Entain reports 27% H1 revenue rise despite German drag

Entain has reported a 27% constant currency uptick in online net gaming revenue (NGR) to £1.59bn for the first half of 2021. NGR from the FTSE 100 operator’s sports betting segment climbed by 52% to £751.m as a result of a full sports fixture list and the early stages of Euro 2020. Sports margin for the period came in at 13.1% after benefitting from an increase in recreational betting behaviour, improved product mix and favourable sporting results. Gaming NGR grew 11% to £825.9m against strong prior year comparatives, particularly in Q2 as the extension to retail lockdowns continued to benefit gaming via online migration. “With strong underlying growth on a two-year basis, we believe the Covid-19 pandemic has driven growth in the overall gaming market,” said Entain in a statement. Germany proved the biggest drag on Entain gaming revenue due to regulation on slots, including the new 5.3% turnover tax, which has impacted market volumes. In fact, H1 gaming NGR would have increased by 28% year-on-year if Germany was excluded from the figures. Online underlying EBITDA topped out at £495.9m for the period amid a rise of 35%.

At a regional level, Entain’s UK online business reported growth of 31% in H1, driven primarily by a 40% increase in sports brand NGR with active customers up 39% on the same period of last year. UK gaming brands NGR, including Foxy and Gala, climbed by 14% in H1 driven by recreational retail-type play and a combination of increased player days and NGR per active customer. Entain’s highest NGR growth rate came in Brazil (153%), while Italy (76%) and Georgia (52%) also performed strongly. Australia rose by 11% led by Ladbrokes and Neds, while Germany (-34%) and partypoker (-10%) reported year-on-year declines. In the US, Entain’s joint venture brand BetMGM recorded NGR of $357m and has solidified itself as the number one player in the market in terms of igaming with a reported 30% market share. At an overall combined level (including retail), Entain reported H1 NGR of £1.79bn amid an 11% rise. Group EBITDA climbed 12% to £401m, while profit after tax hit £91m, up by £69m annually. As well as the H1 financial results, Entain revealed its intention to launch a new efficiency programme designed to reduce costs across the business while supporting investment in innovation. The innovation injection will total £100m over three years and is expected to achieve cost-savings of up to £100m in full-year 2023, according to the operator, leading to a potential net cash benefit of £75m. The efficiency programme is called Evolve and will result in the operator building more proprietary SSBTs and creating more in-house content. In July, Entain pledged to double its investment across its in-house games studios by doubling headcount across three global locations (UK, Italy, India) to 300.