Entain PLC · LSE:ENT
Entain — H1 2024 Earnings Presentation
38 slides from Entain's earnings presentation, Aug 8, 2024
Slide 1: 2024 Interim Results
2024 Interim Results 8 August 2024
Slide 2: Disclaimer
Disclaimer NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION. This presentation has been prepared by Entain PLC (“Entain”) so
Slide 3: Stella David
Stella David Interim CEO & Chair Designate 3
Slide 4: Agenda
Overview Stella David, Interim CEO & Chair Designate Financial review Rob Wood, CFO & Deputy CEO Agenda Strategic performance Sameer Deen, CCO Satty Bhens, CPTO BetMGM & summary Stella David, Interim CEO & Chair Designate Q&A 4
Slide 5: Focused strategic priorities
Focused strategic priorities Vision A leading player in the global sports betting & gaming sector Purpose To deliver the most entertaining customer experience supported by market-leading player protection Strategic pillars Organic Margin US market growth expansion growth Drive margin Grow presence i
Slide 6: 1H24 Overview
1H24 Overview Encouraging H1 performance demonstrating effective strategic progress o Improving underlying growth o Successful Euros with stronger than expected sports margin Focused operational execution in “must win” markets - progress is bearing fruit o Simplified customer journey o Product & Tec
Slide 7: Rob Wood
Zntain Rob Wood CFO & Deputy CEO
Slide 8: Key financial highlights 1H24
Key financial highlights 1H24 Net Gaming Revenue Net Gaming Revenue EBITDA (inc. 50% BetMGM) (exc. 50% BetMGM) adj. £2.9bn £2.6bn £524m +6%, +8%cc (proforma 0%cc) +6%, +8%cc (proforma 0%cc, +5% (proforma -4%cc) of which Online +1%cc, Retail -4%cc) EPS exc. US1 Leverage Interim adj. diluted 3.2x Divi
Slide 9: 1H24 EBITDA bridge
1H24 EBITDA bridge £+24m YoY (+5%) › Proforma EBITDA -4%cc YoY › UK EBITDA £-43m YoY › Primarily reflects 2023 regulatory measures in Online, which we expect to lap in H2 › International EBITDA £+44m YoY › Benefit of acquisitions (£+27m inc. NZ accounting) and underlying EBITDA growth › CEE EBITDA £
Slide 10: 1H24 Segmental performance
1H24 Segmental performance Net Gaming Revenue Regional Online NGR Group1 Online1 Retail Segment Region % of NGR1 YoY Growth % of NGR YoY % of NGR YoY % of NGR YoY UK&I UK & Ireland 21% (8%) UK&I 34% (6%) 21% (8%) 73% (4%) Australia 10% 0% Intl 45% 3% 52% 4% 21% (4%) Italy 7% (3%) CEE 8% 12% 9% 13% 6
Slide 11: 1H24 Cashflow and net debt
1H24 Cashflow and net debt As at 30 June Key metrics 2024 2023 › Underlying free cashflow generation of EBITDA1 £524m £499m £324m Underlying free cashflow2 £324m £314m › Leverage of 3.2x (before investment in BetMGM/acquisitions) › 3.7x inc. impact of DPA settlement Net investment in acquisitions/Be
Slide 12: Project Romer upgrade - identified further savings
Project Romer upgrade - identified further savings Margin expansion achieved on track upgraded £m 2023 2024 2025 2026 Simplifying Entain’s operating model Operating Expenses 10 35 40 70 focused on customer experience Cost of Sales - - 30 30 Delivering technology at scale redesigned product and tech
Slide 13: Outlook for 2024 - guidance upgraded
Outlook for 2024 - guidance upgraded 2024 Online NGR guidance upgrade Online proforma NGR now expected to grow low single-digit, on a constant currency basis Implies reported Online NGR growth of mid-to-high single-digit, on a constant currency basis • Q2 ahead of expectations (Online proforma NGR +
Slide 14: Sameer Deen
Sameer Deen Chief Commercial Officer 14
Slide 15: We defined three commercial priorities
We defined three commercial priorities Brazil turnaround Our fastest growing market Organic Margin growth expansion UK&I turnaround Our single largest market US market Entain Online organic growth growth Underpinned by UK&I and Brazil turnarounds 15
Slide 16: We are delivering on our commitments
We are delivering on our commitments Brazil UK&I Entain Online NGR, YoY Online NGR, YoY Online NGR, YoY 48% 5% 9% 0% 4% 2% 8% 7% 6% 6% 15% 9% 9% 21% 17% Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2023 2024 2023 2024 2023 2024 Q2’24 pre-Copa1 = 38% Q2’24 pre-Euros2 = (10%) Q2’24 pre-Euro/Copa2 = Fl
Slide 17: Brazil
Brazil Our H1 2024 achievements Effectively turned around the business An ongoing turnaround moving from double-digit YoY NGR decline in 2023, up to double digit YoY growth in H1 2024 Acquisition & Retention (Trailing 12 months, Dec’22 = 100) Accelerated player acquisition increasing investment in p
Slide 18: UK & Ireland
UK & Ireland Our H1 2024 achievements Onboarded new management team Stemming decline in NGR now exclusively focused on UK & Ireland, with combined responsibility for both Online and Retail Weekly Gaming Online NGR (Trailing 3 months, Dec’22 = 100) Began to enhance our product delivering over 200 UX
Slide 19: Satty Bhens
Satty Bhens Chief Product & Technology Officer 19
Slide 20: Product & Tech - Highlights from 1H24
Product & Tech - Highlights from 1H24 Platform New BetMGM app in Nevada MLB SGP Handle Sports Differentiated SGP for MLB & NBA Optimise Bet Builders for Euros +100% vs 2023 season Average Player Days Gaming Coin Economy Ladbrokes redesign development +13% following launch of Coral Coins Player Conti
Slide 21: Product & Tech - 2024 and onwards
Product & Tech - 2024 and onwards Platform Nevada SASW1 and omni-channel features Q3 Angstrom markets for all big 4 US Sports Q3-4 Upgraded in-house Bet Builder for EPL Aug Sports New, differentiated SGP markets for NFL Aug Improved quick bet and betslip experience Q4 Omni Jackpots across BetMGM / M
Slide 22: Stella David
Stella David Interim CEO & Chair Designate 22
Slide 23: BetMGM laying groundwork for growth
BetMGM laying groundwork for growth US market growth Strengthen customer offering H1 2024 net revenue $1.0bn1 delivering OSB & iGaming roadmap Market share stabilisation 13%2 consolidated share and 22%3 iGaming share Player acquisition & retention iGaming contribution c$400m4 investing behind improv
Slide 24: Summary
Summary Clear strategic plan Encouraging H1 performance Upgraded 2024 guidance Continued focused execution in “must-win” markets Well positioned for growth into 2025 & beyond 24
Slide 25: Q&A
Q&A Zntain
Slide 26: Appendix
Zntain Appendix
Slide 27: 2024 Guidance
2024 Guidance * Items in pink denote changes to 7th March 2024 guidance Group Cashflow • Full year EBITDA in the range of £1,040m - £1,090m • Working capital neutral • Underlying capex c£255m plus an additional c£25m license costs • Cash interest c£265m, plus c£15m IFRS 161 Online • DPA settlement p
Slide 28: 2024 Q2 proforma trading
2024 Q2 proforma trading NGR (proforma cc) Q1 2024 Q2 2024 H1 2024 › Q1 benefitted from an additional day of trading due to leap UK & Ireland (7%) (5%) (6%) year International (2%) 7% 3% › Q2 Group NGR growth (+3%) ahead of Q1 (-3%) CEE 11% 13% 12% Total Group (exc. US) (3%) 2% 0% › Q2 Online NGR gr
Slide 29: Financials: Group Income Statement
Financials: Group Income Statement Group NGR +8% cc1, flat on a proforma4 basis with proforma Online NGR +1%cc1 4 4 Half Year ended 20244 20234 Change CC1 Group NGR +6% (+8% cc1), flat proforma4 (Online +1%cc1, Retail -4%cc1) 30 June £m £m % % • UK NGR -6%cc1 with Online -8%cc1 and Retail -4%cc1 Net
Slide 30: UK & Ireland
UK & Ireland NGR down -6%cc1 with Online (-8%cc1) continuing to lap regulatory measures and Retail (-4%cc1) performing in line with expectations given gaming cabinet refresh timing Half Year ended Total Online Retail NGR -6%cc1 with Online -8%cc1 and Retail -4%cc1 30 June • Online NGR -8%cc1 as we c
Slide 31: International
International Proforma4 NGR up +3%cc1 reflecting good underlying performance in our key markets offset by poor Italian sports margins Half Year ended Total Online Retail NGR +7% (+10%cc1) with Online +7% (+11%cc1) and Retail 30 June 20243 20233 Change 20243 20233 Change 20243 20233 Change +5% (+8%cc
Slide 32: CEE (Croatia and Poland)
CEE (Croatia and Poland) Proforma4 NGR up +12%cc1 reflecting good underlying performance in both Croatia (SuperSport) and Poland (STS) Half Year ended Total Online Retail NGR +126% (+131%cc1) with Online +130% (+136%cc1) and 30 June 20243 20233 Change 20243 20233 Change 20243 20233 Change Retail +10
Slide 33: Financials: Statutory Income Statement
Financials: Statutory Income Statement Strong operating profit, +20% ahead of 2022 Period ended 20241 20231 Change Underlying depreciation and amortisation £170m 30 June £m £m % • Increase on 2023 driven largely by acquired businesses as well as recent Underlying EBITDA 524 499 5% investment in prod
Slide 34: Financials: Separately disclosed items
Financials: Separately disclosed items One-off cash costs of £153m relating to payments under the DPA, delivery costs for Project Romer and a legal settlement against the disposed Intertrader business Period ended Profit & Loss Cashflow Legal settlement (£88m) 30 June • Payments associated with the
Slide 35: Financials: Cashflow
Financials: Cashflow Strong underlying free cashflow generation with closing net debt of £3.3bn and leverage 3.2x Period ended 2024 2023 Underlying working capital inflow of £53m 30 June £m £m • Largely due to timing differences EBITDA 524 499 Adjusted net working capital1 53 56 Capital expenditure
Slide 36: Financials: Net debt
Financials: Net debt Closing leverage of 3.2x (3.7x incl. DPA liability) with sufficient liquidity to support the Group’s strategy and obligations Period ended Par Value Issue costs/ Total Net debt £3,329m or 3.2x (3.7x incl. DPA liability) 30 June 2024 £m Premium £m £m • Net debt includes a c£90m F
Slide 37: Additional information
Zntain Additional information
Slide 38: Channel split
Channel split Online Retail Half Year ended 20243 20233 Change CC1 Proforma4 Half Year ended 20243 20233 Change CC1 Proforma4 30 June £m £m % % CC1 % 30 June £m £m % % CC1 % Sports wagers 7,164 6,674 7% 10% (2%) Sports wagers 2,303 2,171 6% 7% (1%) Sports margin 14.7% 13.9% 0.8pp 0.8pp 0.1pp Sports