Entain saw a year-on year increase in net gaming revenues (NGR) during its 2022 financial years. This was due to growth in its retail business, which more than compensated for a slight drop in online operations.
The year was busy for the diversified operator, chief executive Jette Nygaard–Andersen (pictured) stating that the company made “excellent” financial and operational progress.
Highlights include five acquisitions Entain stated strengthened its position in regulated market and allowed it to launch in other markets, such as the rollout of the Unirkn trademark in Brazil and Canada.
Entain announced shortly after the year-end that it would be exiting markets with no clear path to regulation. This was in order to ensure that 100% of its revenue is from regulated markets by 2023.
Nygaard Anderson said Entain was well-positioned to continue growth in 2023 and beyond, despite the planned withdrawals.
Nygaard Anderson said, “I am proud that Entain leads the industry in responsible gaming and we are currently the only global operator exclusively in domestically regulated markets.” It is a sign of the solid progress we have made in executing the sustainable growth strategy. We continue to see many opportunities around the globe as we expand into $170bn of market.
“We have a business model which is truly diverse across more than 40 countries, a platform which gives us competitive advantages and a total dedication to providing our ever-growing customer base with a safe environment to enjoy our products.
These factors, along with strong underlying momentum in our business, allow us to continue looking to the future with confidence.”
NGR for full year
Entain’s financial results for the year ended 31/12/2022 show that NGR for the twelve months was PS4.35bn (EUR4.88bn/$5.15bn), an increase of 11.9% over the PS3.89bn the year before.
This resulted to a Group underlying earnings prior to interest, tax, amortization or amortisation of PS993m. This was a 13% increase year-on-year and was at the top of the business’s guidance range.
This metric shows the trend of strong land-based growth offset by a slight decrease in online revenue. The company’s online segment fell 8% to PS828m while retail grew 319% year-on–year to PS280m.
Entain said that the decline in online revenue was due to “regulatory changes made in major markets” and the return of vertical after the negative effects of the Covid-19 pandemic.
Entain could face increased regulatory pressure as the long-awaited publication UK Gambling Act Review White Paper is near. The company’s outlook specifically identified “regulatory headaches” as a concern.
After accounting for VAT, goods and services taxes (GAT), revenue was PS4.30bn. This is 12.3% more than 2021.
This performance was broken down by Entain’s online segment business. It accounted for PS3.05bn overall NGR for 2018, a 0.5% decrease on the previous year. Entain stated that this segment business “lapped” the Covid boosted 2021, and absorbed the material effects of regulatory changes in particular the UK.
Gaming generated some PS1.58bn in online NGR. Sports NGR was attributable to PS1.44bn. With sports wagers declining 0.5% to PS14.09bn, the total amount of online NGR from gaming is PS1.44bn. The PS29.9m of NGR remaining was generated by B2B activities.
Retail sales saw NGR rise 61.6%, to PS1.28bn. This was due to a strong recovery by Covid-19 in Entain’s core markets, the UK and Italy. Belgium was partly affected by venues closing in January 2022, but it recovered over the course of the year.
In 2022, sports betting NGR made up PS705.2m of all retail NGR. Gaming machine NGR was PS572.6m. Entain also reported that retail sports wagers were 68.0% more at PS3.82bn.
Other NGR declined 23.0% to PS25.1m year-on-year, primarily because Entain sold its Exchange business.
Profit and costs
The cost of sales increased 13.5% to PS1.58bn. Entain also reported that administrative expenses rose 14.4% to PS2.19bn. Operating profit increased by 0.9% to PS522.7m. However, PS194.1m was attributable to associates and joint ventures. After that, operating profit was PS328.6m.
Entain also reported PS225.7m total financial expenses, which included a PS112.2m loss due to foreign exchange on debt instruments. Entain’s net profit before taxes was PS102.9m. This is a decrease of 73.8% from the previous year.
In 2022, the group paid PS70.0m income tax, which resulted in a net profit PS32.8m. This is a decrease of 88.1% from 2022. Entain’s net profit was PS19.5m after accounting for a PS13.4m post-tax loss from discontinued operations. This is a 92.5% decrease from PS260.7m the previous year.
EBTIDA for FY19 was 0.3% higher at PS903.9m. However, underlying EBITDA rose 10.3% to PlayStation993.2m.
Nygaard Andersen stated that “our growth strategy consists of four pillars” which will continue to expand our reach, diversify audiences, increase scale, and drive strong, sustainable performance across the group.
These pillars include leadership in the US, growth in existing markets, expansion into new regulated market – both organically or via M&A – and expansion into interactive entertainment.
