Entain reported an increase in net gaming revenue (NGR) and underlying EBITDA during its fiscal 2022, as growth in its retail business more than offset a slight decline in operations and online betting.
The diversified operator has had a significantly busy year, with chief executive Jette Nygaard-Andersen saying the business has experienced “excellent” financial, operational and strategic progress.
Highlights included the completion of five acquisitions that, according to Entain, helped strengthen its position in regulated markets and allowed it to launch in others, including the launch of the Unirkn brand in Brazil and Canada.
Shortly after the end of the year, Entain also made the announcement that it would exit markets without a “clear path” to regulation, with the aim of ensuring that 100% of its revenue comes from regulated markets by the end of 2023.
Nygaard-Andersen said that despite these planned withdrawals, Entain is well positioned for further growth in 2023 and beyond.
“I am particularly proud that Entain leads our industry in responsible gaming and we are now the only global operator exclusively in regulated markets,” said Nygaard-Andersen.
“It’s a testament to the strong progress we’ve made in executing our sustainable growth strategy, and we continue to see a vast array of opportunities around the world as we expand into the $170 billion addressable market we’ve identified.”
“We have a business model that is truly diversified across more than 40 territories, a platform that gives us competitive advantages and a total commitment to providing our growing customer base with a safe environment in which to enjoy our products and services,” he added. Andersen.
“These factors, combined with the strong underlying momentum across our business, mean we continue to look to the future with confidence.”
Entain’s 2022 numbers
Taking a look at Entain’s results for the year ended 31 December 2022, NGR for the 12 months totaled £4.35bn ($5.15bn), up 11.9% from £ 3.89 billion in the previous year.
This resulted in an underlying group earnings before interest, tax, depreciation or amortization (EBITDA) of £993m – which stood out as a 13% increase on the previous year and was at the top of the business’s guidance range.
The trend of strong retail-based growth offsetting a slight decline in online revenue can be seen in this metric; with the company’s online segment down 8% to £828m, while retail was up 319% year-on-year to £280m.
Entain attributed the drop in online revenue as a result of “regulatory changes in key markets”, as well as the return of the vertical after the negative impact of the Covid-19 pandemic.
Entain could face further regulatory pressure in the coming year as the long-awaited publication of the UK Gambling Act Revision White Paper approaches. From a company perspective, it specifically highlighted “regulatory headwinds” as a potential cause for concern.
After accounting for VAT and Goods and Services Tax (GAT), revenue was £4.30 billion, up 12.3% from 2021.
Breaking this performance, Entain’s online business accounted for £3.05bn of overall NGR for the year, a 0.5% year-on-year decline as the operator said this segment business was impacted by Covid-19. 19 in 2021 and absorbed the material effects of regulatory changes, particularly in the UK.
Around £1.58 billion of online NGR came from gaming, while £1.44 billion was attributed to sports NGR, with sports betting down 0.5% to £14.09 billion. The remaining £29.9m in NGR was generated from B2B activities.
Returning to retail, revenue jumped 61.6% to £1.28bn, driven by a strong recovery from Covid-19, particularly in two of Entain’s key markets in the UK and Italy. Belgium was partially affected in early 2022 when venues closed in January, but recovered during the rest of the year.
Sports betting accounted for £705.2m of all retail NGR in 2022, while machine games reached £572.6m. Entain also noted that retail sports betting was 68.0% higher at £3.82 billion.
In terms of other income, it was down 23% year-on-year to £25.1m, mainly due to Entain’s divestment of its foreign exchange business.
Company costs and profits
Looking at spending for the year, cost of sales was up 13.5% at £1.58bn, while Entain also said administrative expenses were up 14.4% to £2.19bn. This meant an operating profit of £522.7m, up 0.9% on the previous year, although £194.1m of this was attributable to joint ventures and associates, after which operating profit was £1. 328.6 million.
Entain also noted £225.7m in total finance costs, including a £112.2m exchange loss on debt instruments, leaving a pre-tax net profit of £102.9m, down 73.8 % compared to the previous year.
The group paid £70m in income tax during 2022, resulting in a net profit of £32.8m, down 88.1% from 2021. After also including a post-tax loss of £13.4m from discontinued operations, Entain was left with a total net profit of £19.5m, a decrease of 92.5% from £260.7m in the previous financial year.
However, EBTIDA for the full year was up 0.3% to £903.9m while underlying EBITDA was up 10.3% to £993.2m.
“Our growth strategy comprises four pillars that will continue to expand our reach, diversify our audience, grow our scale and drive strong sustainable performance across the group,” said Nygaard-Andersen.
“These pillars are leadership in the US; increasing our presence in existing markets; expanding into new regulated markets – both organically and through M&A; and extending into interactive entertainment,” added Entain‘s CEO.
