Ladbrokes and Coral owner Entain (ENT) reported its 23rd consecutive quarter of double-digit online growth for the three months to September and reiterated full-year profit guidance, although previously flagged launch costs in Holland offset the strong momentum, leaving the shares unchanged at £21.06.
Despite tough year-on-year comparisons, overall net gaming revenues grew 6% in constant currencies while the online unit chipped in with 10% growth, taking year-to-date growth to 21%.
Excluding the German market, where regulatory changes continued to impact the business, online net gaming revenues grew 18% compared with the third quarter of 2020.
The retail estate, which now includes UK, Italy, Belgium, and Ireland, grew revenues by 1% with UK volumes said to be recovering towards pre-pandemic levels while in Europe the company said activity was ‘steadily’ building
STRONG STATESIDE GROWTH
The BetMGM joint venture saw continued strong growth and increased its market share quarter-on-quarter by 1% to 23% across iGaming and sports betting while the company said it was the clear market leader in iGaming with a 32% share.
The company noted industry data for August which showed BetMGM challenging for the number one spot across iGaming and sports betting.
Operations are now live across 16 states including recent launches in Arizona, Wyoming and South Dakota.
Analyst Gregg Johnson at Shore Capital said the uplift in BetMGM’s performance during the quarter ‘underpinned’ Entain’s target of achieving $1 billion of net gaming revenues from the US in 2022.
Johnson continued: ‘The trading performance in Q3 is ahead of expectations. However, the uplift from a strong Q3 is offset by previously announced impact of the licensing process in the Netherlands (at a cost of c£5m per month from 1 October with a license expected to be granted in the first half of next year), with full year EBITDA guidance unchanged at between £850-900m; we maintain our forecast of £887m.’
EXPANDING VISION
As the company articulated at its August capital markets day, it sees its future as a global leader in regulated gambling markets but is also eying expansion into new interactive entertainment areas as the media, entertainment and gaming markets converge.
This wider context has led management to envisage a tripling of the company’s total addressable market to over $160 billion.
The recent unsolicited approach by DraftKings underscores the attractions of Entain’s global position while solid execution of its strategy will likely make it tougher to persuade shareholders to sell out.
