GVC “taking share” as Q4 revenues climb 15%
Ladbrokes Coral sports NGR up by 9%, including 12% revenue growth in the UK
GVC has reported a 15% rise in online net gaming revenue (NGR) for the final quarter of 2018, as full-year online revenues increased by 19% to €1.86bn compared to previous proforma numbers.
Sports brands NGR was up 14% in Q4, as wagering growth of 18% was somewhat offset by a sports gross win margin that was down 1.5pp from Q417 to a still-impressive 10.7%.
Legacy GVC sports brands (Bwin and Sportingbet) saw NGR up 21% across all major territories in the quarter, while Ladbrokes Coral sports brands NGR increased by 9%, including 12% NGR growth in the UK LCL sports brands.
Group gaming brands saw an 18% rise in Q4 NGR driven by a 43% increase in partypoker. Gala brands rose by 18% as legacy GVC casino brands improved by 13%.
Total online marketing costs as a percentage of NGR in the quarter hit 22%.
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GVC CEO Kenny Alexander said: “The Group’s performance in 2018 has been excellent with the strong momentum reported at Q3 continuing into Q4. We are materially outperforming the market and taking share in all of our major territories.
“As the Group carries this momentum forward into the new year, and starts to deliver the opportunities provided by both the Ladbrokes Coral integration and our sports-betting joint-venture in the US with MGM Resorts, the Board is confident that the Group is very well placed for a successful 2019.”
Retail did not enjoy the same growth as online with UK like-for-like NGR down 3% and full year betting revenue down 10%, despite a 3% increase in FOBTs activity.
While GVC continued to grow ahead of the market, Regulus Partners analyst Paul Leyland warned an ever-changing regulatory outlook in several key markets may take its toll in the coming year.
“GVC is continuing to demonstrate that it can drive operational improvements from previously badly run assets that are lasting into the medium-term,” said Leyland.
“However, we believe that this operational focus is only likely to deliver another year or so of underlying growth before the much more complex drivers of underlying market trends and long-term R&D start to shape the top-line.
“Germany could swing from being a material cash cow to a drain on resources in the relatively near term (late 2019, early 2020), while regulatory change is also sweeping through a number of other markets important to GVC, with little of it clearly positive (Italy, Sweden, Brazil etc).
“GVC has built an impressive roster of businesses and ironed out many of their structural weaknesses and operational flaws – but this undoubtedly impressive feat might look like the easy bit versus what is coming next,” he added.
GVC shares were up 5% in early trading and the operator intends to release its preliminary FY18 results in March 2019, with full year EBITDA predicted to be in the range of £750m-£755m.