Entain Chief Executive Officer Jette Nygaard-Andersen said the business was a “perfect fit” for an acquisition target, given the second quarter results and plans to make a number of acquisitions in Central and Eastern Europe. He boasted that he was a consolidator.
The result comes along with the business announcing a new venture with Czech private equity business EMMA Capital to target acquisitions in Central and Eastern Europe. The first of these is Croatian market leader SuperSport, a new venture he has agreed to acquire for 920 million euros.
Nygaard-Andersen says Entain is now the natural choice when local market leaders seek integration into larger groups.
Nygaard-Andersen said: “Customer insights and analytics embedded in our platform not only underpin our focus today, but also ensure visibility into emerging trends and emerging product verticals.”
“In every sense, we are perfectly positioned to capture a valuable first-mover advantage.”
Retail growth, online slowdown
As previously reported in July, net gaming revenue in Q2 2022 was up 18.1% to £2.12 billion.
This was as retail revenue tripled as shops reopened after the covid-19 lockdown and online net gaming revenue fell 7.1% to £1.47bn.
Both online sports revenue and online gaming revenue decreased by 6.3% and 8.9% respectively to €702.9 million and €752.7 million. The business earned an additional €15.1 million from online B2B services.
According to Entain, the decline is due to a “very strong comparison” and the impact of the operator’s withdrawal from the Netherlands. Without Holland, her earnings would have been down 3%.
Despite lower revenue, the business said it hit a new record number of active players.
“Not only is this approach great for our customers, but it gives us a broader, more recreational customer base that supports more sustainable long-term revenue,” said Nygaard-Andersen.
The UK was a particularly challenging market for Entain’s online business during the quarter. Here, revenue fell by 15%, as Entain said “the previous year’s lockdown, tougher affordability measures, and customers responding to economic pressures” all had an impact.
In Germany, gaming net revenues fell 19% as business continued to adapt to the country’s new regulatory regime. The board said the “lack of regulatory oversight” created an “unlevel playing field” during the quarter.
“However, we are confident about the prospects for the German market,” added the board. “We expect gaming licenses to be issued soon, bringing stronger enforcement and enabling the group to reestablish itself as a major operator in a fully regulated environment.”
Elsewhere, revenue in Australia increased 19% year-over-year, while revenue in Brazil increased 38%, although revenue growth in Brazil was lower than expected.
Looking at the retail sector, the game’s net revenue reached £636m. Not only is it more than triple his total recorded in the second quarter of 2021, but he is up 2% from the second quarter of 2019 before he was hit by covid-19.
This included 194% growth in the UK, which more than offset the decline in online revenue from that market.
Profit after taking VAT was £2.09bn. However, his cost of goods sold rose to £767.1m and his gross profit to £1.33bn.
Administrative expenses increased, but more slowly than revenue. This means that he more than doubled his operating profit from his core business to £352.6m.
The operator suffered a loss of £106.1m from businesses it did not hold control of, including the BetMGM joint venture with MGM. As a result, his overall operating profit was £246.5m, an increase of 175% year-on-year.
However, the business has lost more than £100 million from foreign exchange movements affecting its liabilities. As a result, his overall profit increased by 43.7% to his £121.7 million.
As a result of these results, Entan reaffirmed its full year earnings before interest, tax, depreciation and amortization (EBITDA) guidance of between £925m and £975m.
“While the economic environment remains uncertain in many markets, we are confident that our customer focus, greater diversification and proven ability to deliver growth will bring further progress to all stakeholders. ” said the board.
In addition to the results, Enten announced a new dividend policy, paying its first dividend since 2019. The business will return £50m at 8.5p per share to shareholders in September.
