Entain ‘optimistic and prudent’ in Q1, UK remains core growth driver
Entain Reports Significant Growth in Q1 Group Net Gaming Revenue
In the first quarter of the year, Entain achieved a notable 9% increase in group net gaming revenue (NGR), or 11% when measured in constant currency, fueled by robust online performances in the UK, Brazil, and the United States. This impressive growth reflects the company’s strategic initiatives and market adaptability in a rapidly evolving sector.
During the analyst call accompanying the latest trading update, Stella David, Entain’s newly appointed CEO, expressed a cautiously optimistic outlook regarding the company’s performance in Q1. “While we have started the year on a positive note, it is imperative that we navigate forward with diligence and ensure we are on the right trajectory,” she stated.
Notably, the group NGR, excluding the US BetMGM joint venture, rose by 6%, or 10% in constant currency. Although the trading update did not provide a detailed breakdown of specific revenue figures, the overall performance was notably supported by a remarkable 22% growth in online NGR across the UK and Ireland. This surge indicates strong market demand, positioning Entain ahead of the industry average during this period.
Shifting Consumer Preferences: The Impact of Adult Gaming Centres
While group NGR from online channels surged by 10%, retail NGR experienced a modest increase of 2%. Despite the uptick, retail revenue faced headwinds from decreased gaming volumes in the UK. Notably, retail NGR in the UK and Ireland saw a slight dip of 1%, attributed to lighter gaming activity. CFO Rob Wood emphasized that these “softer results” were indicative of changing consumer behaviors, suggesting a notable shift towards online platforms.
Wood also pointed to adult gaming centres (AGCs) as competitors that may be diverting traditional retail customers away from betting shops. He remarked, “AGCs have operated largely unnoticed and lack the rigorous player monitoring practices found in other segments.” However, he maintained a generally positive outlook on the retail sector’s performance.
Entain’s Success in Brazil and Central and Eastern Europe
Beyond the UK, Brazil’s NGR soared by 31% in Q1, coinciding with the first full quarter of the country’s legal online betting market. This growth surpassed initial expectations, although Wood acknowledged the lack of official market data from regulators, complicating competitive comparisons. He remarked on the stability of the environment, indicating it felt similar to pre-regulation conditions.
The Central and Eastern Europe (CEE) region also registered robust performance, with NGR increasing by 10%, particularly shining in Croatia. Meanwhile, international revenue remained stable but saw a 5% increase in constant currency. The Australian market, however, faced challenges, with NGR declining by 8% in constant currency due to customer-friendly sports outcomes.
Improving Sports Margins and Strategic Initiatives
Both David and Wood emphasized improvements in sports margins, which rose to 14.9% in Q1. “This upward trend reflects several structural growth drivers,” Wood noted. A significant factor is the shift in player demographics toward a more recreational mix. He highlighted Poland’s dominance in sports betting, where engagement levels consistently trend high.
In a discussion about technological advancements, an analyst inquired whether Entain planned to integrate any of the innovations from its Angstrom division into BetMGM. Wood confirmed that Angstrom’s primary focus for the year would be on the U.S. market, while also suggesting potential future evolutions for the technology.
In a related milestone, BetMGM reported a striking 34% increase in net revenue for Q1, reaching $443 million, translating into adjusted EBITDA of $22 million—a remarkable turnaround of over $150 million from the losses recorded in the first quarter of the previous year.
