Business Confident and Cautious in Q1, UK Stays Key Factor for Growth
New and Improved Analysis of Entain Q1 Performance
Discussing the latest trading update, new CEO Stella David showed an optimistic yet cautious outlook on Entain's Q1 performance. She highlighted the strong start of the year but emphasized the need for continued progress.
Group NGR, excluding the US BetMGM joint venture, climbed 6%, or 10% in constant currency. Unfortunately, no specific revenue figures were provided in the update.
What's catching the eye is the surge in UK and Ireland online NGR by a whopping 22%. This growth is attributed to impressive volume growth in the market, which Entain predicts will outpace the average market growth for the period.
On the contrary, group online NGR rose only 10%, whilst retail NGR inched up 2%. Despite the moderate retail growth boosted by expanded sports margins, the UK gaming volume was lower, partially counterbalancing the increase.
UK&I retail NGR dropped slightly by 1% due to reduced gaming volumes. According to CFO Rob Wood, the "softer results" in retail are likely due to changes in consumer behavior. He pointed out the growing trend of digital gaming across the UK and suspected adult gaming centers (AGCs) as a significant factor in the declining retail business.
Wood believes AGCs are overshadowing retail gaming shops by attracting customers with less stringent player monitoring than regulated betting shops. Although the full impact of AGCs hasn't been quantified, their influence on customer preferences seems undeniable.
Looking beyond the UK, Brazil NGR spiked 31%, marking the first full quarter of Brazil's legal online betting market. The operator expressed satisfaction with their performance, though official market data is scarce due to the absence of comprehensive information from the regulator.
The Central and Eastern Europe (CEE) region also delivered a solid 10% growth, with Croatia leading the way. International revenue remained flat but climbed 5% in constant currency, despite Australian NGR dropping 8%.
Wood and David also highlighted an increase in sports margins, which rose to 14.9% in Q1. They noted a positive trend of structural growth driven by changes in the player mix and the impact of Poland, where sports betting accounts for a substantial part of their sports mix. For the year ahead, Angstrom's technology will primarily focus on the US market.
BetMGM, Entain's US joint venture, reported a staggering 34% increase in Q1 net revenue, reaching $443 million. Adjusted EBITDA also showed a significant improvement of over $150 million from the loss in Q1 2024.
- Stella David, Entain's new CEO, expressed an optimistic yet cautious outlook on the Q1 performance, emphasizing the need for continued progress.
- Group NGR, excluding the US BetMGM joint venture, experienced a growth of 6% or 10% in constant currency, while specific revenue figures were not provided.
- The surge in UK and Ireland online NGR by 22% is attributed to impressive volume growth in the market, which Entain predicts will outpace the average market growth for the period.
- Despite the moderate growth in retail NGR, UK gaming volumes were lower, contributing to a slight drop of 1% in UK&I retail NGR, partly due to changes in consumer behavior and the growing trend of digital gaming.
