Entain records flat NGR rise in Q3 as firm targets World Cup and M&A gains

Entain has posted a 2% year-on-year (YoY) rise in net gaming revenue (NGR) for Q3 2022 as the multi-brand group looks to strong end to the year. Delivering its financial report for the latest trading period, the FTSE 100 operator announced flat growth across the group and online division, with its retail arm continuing to grow against Covid-19 comparisons in 2021. Online NGR rose 1% YoY but fell 2% in constant currency, which Entain noted was “broadly in line with expectations”. Both online sports betting and igaming NGR increased by 1% YoY. However, Entain highlighted the division’s underlying growth as a positive indicator. The group’s three-year CAGR (compound annual growth rate) for online sports betting NGR, was up 12% on a constant currency basis, with online gaming up 9% by the same metric. Overall, three-year CAGR online NGR increased by 11%. Elsewhere, Entain highlighted that when discounting the Netherlands, where it is waiting to go live with bwin and PartyCasino, and won’t reap any benefits of the acquisition of local operator BetCity until the deal completes, online NGR was up 4%. The group’s retail arm continued to perform well, with NGR rising 10% YoY, as well as climbing 8% on pre-Covid levels. Entain also revealed a record level of active customers during the quarter, rising 6% YoY. Looking at the US and Entain’s BetMGM JV with MGM Resorts International, the operator pointed towards another strong quarter. BetMGM holds a 25% market share in the US where it operates, excluding New York, with this figure increasing to 31% for igaming market share alone. BetMGM was bolstered during the quarter thanks to the start of the NFL season in September, with Q3 NGR of just over $400m, an increase of 90% YoY. Entain said BetMGM was on track for full-year NGR of over $1.3bn and that its “continued strong financial performance” reaffirmed the expectation to record positive EBITDA during 2023. Looking ahead to the remainder of the year, Entain confirmed the acquisitions of BetCity and Croatian firm SuperSport should complete during Q4. The acquisition of SuperSport will lead to the creation of Entain CEE, with the operator planning a concentrated geographic expansion in the region. The firm also noted an easing of prior year comparisons, with the last material Covid-19 lockdowns annualising in October, and an expected arrival in the Netherlands to come. Full-year group EBITDA is expected to be in line with previous guidance of between £925m and £975m, which would represent growth of between 5% and 10% YoY. Jette Nygaard-Andersen, Entain CEO, praised the success of BetMGM and provided an outlook on the end of the year ahead of the FIFA World Cup. “Our business continues to perform well with good underlying momentum across the group, including in BetMGM. This illustrates the effectiveness of our growth strategy, the unique capabilities of the Entain platform, and the underlying strength of our diversified global business. “In the US, BetMGM continues to be the clear leader in the igaming market, and the successful start to the NFL season also highlights the strength of our growing US sports betting offer. “We have healthy momentum across the business and look forward to a strong finish to the year which includes the World Cup. Looking ahead, we remain vigilant of the economic backdrop. “However, our diversified revenue base and robust business model enable us to remain confident in our ability to deliver on our growth and sustainability strategy,” she added. Edison Group director Russell Pointon echoed Nygaard-Andersen’s positive outlook for Q4, as he noted the World Cup could offset concerns over macroeconomic conditions. He said: “Expanding its sport offering, the betting operator has acquired five businesses already in 2022, an expansion which will maximise benefits from the upcoming World Cup. This will likely also offset the potentially significant impact of further inflation and tighter consumer budgets, leading Entain to forecast YoY growth in Q4.” Entain’s shares were up 3% to 1,121p at the time of writing.