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Entain releases Q3 2023 trading update

4 Nov 2023

(PRESS RELEASE) -- Entain plc, the global sports betting and gaming group, today reports trading for the period from 1 July to 30 September 2023 and provides an update on accelerating the Group’s operational strategy.

Q3 Highlights

- Total Group (including US) Net Gaming Revenue (“NGR”) up +7% (+10% cc)
  • Group NGR (excluding US) up +7% (+9% cc), -5% proforma
- Online NGR up +9% (+11%cc), -6% proforma, in line with updated expectations
  • Excluding known regulatory impacts, Online NGR up +17%cc, flat proforma
  • 2-3ppt impact from customer-friendly sports results in September
  • Continued strong growth in active customers, +26% YoY (+10% proforma)
- Robust performance in Retail6 with NGR up 4% (+4% cc), -4% proforma

- BetMGM continues to perform strongly with Q3 NGR of approximately $458m, up c.15% YoY
  • 18% market share in markets where it operates (excluding New York) in sports betting and online gaming
  • Continued iGaming strength with 26% market share
  • Successful start to the NFL season as Online sports-betting customers enjoy the benefits of significant investment enhancing the customer experience
  • On track for FY2023 NGR at the upper end of $1.8-$2.0bn guidance and to be EBITDA positive in H2 2023
- Continued leadership and progress delivered across our Sustainability Charter

Accelerate Operational Strategy

Over the last three years Entain has undergone a significant strategic transformation, improving the quality of earnings, strengthening operations, and aligning structures to best position the Group to capitalize on future growth opportunities and deliver shareholder value.

At a presentation today, management will outline key initiatives to accelerate the Group’s operational strategy, including:

- Focused market portfolio, optimized for organic growth and ROI
  • Prioritisation of high growth, high return markets, including US, Brazil CEE and New Zealand
  • Drive profitable growth in core markets, including the UK, Australia, Italy, Germany and the Baltics
  • Exit smaller non-core operations
- Return to organic growth at least in line with our markets (c.7% CAGR) from 2025
- Drive US market share to 20%-25% through investment in product & pricing capabilities, customer acquisition and maximising the omnichannel opportunity
- Delivery of Project Romer to support expansion of Online EBITDA margin to 28% by 2026 and 30% by 2028
  • Simplification of the organisation to improve operational leverage and drive cost efficiencies
  • Gross cost savings of £100m (net cost savings £70m) by 2025
- Enhanced Governance:
  • Plan to appoint four new non-executive directors, including Amanda Brown’s appointment from 8 November 2023
  • Creation of a capital allocation committee of non-executive directors

Guidance

- FY2023 Group EBITDA (pre TAB NZ accounting) guidance:
  • Q3 performance tracked to EBITDA guidance of £1.00bn – £1.05bn as stated on 25 September 2023
  • During October, while volumes have been in line with expectations, continued customer friendly results have seen sports margins impact EBITDA by approximately £45m
  • This does not impact our expectations beyond Q4 2023
- FY2024
  • Pro forma Online NGR growth expected to be low single digit, supported by return to growth during H2 2024
  • Online EBITDA margin expected to be 24%-25%
Jette Nygaard-Andersen, Entain’s 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.

From here, we have a clear plan to focus our portfolio for organic growth, drive our market share in the US, improve our operational leverage, and increase our EBITDA margins. 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.”
 
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