Entain online NGR dips 7% in H1 as firm begins CEE M&A roadmap
FTSE 100 group acquires leading Croatian operator in deal worth up to €800m as UK and German headwinds take their toll
Entain has posted a 7% year-on-year (YoY) downturn in online net gaming revenue (NGR) for H1 2022, with the company blaming “very strong prior year comparatives” for the slide.
The operator recorded online NGR of £1.47bn for H1 as strong performances in Australia and Brazil failed to offset challenging conditions in European markets.
Of this total online NGR, sports betting amounted to £702.9m, falling 6% YoY from £751.1m with a corresponding dip in sports margin from 13.1% to 12.8%.
Gaming NGR slipped 9% from £825.9m to £725.7m while B2B NGR jumped 42% from £10.6m to £15.1m.
The London-listed operator noted the downturn as regulatory headwinds came to the fore across Europe, as well as the absence of a major men’s international football tournament such as H1 2021’s Euro 2020.
The UK posted a significant 15% YoY downturn in online NGR on a constant currency basis, with Entain pointing to “tighter affordability measures”, along with the growing cost-of-living crisis in the country.
Italian online NGR fell by 12% on a constant currency basis YoY while German online NGR decreased 19%. Online NGR in Georgia dropped 9%.
There were positives for Entain to draw on in terms of its online operations, with online NGR in Brazil leaping 38% and active customers rising 44% while Australian online NGR grew 20%.
Entain did note that the underlying performance continued to look positive, with H1 representing a three-year compound annual growth rate (CAGR) of 13% in constant currency.
In the US, the BetMGM brand – a JV between Entain and MGM Resorts – continues to perform well, having delivered NGR of $608m for the period.
BetMGM is now live in 23 markets and has established itself as a leader in igaming with a 23% market share, Entain said.
However, the group did note it had taken the strategic decision to focus attention away from New York due to the “unfavourable tax environment” in the Empire State.
At a group level, including Entain’s retail operations, total NGR increased 18% YoY from £1.8bn to £2.1bn.
Elsewhere, EBITDA jumped 17% for the first six months of the year from £401.1m to £471m while post-tax profit fell from £90.9m to £28.1m.
It was also revealed that H1 2022 represented the highest-ever level of active customers in H1, rising 57% compared to 2020.
Furthermore, Entain also announced it had acquired leading Croatian operator SuperSport in a €800m deal via a JV with Czech investment management company Emma Capital.
The agreement will see Entain pay €600m in cash upon completion of the deal, which is expected to close in Q4, with further payments due to Emma Capital based on the future performance of the business.
SuperSport currently holds a 54% market share in Croatia, with CAGR from 2016 to 2021 of 16.6% for revenue and 20.8% for EBITDA.
The JV, named Entain CEE, is 75% owned by Entain and 25% owned by Emma Capital. Entain CEE will be led by SuperSport CEO Radim Haluza.
Entain said it expected the transaction to be mid-to-single-digit earnings accretive in its first full year.
Looking ahead, Entain said its “momentum remain[ed] strong” and reaffirmed its full-year 2022 EBITDA outlook range of £925m to £975m despite the darkening macroeconomic environment.
Jette Nygaard-Andersen, Entain CEO, touched on the company’s continued expansion plans while reflecting on the results.
She said: “Underpinned by the Entain platform, we continue to expand our growth opportunities, and have already announced five transactions so far this year. This includes today’s announcement of an innovative growth strategy for Central and Eastern Europe, starting with the acquisition of SuperSport in Croatia.
“In the US, BetMGM goes from strength to strength and continues to demonstrate its market leadership with a 23% market share.
“We continue to make excellent progress on our strategic priorities, with momentum in our business remaining strong as a result of putting the customer at the heart of everything we do. I am delighted that more customers are choosing to play with us as we focus on providing them with even better products, engaging content and exciting experiences,” she added.
At the time of writing, Entain’s share price was up 3.6% to 1,335.50p.