Live blog recap: Entain and William Hill full-year financial results
Follow the latest updates as two of the UK's biggest gambling operators reveal revenue figures for 2020
The Q&A has concluded and this live blog has ended
Does Entain intend to pay back £59m in UK furlough scheme funds?
Wood: “This is kept under review and not linked to dividends at this stage.”
How valuable is US tech stack and what happened to relationship with MGM after rejected takeover bid?
Entain have a dedicated tech team working directly with BetMGM sitting together with other developers in India. JNA says: “The US is different because every time you enter state you need to adjust to specific regulations and the fast roll-out of BetMGM has proved how valuable that is for us.” On relationship with JV partner MGM, she adds: “The operational relationship with our team and the BetMGM board has been ongoing as usual. We are fully aligned on prospects and opportunity. Our eyes are focused on helping and supporting BetMGM in getting the maximum out of the US opportunities.”
Entain mentioned strong growth after the reporting period, but what are the numbers?
Wood says deposits per head are up materially with users playing more frequently, which is all contributing to NGR growth. FTDS also up year on year and Entain is spending less to acquire them, so CPAs are down. “You couldn’t ask for a more healthy set of metrics for online business at the start of this year,” he adds.
Is Germany going to launch on time?
Germany was scheduled to launch on 1 July 2021 but Rob Wood expects that to be delayed, especially in terms of gaming, which could stretch into 2022. He adds there hasn’t been enough uptake of new licensing regime with many operators choosing to ignore the transitional period. Wood says he doesn’t know if 5.3% turnover tax on online poker and slots will come into force from 1 July 2021, which would obviously impact previous guidance.
Q&A
The analyst Q&A is underway. Updates to follow.
US outlook
BetMGM is now live in 12 states and expects to be live in 20 by the end of 2021. After the full-year reporting period, BetMGM said it was the number one operator for US igaming in January 2021 and is firmly established in a number three position overall behind FanDuel and DraftKings. Yahoo is the biggest affiliate partner for BetMGM in the US.
Esports excitement
Entain CEO Jette Nygaard-Andersen is talking up the esports betting opportunity. Entering the esports arena was a key strategic focus for former CEO Shay Segev and the board appear to have bought into it with a renewed focus on combining gambling with the wider entertainment sector. Around 63% of esports viewers are interested in betting according to this presentation. The vertical benefitted this year from a Covid-damaged Q2 period where real-life sports events were hard to come by.
M&A outlook
2021 will be a year of investment as acquisitions of Bet.pt and Enlabs complete, combined with increased costs of investing in US-facing BetMGM. Entain has also made a chunky bid for Tabcorp’s wagering division in Australia, although faces stiff competition from private equity and potential stumbling blocks from authorities.
2020 marketing spend
Marketing costs for the year hit £560m which was in line with expectations. Savings from Q2 were reinvested over second half of the year. This equals 20.4% as a percentage of NGR. This percentage should be higher in 2021, according to CFO and deputy CEO Rob Wood.
Entain’s online NGR breakdown
Entain’s online NGR for 2020 rose 28% to £2.75bn. The infogram below breaks down the growth by operating division:
Entain numbers
Entain up next as the analyst call gets underway. Here is the numbers story from this morning:
“I said, back in 2019, that I wanted a renewed focus on the long term competitiveness of William Hill centred around three focus areas; customer, team and execution. It’s the output of that we are seeing in our results. Obviously, it’s unfortunate that we had, had to close retail during the year but, other than that, we have made tremendous progress as a group.
“We are expanding in opportunity and we will continue to invest across product, technology and people and over the next decade online gambling will continue to grow. The convergence from offline into online will accelerate and William Hill is well positioned to take advantage of that opportunity. Today, our internal capabilities matches our external opportunity.”
Caesars takeover impact
“The Caesars acquisition will require considerable time and effort by management to ensure it proceeds smoothly, which raises the risk that business as usual activities could be impacted if this is not managed.
“Caesars has indicated they intend to sell the non-US business and this will also require considerable effort and management resource to ensure this challenge is met in a timely manner with minimal impact or disruption to the group’s usual trading activities.”
Entain CEO Jette Nygaard-Andersen is talking up the esports betting opportunity. Entering the esports arena was a key strategic focus for former CEO Shay Segev and the board appear to have bought into it with a renewed focus on combining gambling with the wider entertainment sector. Around 63% of esports viewers are interested in betting according to this presentation. The vertical benefitted this year from a Covid-damaged Q2 period where real-life sports events were hard to come by.
M&A outlook
2021 will be a year of investment as acquisitions of Bet.pt and Enlabs complete, combined with increased costs of investing in US-facing BetMGM. Entain has also made a chunky bid for Tabcorp’s wagering division in Australia, although faces stiff competition from private equity and potential stumbling blocks from authorities.
2020 marketing spend
Marketing costs for the year hit £560m which was in line with expectations. Savings from Q2 were reinvested over second half of the year. This equals 20.4% as a percentage of NGR. This percentage should be higher in 2021, according to CFO and deputy CEO Rob Wood.
Entain’s online NGR breakdown
Entain’s online NGR for 2020 rose 28% to £2.75bn. The infogram below breaks down the growth by operating division:
Entain numbers
Entain up next as the analyst call gets underway. Here is the numbers story from this morning:
Entain reports 28% rise in full-year online revenue to £2.75bnAnalyst analysis Regulus Partners analyst Paul Leyland on the operator’s 2020 performance: “William Hill has proved adept at weathering storms. Several years of weak management, market exits, UK-specific regulatory interventions and an acquisition with a ‘challenging’ geographic footprint were mostly self-inflicted. “To have remained profitable in the face of these challenges and Covid-19 policy disruption is testimony to the resilience of the brand and the underlying strength of established gambling operations. “However, Caesars is not buying a resilient survivor, its strategy and valuation say that it is buying strategic growth potential and digital operational competence. William Hill’s last set of results as an independent company demonstrate just how much work needs to be done to re-engineer these skills.” CEO Ulrik Bengtsson on 2020
“I said, back in 2019, that I wanted a renewed focus on the long term competitiveness of William Hill centred around three focus areas; customer, team and execution. It’s the output of that we are seeing in our results. Obviously, it’s unfortunate that we had, had to close retail during the year but, other than that, we have made tremendous progress as a group.
“We are expanding in opportunity and we will continue to invest across product, technology and people and over the next decade online gambling will continue to grow. The convergence from offline into online will accelerate and William Hill is well positioned to take advantage of that opportunity. Today, our internal capabilities matches our external opportunity.”
“We have used this year effectively to accelerate the convergence of our proprietary technology platform to realise scale benefits across the business. To achieve our ambition to be a market leader on app performance and personalisation we have launched regular new product improvements and migrated our platform architecture onto AWS (Amazon Web Services) cloud computing.”
COO Stephen Parry is leading a programme to improve operational efficiency and further automate customer facing and internal processes.
VAT refund buoys revenue
Earlier in the year, Hills revealed a £208.3m boost from a refund of incorrectly paid UK VAT on certain types of gambling machines, with these funds offsetting both retail cash non imparements and costs arising from the Caesars takeover.
In addition to necessary retail closures, Hills reports a number of other Covid-19 mitigation measures during 2020 as outlined below.
• All salary increases and bonuses were stopped while the 2020 Performance Share Plan awards were cancelled
• UK employees’ wages were topped up to 100% while on furlough, all shop and office environments were made Covid-safe and we introduced a flexible working policy, ‘Balance’, empowering our colleagues to work in a way that suits them
• The UK government job retention support scheme was taken during the first half and enabled us to protect UK jobs. However, in light of the performance of Online and Retail, we repaid the furlough monies of £24.5m in the second half and have since forgone further UK government job support
• The William Hill USA Charitable Foundation was established to provide financial assistance to US employees adversely impacted by the pandemic
Numbers story
As promised, you can find the numbers news story on William Hill in the link below:
William Hill profits plummet 91% in 2020 as pandemic impact financialsGermany guidance
Hills has reported a 30% loss in revenue from implementing German transitional regulations and expects this to reduce EBITDA contribution by £10m in 2021. A familiar story for European players.
International expansion
The live blog is meant to add some colour to the financial figures, but if you’re a sucker for cold-hard numbers, we will also have our number-focused news stories up online shortly. William Hill managed to expand its international footprint in 2020. Now 36% of revenue is generated outside of the UK, which is facing further regulatory changes as a result of the Gambling Act 2005 review. The figure has risen from just 24% in 2019.
William Hill revenue
William Hill headlines
Best to start with Hills as Entain have a conference call coming up at 9.30am. The standout figure is probably a 91% dip in adjusted pre-tax profit to £9.1m in 2020. The operator has also reported a 16% year-on-year drop-off in 2020 net revenue to £1.3bn.
And we’re live!
Good morning everyone. Today promises to be a busy day with Entain and William Hill both reporting their full-year financial results on the same date. Some calendar clash, but we’ll do our best to guide you through all the relevant facts and figures.