In a business update published this morning (2 November), Entain sets out several financial highlights from Q3. This centres on the increase in group revenue for the three months to 30 September.
Beginning with its online business, Entain says revenue was 9% higher than in Q3 last year. This was driven by growth in the online gaming business, with revenue here 14% higher.
There was also a revenue increase within the online sports betting segment in Q3. However, with revenue only 1% higher, this was only a marginal rise compared to gaming. This can be partly attributed to a 6% decline in wagers, although sports margin was up 0.5 percentage points.
Turning to retail and revenue for this area was up 4%. This figure covers retail operations in the UK, Ireland, Italy, Croatia, Poland and New Zealand.
US: BetMGM continues to shine for Entain in Q3
Turning to the US, net gaming revenue from the BetMGM joint venture with MGM Resorts was 8% higher. Entain said revenue for this part of the business was approximately $458m (£377/€432m) in Q3.
While revenue growth is impressive enough for BetMGM, Entain picked out other highlights for the segment. These include BetMGM having an 18% share of markets where it operates, excluding New York.
Breaking this down, Entain says BetMGM held a 26% US market share for igaming during Q3.
As for sports betting, Entain hails a successful start to the new NFL season, which began in early September. It says “significant” investment in improving the customer experience on BetMGM has been paying dividends.
Such is the level of growth within the US business, Entain says full-year revenue at BetMGM could reach between $1.80bn and $2.00bn. In line with earlier forecasts, the segments is expected to be EBITDA-positive in the second half.
“Entain has undergone a profound transformation over the last few years and now has strong foundations from which to move into its next phase of growth,” Entain CEO Jette Nygaard-Andersen (pictured) said.
Entain building for the future
On this point, Nygaard-Andersen references Entain’s strategic transformation over the past three years. This has focused on improving the quality of earnings, strengthening operations and aligning structures to support future growth.
Seeking to build on this, Entain has outlined several key initiatives to further improve its operational strategy.
Among these is a commitment to a market portfolio more optimised for organic growth. This includes a prioritisation of high growth, high return markets such as the US, Brazil, Central and Eastern Europe – helped by the recent STS acquisition – and New Zealand
Entain will also seek profitable growth in core markets including the UK, Australia, Italy, Germany and the Baltics. However, at the same time, the group will exit smaller, non-core operations.
Meanwhile, Entain will work towards returning to organic growth at least in line with its markets. In addition, it is committing additional investment to drive US market share to between 20% and 25%.
Targeting online EBITDA margin of 30% by 2030
As for longer-term plans, Entain will be delivering Project Romer. The aim of this is to reach an online EBITDA margin of 28% by 2026 and 30% by 2028.
To achieve this, Entain plans to simplify the group to improve operational leverage and drive cost efficiencies. It will also seek to make cross cost savings of £100m by the year 2025.
In addition, Entain is in the process of improving its governance. This included appointing four new non-executive directors, the first of which was confirmed this week with the addition of Amanda Brown.
“We have made significant investments in responsible gambling initiatives. While these steps have impacted EBITDA, they are unquestionably the right thing to do to improve our long-term prospects,” Nygaard-Andersen said.
“From here, we have a clear plan to focus our portfolio for organic growth, drive our market share in the US, improve our operational leverage and increase our EBITDA margins.
“The wide range of initiatives that are under way will cement our position as a customer-focused industry leader, enable us to achieve our strategic ambitions and deliver enhanced returns for all our stakeholders.”