Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Entain PLC (GMVHF, Financial) reported strong interim results, with Group NGR up 8% year-on-year on a reported basis.
- The company achieved significant growth in Brazil, with a 48% increase in the second quarter, indicating successful market strategies.
- Project Romer, the efficiency program, is progressing well, with increased net savings target to at least GBP100 million by 2026.
- BetMGM delivered $1 billion in NGR, with iGaming showing strong profitability and a healthy market share of 22%.
- Entain PLC (GMVHF) upgraded its 2024 guidance, reflecting positive momentum and operational improvements across key markets.
Negative Points
- UK Online NGR was down 8%, reflecting regulatory measures and challenges in the market.
- The Netherlands market is facing regulatory tightening, impacting performance, and represents 3% of the overall mix.
- Retail NGR was up only 1%, but 4% lower on a pro forma basis, indicating challenges in the retail segment.
- FX created a GBP16 million year-on-year negative impact on EBITDA due to the strengthening of sterling.
- BetMGM's online sports betting market share has weakened, indicating challenges in this segment.
Q & A Highlights
Q: Could you confirm whether the higher losses for BetMGM this year require additional capital injection from the parents? Also, regarding the guidance, there's a GBP25 million increase to EBITDA versus consensus expectations. Is this due to more space for marketing?
A: The parents do not expect to inject further capital into BetMGM. Any additional capital required will be secured by a debt facility at the subsidiary level, with no impact on Entain's cash flows. The GBP20 million uplift in guidance is driven by Online NGR, and we are maintaining our marketing investment, especially in markets like Brazil and the UK, where we see strong returns.
Q: On the UK, why is NGR growth pre-Euros still declining? And does the upgrade on Project Romer change the guidance for online margins in 2026?
A: The UK NGR performance is improving due to operational changes and the new voluntary code, which sets a better level playing field. The guidance for 2026 EBITDA margin remains unchanged despite the Romer upgrade, as cost reallocations offset the benefits.
Q: Regarding BetMGM, if new initiatives in online sports betting show good momentum, could there be additional investments?
A: Incremental investment is focused on iGaming, which is performing well. We have already accounted for significant investment in online sports betting for the NFL season. The decision to invest further will depend on the returns we see.
Q: Can you discuss the competitive dynamics in Brazil and what makes you confident about market share growth?
A: Brazil is competitive, but we have a trusted brand and are seeing strong customer engagement. Our marketing and product improvements are resonating well, and we are confident in our trajectory based on growth rates and customer feedback.
Q: On BetMGM, how confident are you in the at-maturity margin and market share outlook, especially with potential tax rises?
A: We are confident in reaching the $500 million EBITDA target, but the timing depends on new state launches and their nature (iGaming or sports betting). BetMGM's current EBITDA margin is already strong, and we are strategically investing in player acquisition to maximize long-term profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
