Entain eyes UK&I market share gains as segment returns to growth

Entain’s Unexpected Growth Surge: Strategic Realignment and Market Opportunities Shaping the Future

Entain has experienced an unexpected resurgence in growth within its core UK and Ireland (UK&I) segment in 2024, positioning the company to capture an increased market share as looming regulatory changes may adversely affect smaller operators in the sector.

According to Entain’s full-year 2024 financial report, the operator has successfully reversed a trend of declining revenues in its primary market for the first time since 2021. This revival was fueled by a substantial 13% year-on-year revenue increase in Q4, attributed to a stabilization in the effects of recent regulatory adjustments alongside improvements made in both front-end and back-end operational processes.

Overall, the company demonstrated robust organic growth, with revenues rising 7% year-on-year to £5.16 billion (€6.1 billion/$6.6 billion). The EBITDA also saw a commendable increase of 5%, reaching £1.09 billion.

“In March of last year, I candidly addressed the challenges confronting Entain,” stated interim CEO Stella David during the latest earnings call on March 6. “We encountered some harsh realities and committed ourselves operationally. Fast-forward a year, and we are pleased to announce a return to organic growth, marked by improvements in both Net Gaming Revenue (NGR) and EBITDA.”

Performance Breakdown: The UK&I Market in 2024

The second half of 2024 saw revenue growth in the UK&I segment, effectively counterbalancing a 7% revenue decline experienced in Q1. According to David, this turnaround is a product of Entain’s strategic adjustments and substantial enhancements in both product offerings and marketing efforts implemented over the past year.

• Online revenue in the UK&I exceeded expectations, increasing by 2.1% to £984.6 million.
• Active customer engagement surged, with an 11% year-on-year increase in active players.
• Spending per customer across both sports and gaming segments witnessed positive growth in Q4 for the first time since Q1 2021.

In contrast, retail revenue faced a slight decline of 1.3% to £1.07 billion in 2024. However, the latter half of the year showed resilience, with a 2% uptick in revenue as the company’s retail outlets benefitted from robust margins in sports betting and the successful rollout of new Kascada gaming cabinets, which partially offset the prevailing challenges in the retail gaming landscape.

The cumulative NGR for the UK&I market for the year totaled £2.05 billion, reflecting a modest increase of 0.2% year-on-year. CFO Rob Wood attributed this growth to the company’s focus on streamlining customer journeys to alleviate friction and complexity, fostering a conducive environment for market-level growth.

“By addressing these friction points, the UK market has achieved renewed growth in H2, consequently assisting the entire Entain portfolio to return to market growth,” Wood informed analysts. “We are, therefore, confidently on track to meet our growth targets for 2025.”

Looking ahead, Wood expects this positive growth trajectory to continue into the first half of the current year. The company’s strategic adjustments, which commenced last year, include enhancements in website speed, user interface improvements, the introduction of a new bet builder feature, and the development of in-game economies to elevate player engagement.

Anticipating Regulatory Changes: A Competitive Advantage

Wood further stated that Entain has effectively navigated the adjustments necessitated by tighter regulatory measures in the UK throughout 2023, and the return to growth has occurred ahead of predictions.

When queried about the anticipated impact of forthcoming regulations, such as the online slot stakes limits set for introduction in April and May, executives expressed confidence that these looming limitations would disproportionately affect tier two and tier three operators, thus enhancing Entain’s strategic positioning within the market.

“We anticipate that certain headwinds will emerge for these operators,” David added during the earnings call. “Our strength lies in attracting higher-value players. While the new limits may diminish overall player experience, this will create an opportunity for customer churn among those seeking superior offerings, ultimately benefiting our brand.”

International Markets: A Dynamic Performance Review

Beyond the UK, Entain reported a noteworthy 10% increase in international NGR on a constant currency basis. Notably, the Central and Eastern Europe (CEE) region exhibited strong performance with a 12% revenue growth. Although Australia’s growth remained stable at 1% in 2024, Brazil emerged as a significant player for the company, achieving a remarkable 41% revenue growth spurred by a substantial 42% increase in active players. David and Wood emphasized the advantage of securing early licenses in Brazil, providing a critical first-mover advantage in this emerging market.

Enhancements to Brazil’s product offerings, including the introduction of instant payment withdrawals, also contributed to end-of-Q4 growth. Meanwhile, BetMGM, Entain’s joint venture with MGM in the United States, reported a net revenue of $2.1 billion, reflecting a 7% year-on-year increase.

Leadership Transition: New CEO Search Underway

Following the unexpected departure of CEO Gavin Isaacs in February, David confirmed that the search for a new CEO is currently active, although her immediate focus remains on ensuring operational continuity and performance. “I have conveyed to the organization that I am committed to serving as long as necessary. It is critical that we maintain stability and capitalize on our existing momentum while identifying the right long-term leadership solution,” she emphasized.