Entain seeks cost savings by 2025 as online NGR faces regulatory headwinds
FTSE 100 giant champions BetMGM US growth as favourable sporting results bear their teeth
Entain has reported a 5% pro forma year-on-year (YoY) decrease in group net gaming revenue (NGR), excluding its US operations, for Q3 2023.
The FTSE 100 giant confirmed its Q3 performance today, 2 November, after briefly updating the market in September in which it foresaw a “softer than anticipated” quarter.
While non-US NGR declined on a pro forma basis, total group NGR increased 10% on a constant currency basis.
Entain’s US operations, in the shape of its BetMGM JV with MGM Resorts, posted an approximate NGR of $458m, up 15% YoY on a constant currency basis.
Entain added that excluding New York, BetMGM maintained its 18% market share for jurisdictions where it operates.
However, igaming market share slipped from 27% in Q2 to 26% in Q3.
Elsewhere, the group’s non-US online NGR was down 6% YoY on a pro forma basis, which the company said was in line with its previous market updates.
Although, the London-listed giant caveated that “excluding known regulatory impacts”, which include UK affordability measures and ongoing issues in Germany, online NGR was up 17% on a constant currency basis and flat on a pro forma basis.
Similar to its competitors, Entain was hit with a run of customer-friendly sports results in September, which the firm said had resulted in a two to three percentage point impact.
Actives continued to grow strongly for the company, with figures up 26% YoY or 10% on a pro forma basis.
Along with delivering the Q3 update, Entain also laid out “key initiatives to accelerate the group’s operational strategy”, including a new strategy known as Project Romer.
Project Romer will be deployed to “support expansion of online EBITDA margin to 28% by 2026 and 30% by 2028”.
Measures in the project include gross cost savings of £100m by 2025 and the simplification of the organisation.
Additionally, Entain confirmed it would prioritise high growth markets including the US, Brazil and New Zealand, while exiting smaller “non-core operations”.
In the US, the firm is aiming for a market share of between 20% and 25%, which it said it would achieve via “investment in product and pricing capabilities, customer acquisition and maximising the omnichannel opportunity”.
Jette Nygaard-Andersen, Entain CEO, commented: “Entain has undergone a profound transformation over the last few years, and now has strong foundations from which to move into its next phase of growth.
“We have made significant investments in responsible gambling initiatives. While these steps have impacted EBITDA, they are unquestionably the right thing to do to improve our long-term prospects.
“The wide range of initiatives that are underway will cement our position as a customer-focused industry leader, enable us to achieve our strategic ambitions, and deliver enhanced returns for all our stakeholders,” she added.