Bet365 revenue rises 2% but profits tumble amid soaring admin costs

Bet365 has recorded a 2% increase in annual revenue, according to the latest set of accounts filed with Companies House as the operator’s gaming vertical came to the rescue.

For the 52 weeks to 27 March 2022, the privately owned business reported revenue of £2.85bn compared to the £2.78bn recorded in the previous reporting period to 28 March 2021.

Once again, the Stoke-on-Trent-headquartered firm declined to provide a geographic breakdown of its revenue, noting it could severely impact the interests of the group.

Bet365 said: “A geographical analysis of turnover has not been given as in the opinion of the directors such disclosure would be severely prejudicial to the interests of the group.”

The operator did disclose that sports revenue fell 2% year-on-year (YoY), with a reduction in sports margin offsetting the impact of wagering growth.

Impressively, the group’s gaming vertical achieved a 25% rise in revenue for the reporting period, with bet365 noting its “improved offering” as the core reason for the gain.

Elsewhere, total active customers jumped 48% compared to a 13% YoY rise in the 12 months to March 2021.

Despite these positive figures, bet365 recorded a huge 94.6% decrease in operating profit, falling from £285.5m to £15.4m.

Additionally, pre-tax profit plummeted 85.5% from £525.1m to just £76.1m.

Bet365 said the sharp fall in both operating and pre-tax profit were as a result of the significantly increased administration costs of running the business.

Administration expenses increased by £319.5m YoY due to investments in IT, infrastructure and technology, as well as raising brand awareness in new markets.

Combined with these costs, bet365 also ramped up its employee headcount from 5,442 to 6,092, which came with increased costs for the company

Bet365 maintained its strong balance sheet for the reporting period, with cash and investment assets sitting at £3.3bn, down from £3.4bn.

Meanwhile, its taxes paid to the UK Treasury for the reporting period stood at £493.1m, down from £516.3m in the prior 12 months.

The operator said: “The directors are also pleased with the strength of the financial position reported on the balance sheet. Due to the cash-generative nature of the group, the directors are confident that the balance sheet will continue to remain strong.”

The family-owned operator also continued its charity efforts during the reporting period after donating £100m to the Denise Coates Foundation, matching its contribution from the last reporting period.

The accounts show Coates herself was paid £213m during the reporting period, plus a £45m dividend.

Regulus Partners’ Paul Leyland said that while the latest financials showed underlying performance was stronger than the 2% rise in revenue suggests, bet365 could be losing out on high-growth markets and a savvier competitor field.

Leyland said: “To a large extent, bet365’s underlying performance is far stronger than 2% revenue growth suggests, especially evidenced by a nearly 50% increase in global active users. However, bet365’s business model has long been built upon being the leading in-play driven sports betting offer wherever it is available.

“A product that appeals to engaged users tends to have a high ARPU which a combination of safer gambling measures and emerging market growth is bound to impact negatively overall. These drivers have likely produced most if not all of the additional c. 10% fall in ARPU which cannot be explained by margin and incentives swings.”

He added: “Finally, while the absolute results are solid, bet365’s competitive landscape is changing rapidly and 2% growth in this period implies a material loss in share

“Similarly, bet365 is not present in high growth markets with ‘fiddly’ regulation or a small base-line such as Belgium, Czechia, France, Poland, Portugal, Romania, South Africa and Colombia – all of which have outstripped average global growth in 2021.

“Therefore, while bet365 is still likely to be the market leader in in-play led sports betting, it is far less likely to be a market leader in highly localised, multiples-led, pre-match-led, data-light, or gaming-led markets, which represents a dangerously expanding list,” he concluded.

Bet365 finished third in the 2022 edition of the Power 50, EGR’s annual rundown of the largest and most influential online gambling operators.