REG - Entain PLC - Q3 Trading Statement & Business Update

EntainAnnouncement

02/11/2023 07:16

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RNS Number : 1202S  Entain PLC  02 November 2023

For Release at 7.00am

2 November 2023

 

THIS ANNOUNCEMENT CONTAINS INFORMATION THAT QUALIFIES OR MAY QUALIFY AS INSIDE
INFORMATION

 

Entain plc

("Entain" or the "Group")

 

Q3 performance in line with updated expectations

Business update on accelerating our operational strategy

 

Entain plc (LSE: ENT), the global sports betting and gaming group, today
reports trading for the period from 1 July to 30 September 2023 ("Q3") and
provides an update on accelerating the Group's operational strategy.

 

Q3 Highlights

·    Total Group (including US) Net Gaming Revenue ("NGR") up +7% (+10%
cc(2))

o   Group NGR (excluding US) up +7% (+9% cc(2)), -5% proforma(2,3)

·    Online NGR up +9% (+11%cc(2)), -6% proforma(2,3), in line with
updated expectations(4)

o   Excluding known regulatory impacts(5), Online NGR up +17%cc(2), flat
proforma(2,3)

o   2-3ppt impact from customer-friendly sports results in September

o   Continued strong growth in active customers, +26% YoY (+10%
proforma(2,3))

·    Robust performance in Retail(6) with NGR up 4% (+4% cc(2)), -4%
proforma(2,3)

·    BetMGM continues to perform strongly with Q3 NGR of approximately
$458m, up c.15% YoY

o   18%(7) market share in markets where it operates (excluding New York) in
sports betting and online gaming

o   Continued iGaming strength with 26%(8) market share

o   Successful start to the NFL season as Online sports-betting customers
enjoy the benefits of significant investment enhancing the customer experience

o   On track for FY2023 NGR at the upper end of $1.8-$2.0bn guidance and to
be EBITDA positive in H2 2023(9)

·    Continued leadership and progress delivered across our Sustainability
Charter

 

Accelerate Operational Strategy

Over the last three years Entain has undergone a significant strategic
transformation, improving the quality of earnings, strengthening operations,
and aligning structures to best position the Group to capitalise on future
growth opportunities and deliver shareholder value.

At a presentation today, management will outline key initiatives to accelerate
the Group's operational strategy, including:

·    Focused market portfolio, optimised for organic growth and ROI

o   Prioritisation of high growth, high return markets, including US, Brazil
CEE  and New Zealand

o   Drive profitable growth in core markets, including the UK, Australia,
Italy, Germany and the Baltics

o   Exit smaller non-core operations

·    Return to organic growth at least in line with our markets (c.7%(10)
CAGR) from 2025

·    Drive US market share to 20%-25% through investment in product &
pricing capabilities, customer acquisition and maximising the omnichannel
opportunity

·    Delivery of Project Romer to support expansion of Online EBITDA
margin to 28% by 2026(11) and 30% by 2028(11)

o   Simplification of the organisation to improve operational leverage and
drive cost efficiencies

o   Gross cost savings of £100m (net cost savings £70m) by 2025

·    Enhanced Governance:

o   Plan to appoint four new non-executive directors, including Amanda
Brown's appointment from 8 November 2023

o   Creation of a capital allocation committee of non-executive directors

 

Guidance

·    FY2023 Group EBITDA(12) (pre TAB NZ accounting) guidance:

o   Q3 performance tracked to EBITDA guidance of £1.00bn - £1.05bn(12,13)
as stated on 25 September 2023

o   During October, while volumes have been in line with expectations,
continued customer friendly results(14) have seen sports margins impact EBITDA
by approximately £45m

o   This does not impact our expectations beyond Q4 2023

·    FY2024

o   Pro forma Online NGR growth expected to be low single digit, supported
by return to growth during H2 2024

o   Online EBITDA margin(11,15) expected to be 24%-25%

·    Detailed guidance available at:
https://entaingroup.com/investor-relations/results-centre
(https://entaingroup.com/investor-relations/results-centre/)

 

Jette Nygaard-Andersen, Entain's CEO, commented:

"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.
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.

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 underway
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."

 

 

                      Q3: 1 July to 30 September 2023
                      Total                               Sport                Sports Margin

                      NGR                                 Wagers
                      Reported(1)  cc(2)   Proforma(2,3)  Reported(1)  cc(2)

 Online
    Sports            1%           4%      (15%)          (6%)         (2%)    +0.5pp
    Gaming            14%          15%     1%
 Total Online         9%           11%     (6%)

 Retail(6)            4%           4%      (4%)           12%          11%     (0.6pp)

 Total Group (ex US)  7%           9%      (5%)

 BetMGM               8%           15%

 Total Group          7%           10%

 incl 50% BetMGM

 

                      YTD: 1 January to 30 September 2023
                      Total                               Sport                Sports Margin

                      NGR                                 Wagers
                      Reported(1)  cc(2)   Proforma(2,3)  Reported(1)  cc(2)

 Online
    Sports            4%           4%      (8%)           (4%)         (4%)    +0.8pp
    Gaming            19%          17%     4%
 Total Online         13%          11%     (2%)

 Retail(6)            9%           8%      3%             12%          11%     0.3pp

 Total Group (ex US)  11%          10%     in line

 BetMGM               41%          40%

 Total Group          15%          14%

 incl 50% BetMGM

 

Notes

(1)      2023 reported numbers are unaudited and relate to continuing
operations

(2)      Growth on a constant currency basis is calculated by translating
both current and prior year performance at the 2023 exchange rates

(3)      Proforma for all 2022 and 2023 acquisitions for the full period
in both years

(4)      As stated in trading update on 25 September 2023

(5)      Adjusted for impact of known regulatory changes and RG measures
including UK affordability measures and lack of enforcement in Germany post
licensing

(6)      Retail operates in UK, Italy, Belgium, Republic of Ireland,
Croatia, New Zealand and Poland

(7)      Market share for last three months ending August 2023 by GGR
including iGaming, retail and online sports betting, and only U.S. markets
where BetMGM was active excluding New York; internal estimates used where
operator-specific results are unavailable

(8)      Market share for last three months ending August 2023 by GGR,
including only U.S. markets where BetMGM was active; internal estimates used
where operator specific results are unavailable

(9)      Based on current assumption of future live markets

(10)   Regulus Partners estimates of Online market growth weighted for
Entain's market portfolio

(11)   Includes impact from accounting treatment of TAB NZ profit share
payment arrangement

(12)   EBITDA is defined as earnings before interest, tax, depreciation and
amortisation, share based payments and share of JV income. EBITDA is stated
pre-separately disclosed items

(13)   Excludes an estimated c£35m benefit to EBITDA from TAB NZ profit
share payments which are deemed to form part of consideration under IFRS 3

(14)   Since 2019, Entain's online business has only seen negative football
margins for a full week on three occasions, two of which were the last two
weeks of October 2023

(15)   Reflecting the annualisation of TAB NZ acquisition, new taxes in
Brazil (assumed from 1 July), partially offset by Project Romer savings

 

Enquiries:

 Investor Relations - Entain plc                           investors@entaingroup.com (mailto:investors@entaingroup.com)

 David Lloyd-Seed, Chief IR & Communications Officer

 Davina Hobbs, Head of Investor Relations

 Aimee Remey, VP US Investor Relations

 Callum Sims, IR Manager
 Media - Entain plc                                        media@entaingroup.com (mailto:media@entaingroup.com)

 Lisa Attenborough, Head of Corporate Communications

 Jay Dossetter, Head of Corporate PR

 Jodie Hitch, PR Manager
 Powerscourt                                               Tel: +44 (0) 20 7250 1446

 Rob Greening/Russ Lynch/Sam Austrums                      entain@powersco (mailto:entain@powerscourt-group.com) urt-group.com
                                                           (mailto:entain@powerscourt-group.com)

 

 

Presentation

Entain will host a presentation and Q&A session at 12.00 noon today,
Thursday 2(nd) November 2023.

Participants may join via the webcast through this link Entain 2 Nov
presentation (https://kvgo.com/IJLO/Entain_Q3_Trading_Update) or attend in
person, having registered via the link In-person registration
(https://entain-q3-trading-update.virtualhub.events/)

A replay, transcript and slides will be available on our website:

https://entaingroup.com/investor-relations/results-centre/
(https://entaingroup.com/investor-relations/results-centre/)

 

Upcoming dates:

BetMGM Business Update:                4 December 2023

Entain Sustain:                                    Week of
11 December 2023

 

 

Inside Information

This announcement contains information that qualifies or may qualify as inside
information within the meaning of Article 7 of the Market Abuse Regulation
(EU) No. 596/2014 as it forms part of English law by virtue of the European
Union (Withdrawal) Act 2018.  The person responsible for releasing this
announcement on behalf of the Company is Simon Zinger, General Counsel.  Upon
the publication of this announcement via a regulatory information service,
this inside information is now considered to be in the public domain.

 

Forward-looking statements

This document contains certain statements that are forward-looking statements.
The words "believe", "expect", "anticipate", "intend" and "plan" and similar
expressions identify forward-looking statements. They appear in a number of
places throughout this document and include statements regarding our
intentions, beliefs or current expectations and those of our officers,
directors and employees.  These forward-looking statements include all
matters that are not historical facts and include, without limitation, those
statements regarding the Company's financial position, potential business
strategy, potential plans and potential objectives. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the Company's actual results, performance or achievements to
be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such forward-looking
statements are based on numerous assumptions regarding the Company's present
and future business strategies and the environment in which the Company will
operate in the future. Further, certain forward-looking statements are based
upon assumptions of future events which may not prove to be accurate. Any such
forward-looking statements reflect knowledge and information available at the
date of preparation of this document. Other than in accordance with its legal
or regulatory obligations (including under the Market Abuse Regulation
(596/2014) as it forms part of English law by virtue of the European Union
(Withdrawal) Act 2018, the Listing Rules, the Disclosure Guidance and
Transparency Rules and the Prospectus Rules), the Company undertakes no
obligation to update or revise any such forward-looking statements.  Nothing
in this document should be construed as a profit forecast.  The Company and
its directors accept no liability to third parties in respect of this document
save as would arise under English law.

 

About Entain plc

Entain plc (LSE: ENT) is a FTSE100 company and is one of the world's largest
sports betting and gaming groups, operating both online and in the retail
sector. The Group owns a comprehensive portfolio of established brands; Sports
brands include BetCity, bwin, Coral, Crystalbet, Eurobet, Ladbrokes, Neds,
Sportingbet, Sports Interaction, STS, SuperSport and TAB NZ; Gaming brands
include Foxy Bingo, Gala, GiocoDigitale, Ninja Casino, Optibet, Partypoker and
PartyCasino. The Group owns proprietary technology across all its core product
verticals and in addition to its B2C operations provides services to a number
of third-party customers on a B2B basis.

The Group has a 50/50 joint venture, BetMGM, a leader in sports betting and
iGaming in the US. Entain provides the technology and capabilities which power
BetMGM as well as exclusive games and products, specially developed at its
in-house gaming studios. The Group is tax resident in the UK and is the only
global operator to exclusively operate in domestically regulated or regulating
markets operating in over 40 territories.

Entain is a leader in ESG, a member of FTSE4Good, the DJSI and is AA rated by
MSCI. The Group has set a science-based target, committing to be carbon net
zero by 2035 and through the Entain Foundation supports a variety of
initiatives, focusing on safer gambling, grassroots sport, diversity in
technology and community projects. For more information see the Group's
website: www.entaingroup.com (http://www.entaingroup.com) .

 

LEI: 213800GNI3K45LQR8L28

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