 111%.

On a pro forma basis and at constant currency, revenue was up 11%. Also using this method, pro forma net gaming revenue (NGR) from gaming increased 30%, sports NGR 6% and sports wagers 7%.

International growth at Entain 

Elsewhere, there was growth in Entain’s international business, which covers activity outside of CEE, the UK and Ireland and US. Here, reported revenue was up 4%, with online and retail revenue both also rising by 4%. 

Total international revenue was 3% higher at constant currency, but at pro forma constant currency, revenue fell 2%.

Gaming was the main driver of international growth, with pro forma and constant currency NGR here up 1%. In contrast, sports NGR slipped 5%, with sports wagers also falling 3%.

Going into further detail, Entain reported a positive performance across many of its markets. However, this was partly offset by expected softness in Australia, the Netherlands and Germany 

There was “encouraging” return to good year-on-year growth in Brazil, driven by ongoing operational improvements. Meanwhile, in spite of strong volume growth, NGR in Italy was hit by customer-friendly sports margins.

What’s happening in the UK and Ireland?

As for the UK and Ireland, the news was not so good as Entain continues to feel the effects of its regulatory implementation. Reported revenue declined 7%, with online revenue down 9% and retail 6%.

On a constant currency basis, revenue was also 7% lower, while on a pro forma basis, the fall remained at 7%. 

Pro forma and constant currency NGR from gaming declined 7% in the UK and Ireland. Sports NGR was also 8% lower, with this not being helped by a 12% drop in sports wagers in Q1.

However, looking to the future, Entain is more positive about its prospects in the UK and Ireland. It says actions are driving operational improvements, while it also notes the levelling of the UK regulatory landscape. As such, this positions its brands for growth into 2025.

More US success for Entain with BetMGM

Turning to the US and Entain continues to see success from the BetMGM venture it shares with MGM Resorts International. During Q1, NGR from BetMGM increased 2%, with the brand holding a 14% market share across sports betting and igaming.

Entain says continuing igaming strength was offset by customer-friendly win margins across online and retail sportsbooks. When adjusting for impact of sports margin, estimated Q1 NGR would have been high-single-digit positive.

The group also reported “strong” growth in customer acquisition, helped by successful Super Bowl March Madness engagement. It also noted the impact of improving app and product capabilities.

Looking ahead, Entain that said an improved player experience means BetMGM is well positioned to invest for future growth.

Entain expects organic growth

This was reflected by Stella David, the interim CEO of Entain, in her comments on Q1. David took temporary charge of Entain in December after Jette Nygaard-Andersen resigned. This month, it was also confirmed David will replace Barry Gibson as chair of Entain.

“Our Q1 performance was in line with our expectations,” David said. “Growth reflects both strong performances in many of our markets as well as known challenges in others. 

“We are particularly encouraged by the level of customer engagement in the US following a successful Super Bowl and March Madness. Also, our return to growth in Brazil following the changes we implemented.

“Overall, we are pleased with the progress being made against our plan to accelerate Entain’s operational performance.”

However, David said there is still more for Entain to do to ensure it hits its long-term growth goals. 

“The team is fully engaged in delivering operational improvements, product enhancements, as well as greater organisational agility and efficiency,” David said. “We look forward to building on this momentum as we focus on our strategic priorities of organic revenue growth, margin expansion and winning in the US.

“We remain confident that our continued focused execution will drive organic growth into 2025 and beyond.”

Entain mulling possible asset sale

The update comes amid murmurings of a potential, multiple asset sale at Entain. Earlier this month, reports revealed Entain has hired Wall Street firm Moelis to advise on potential asset sales.

A report in the Financial Times suggested sale priority will be given to assets not directly integrated into the company’s platform. In total, these accounted for close to a third of net gaming revenues in the first half of last year.

Entain is understandably keen to reduce its asset exposure given the cost of its extensive acquisition campaign. The STS acquisition, for example, incited a shareholder revolt from Eminence Capital at the time. 

The reports follow Entain publishing its full-year 2023 results in March. These revealed a net loss of £936.5m (€1.10bn/$1.17bn) for the past year, mainly due to the settlement with HMRC over the historic Turkish case.

Announced in November and finalised in December, the settlement laid out that Entain must pay £585.0m. It will also make a charitable donation of £20.0m and contribute £10.0m to CPS and HMRC costs. All these costs were noted in its 2023 results, as were other additional costs from across the business.

Such costs offset an 11.1% rise in net gaming revenue to £4.83bn, while group revenue also climbed 11.0% to £4.77bn. Entain noted revenue was higher across all core businesses. In addition, group EBITDA edged up 1.5% to £1.01bn.