Entain warns about its drop in online revenue

The company is also set to inform shareholders about the progress of ongoing initiatives aimed at bolstering operational efficiency and enhancing shareholder value.

Current Trading

Following the summer season, Online Net Gaming Revenue (NGR) has displayed a mixed performance across the Group, yet, overall, it has been softer than initially expected. Growth in Q3 Online NGR is now anticipated to exhibit a high single-digit increase, and a high single-digit decrease on a proforma basis. The primary contributing factors are:

• Unfavorable sporting outcomes affecting sports margins in September.
• The widespread implementation of industry-leading measures for safer gambling across the Group, with continued regulatory challenges persisting longer than anticipated, particularly in the UK.
• Slower growth than anticipated in Australia and Italy.
• Encouraging underlying Online growth (excluding regulatory impacts), as demonstrated by robust proforma growth in active customer base throughout the quarter.
• Outstanding performance from recent acquisitions, notably SuperSport in Croatia.
• Strong performance in the Retail sector.
• BetMGM's continued strong performance in the US: it remains on course to achieve positive EBITDA in the latter half of 2023; FY2023 NGR is expected to be at the upper end of the $1.8-$2.0 billion guidance range; and the successful implementation of the Single Account Single Wallet, in addition to enhancements in the online sportsbook, which have contributed to a robust start to the NFL season.

The Group now anticipates Online NGR for FY2023 to experience a low double-digit percentage increase, while proforma NGR is projected to decrease by a low single-digit percentage. The expectations for FY2023 EBITDA remain in the range of £1.00 billion to £1.05 billion, supported by robust operational controls.

Actions to Accelerate Operational Strategy and Performance

Over the past three years, Entain has undergone a significant strategic transformation, which has led to an improvement in earnings quality and the alignment of operations to ensure that the Group is positioned as robustly as possible to deliver long-term value to shareholders.

In conjunction with the Q3 trading update scheduled for November 2, 2023, management will provide additional details on the implementation of these actions aimed at accelerating performance and delivery, including:

• A comprehensive market review with a focus on achieving sustainable, long-term organic growth.
• The streamlining of Group structures and operations to enhance operational efficiency and reduce costs.
• A plan for the integration of acquired businesses onto the Group's industry-leading technology platform.
• Optimization of capital allocation priorities.
• Progress in achieving the Group's target Online EBITDA margin of 30%.

Jette Nygaard-Andersen, CEO of Entain, remarked: "We continue to observe robust underlying growth in our online business and are reiterating our EBITDA guidance for the year, despite softer-than-expected revenue growth in Q3 and the ongoing rollout of industry-leading safer gambling measures. We are attracting more customers than ever before to enjoy our products and services. BetMGM remains on track to deliver positive EBITDA in H2, with full-year NGR performance expected at the upper end of our projections. We are particularly excited about the product enhancements that we are introducing during the NFL season.

We have implemented significant changes within the Group over the past three years. Our current focus is on accelerating the initiatives we are undertaking to drive sustainable organic growth, expand our margins, capitalize on the US opportunity, and deliver long-term returns for our shareholders. We maintain confidence in our ability to capitalize on the extensive opportunities that lie ahead, and we eagerly anticipate sharing more details about the changes we are making alongside our Q3 trading update in November."

Notes:

The period pertains to July 1 to September 22, 2023.
Growth estimates are based on a constant currency basis, calculated by converting 2023 and 2022 performances using 2023 exchange rates.