- Q1 revenue falls less than expected
- US market share maintained
- New CEO could be announced imminently
After a challenging couple of years amid pressure from activist investors to improve performance, bookmaker Entain (ENT) said first quarter net gaming revenue including its 50/50 joint venture with BetMGM fell 3%.
Consensus analyst expectations compiled by the company were looking for a bigger drop in net gaming revenue of between 4% and 6%, giving the shares a welcome boost, up almost 2% to 821.4p.
Over the last year shares in the Ladbrokes and Coral owner are down around 37% compared with a 1% fall in the FTSE 100 index.
WHAT DID THE COMPANY SAY?
Interim CEO Stella David commented: ‘Our Q1 performance was in line with our expectations, with growth reflecting both strong performances in many of our markets as well as known challenges in others.
‘We are particularly encouraged by the level of customer engagement in the US following a successful Super Bowl and March Madness, as well as our return to growth in Brazil following the changes we implemented.
‘There is still more to do, but the team is fully engaged in delivering operational improvements, product enhancements, as well as greater organisational agility and efficiency.’
One bright spot was a material improvement in group proforma online revenue which fell 2% compared with the 6% fall reported in the last two quarters. Proforma data reflects acquisitions made during 2023.
Performance was helped by an 11% increase in active customers. Regulatory burdens continued to impact the UK and Ireland with net gaming revenue down 7%.
BetMGM saw net gaming revenue grow 2% year on year supported by continuing strength in iGaming offset by customer-friendly win margins. Adjusting for the impact on sports margin, the company said revenue would have registered growth in high single digit.
EXPERT VIEWS
Shore Capital’s Greg Johnson said: ‘Overall, we would see the update as consistent with full year assumptions, as it looks to put a difficult couple of years behind it and return to growth.’
Johnson added that he hopes to see ‘modest’ growth in the US move up as the year progresses.
Russ Mould, investment director at AJ Bell, commented: ‘The Ladbrokes owner counted the significant cost of betting regulations in the UK and Ireland. While the US has been seen as the golden goose, there are signs of slowing growth in its Bet MGM joint venture as competitive pressures ramp up.
‘There has been speculation the company might look to streamline its operations by selling off some of its international brands although any radical shake-up of the business will likely have to wait until the company appoints a permanent CEO to take over from interim chief executive, Stella David.
‘An appointment is thought to be imminent and whoever assumes the top job will face a full in-tray from day one.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor (James Crux) own shares in AJ Bell.
