Slide 1: Q3 Trading and Business Update
Q3 Trading and Business Update 2 Nov 2023
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: Agenda
1 Introduction Jette Nygaard-Andersen, CEO 2 Chairman’s remarks Barry Gibson, Chairman Strategy Agenda 3 Q3 2023 Financial review Rob Wood, CFO & Deputy CEO overview Jette Nygaard-Andersen, CEO 4 Strategic update Satty Bhens, CPTO 5 Q&A 3
Slide 4: Jette Nygaard-Andersen, CEO
Jette Nygaard-Andersen CEO 4
Slide 5: CEO's introduction
CEO’s introduction • We have an attractive, diversified global portfolio, with strong long-term growth prospects • Our near-term performance has been impacted by increased regulatory headwinds & operational challenges in select markets • Our strategy and capital allocation priorities going forward a
Slide 6: Agenda
1 Introduction Jette Nygaard-Andersen, CEO 2 Chairman’s remarks Barry Gibson, Chairman Strategy Agenda 3 Q3 2023 Financial review Rob Wood, CFO & Deputy CEO overview Jette Nygaard-Andersen, CEO 4 Strategic update Satty Bhens, CPTO 5 Q&A 6
Slide 7: Barry Gibson, Chairman
Barry Gibson Chairman 7
Slide 8: Chairman's remarks | Deferred Prosecution Agreement
Chairman’s remarks | Deferred Prosecution Agreement Overhang from legacy operations • Relates to period 2011 - 2017 – business sold in 2017 • Expecting to achieve court approval of DPA in Q4 • Provision of £585m – expected to be paid over 4 years • Ongoing commitments during term of DPA • DPA draws
Slide 9: Chairman's remarks | UK White Paper
Chairman’s remarks | UK White Paper • Welcome the positive step in updating ageing regulatory environment • Clear, and appropriate focus on player protection • Ongoing Entain and UKGC actions aligning with the objectives of the White Paper • Important to avoid growth of black market with over burden
Slide 10: Chairman's remarks | Board strength & support
Chairman’s remarks | Board strength & support • Four new non-executive appointments • Amanda Brown joining the Board on 8 November 2023 • Three further appointments in flight • New capital allocation committee • Management laser focused on operational excellence and integration of, and synergies fro
Slide 11: Agenda
1 Introduction Jette Nygaard-Andersen, CEO 2 Chairman’s remarks Barry Gibson, Chairman Strategy Agenda 3 Q3 2023 Financial review Rob Wood, CFO & Deputy CEO overview Jette Nygaard-Andersen, CEO 4 Strategic update Satty Bhens, CPTO 5 Q&A 11
Slide 12: Rob Wood, CFO & Deputy CEO
Rob Wood CFO & Deputy CEO 12
Slide 13: Group NGR performance
Group NGR performance Track record of strong NGR growth Recent organic Online NGR growth (ex-US) slowed Entain NGR (£bn) FY22 FY23 guide 2Yr CAGR (2022-23) 5.5-5.7 Pro forma ex regulatory +5% L-MSD MSD +11% 4.9 c0.8 Regulatory impacts -9% -ve MSD -ve M-HSD 4.2 0.6 Pro forma Online -5% -ve LSD -ve L-
Slide 14: Trading performance and outlook
Trading performance and outlook Q3 Group NGR growth (cc) Commentary • Group NGR up 9% in Q3, exc BetMGM Q3-23 • BetMGM NGR up 15%; same-state NGR from iGaming +22% YoY Group + 50% of BetMGM +10% • Robust performance across Retail Group ex-US +9% • Weaker than expected proforma Online NGR growth Reta
Slide 15: Strong underlying business with record actives
Strong underlying business with record actives Actives, Entain Online, by quarter 2-year CAGR: 15% 3-year CAGR: 20% 3-year CAGR Q3 YoY: +10% PF +20% YTD YoY: +12% PF 2019 2020 2021 2022 2023 15
Slide 16: Strong EBITDA generation with improving quality
Strong EBITDA generation with improving quality Group EBITDA1, inc 50% BetMGM2,3 +20%4 £0.8bn c£1.0bn3 £0.8bn £0.7bn £0.7bn £1.0bn c£1.0bn £0.8bn £0.9bn £0.8bn -£0.0bn -£0.1bn -£0.2bn -£0.2bn 2019 2020 2021 2022 2023 Cons.3 1. EBITDA pre TAB NZ accounting; Group excl. US 50% BetMGM 2. Translating at
Slide 17: Agenda
1 Introduction Jette Nygaard-Andersen, CEO 2 Chairman’s remarks Barry Gibson, Chairman Strategy Agenda 3 Q3 2023 Financial review Rob Wood, CFO & Deputy CEO overview Jette Nygaard-Andersen, CEO 4 Strategic update Satty Bhens, CPTO 5 Q&A 17
Slide 18: Overview of Entain today
Overview of Entain today £4.8bn £1bn +15% +50% 30+ FY23 Cons.1 NGR2 FY23 Cons.1 EBITDA2 2yr CAGR in actives to Q3’232 US NGR 2yr CAGR to FY23E3 Iconic brands Leadership positions High quality revenue In the most attractive markets, including Sustainable revenue from recreational the US, UK, Italy, A
Slide 19: We are transforming our business
We are transforming our business FROM … … TO … … NEXT Legacy issues and ‘grey Leader in responsible gambling Regulatory market’ operations and 100% regulated markets1 We are addressing key Growth Unfocused portfolio & Leadership positions in the US and areas in order to: portfolio uncertain markets
Slide 20: Our key initiatives to deliver on our 3-year ambition
Our key initiatives to deliver on our 3-year ambition Market focus 1 Portfolio review: More focused portfolio optimised around growth and ROI 2 Key markets: Comprehensive commercial and operational excellence program underway Organic growth 3 Tech & product: Build on capabilities and innovate our sp
Slide 21: Ambition | Our 3-year plan to drive shareholder value
Ambition | Our 3-year plan to drive shareholder value Clear targets Organic Margin US Market Growth Expansion Growth Online organic NGR growth in-line 2026 Online EBITDA Market share with market1 (from 2025, Ex-US) margin2 % (Ex-US) 7%+ 28%+ 20-25% 30% by 2028 Capital Discipline: Allocate for superi
Slide 22: Market review | Prioritising portfolio for growth & ROI
1 Portfolio review Market review | Prioritising portfolio for growth & ROI We have built a highly attractive, diversified portfolio Growth Core Non-Core “Invest for leadership” “Continue profitable growth” “Exit” Markets USA Brazil CEE NZ UK Aus Europe Baltics Kenya Zambia D2C Market growth1 +17% +6
Slide 23: Markets | Majority performing well; select challenges
2 Key markets Markets | Majority performing well; select challenges Majority of portfolio Underperforming markets Markets Market growth1 Markets Market growth1 Key challenges in ‘23 2023-26 (ex-US) 2023-26 (ex-US) +8% × Impact from RG2 62% of +4% implementation, portfolio 4% UK notably since 2022 4%
Slide 24: Our approach | Commercial excellence program
2 Key markets Our approach | Commercial excellence program ~80%+1 of our online NGR each We are laser focused on execution against the key year is driven by existing players drivers of acquisition and retention Annual NGR I New players • Marketing investment & ROI Acquired in-year ~15-20% Customer •
Slide 25: UK | Strong base to return to growth from H2'2024
2 Key markets UK | Strong base to return to growth from H2’2024 Strong underlying performance Continued investments in the UK Growth from H2’24 UK online market share1 Continue to invest 40% Tier 2 & 3 Customer New offers, propositions 30% Operator 1 Acquisition 20% Other Tier 1s Omnichannel brands
Slide 26: Brazil | Business to return to growth in H1'2024
2 Key markets Brazil | Business to return to growth in H1’2024 Outspent but turning around FTDs Allocating more investment Growth in H1’24 Share of media spend, Entain & top competitors1 Increase investment ~25% Competitor #3 Customer Rejuvenate brand Acquisition ~25% Competitor #2 Leverage 365Score
Slide 27: Satty Bhens, Chief Product & Technology Officer
Satty Bhens Chief Product & Technology Officer 27
Slide 28: Product | Largest platform, localisation in-flight
3 Accelerate tech & product agenda Product | Largest platform, localisation in-flight Our global platform has all the …we are now localising, which is increasingly capabilities to compete everywhere… important to win across markets Tailored local preferences & experiences, e.g., Sports NFL SGP in US
Slide 29: Product | Investing in global product leadership
3 Accelerate tech & product agenda Product | Investing in global product leadership Initial proof points Our path forward ✓ New Angstrom-powered markets in US In-house SGP for MLB season Sports ✓ BetMGM uptime1 in-line with market leader Upgraded betbuilder for EPL season ✓ Started rollout of AI-per
Slide 30: Transformation | 28% margin by 2026; 30% by 2028
4 Expand margins Transformation | 28% margin by 2026; 30% by 2028 Online EBITDA margin, progression 2023-2028 30% 2 28% Efficiencies 2 +2 26% 1 +1 -2 +2 28 26 25 20231 Brazil Cost Operating 20262 Operating 20282 taxes Efficiencies leverage leverage & integrations Underlying New Zealand Deep-dive on
Slide 31: Transformation | Implementing £100m cost efficiencies
4 Expand margins Transformation | Implementing £100m cost efficiencies Implementing c£100m of Online gross cost efficiencies Project Romer Multi-year simplification and efficiency program in our online business £m 2023 2024 2025 Online efficiencies 10 50 80 Areas we are addressing include: Migration
Slide 32: US | BetMGM's performance is strong
5 US market growth US | BetMGM’s performance is strong BetMGM NGR growth, $bn #3 Consolidated operator position as top-3 NGR CAGR +50% 1.8-2.0 28 Active markets, +11 since Jan 2022 1.4 Became EBITDA positive in Q2 2023 0.8 0.2 Huge opportunity to capitalise on; $37bn TAM2 2020 2021 2022 2023E1 JV pa
Slide 33: US | We've achieved outsized return on our capital
5 US market growth US | We’ve achieved outsized return on our capital Capital invested vs. market share1 31% We’ve punched above our $5.8bn $5.8bn 29% weight in the US and achieved best-in-class market share return on 17% capital $2.9bn $2.8bn 2 We have prioritised US $1.5bn 7% development in our te
Slide 34: US | We are investing to win share in the US
5 US market growth US | We are investing to win share in the US We launched quickly Investing to win in the US Winning proposition Key upcoming milestones Sports • Leading SGP for MLB season We now have a Entain platform product • New Angstrom-powered markets significantly enabled fast • Unique recr
Slide 35: Capital allocation | Our focus & approach
6 Capital allocation Capital allocation | Our focus & approach ✓ Drive higher market share in the US Organic growth ✓ Reinvestment of cost efficiencies, prioritisation of key “Growth” & “Core” markets ✓ Allocate marketing spend and key Tech & Product localisation resources accordingly ✓ Medium term
Slide 36: Recap | Execution plan to deliver our targets
Recap | Execution plan to deliver our targets Strong fundamentals Our execution plan Clear targets Leadership positions 1 Optimise & prioritise portfolio Organic Growth Global portfolio 7%+ 2 Commercial excellence program Online growth from 2025 Profitable growth (in line with market) 3 Bolster our
Slide 37: Agenda
1 Introduction Jette Nygaard-Andersen, CEO 2 Chairman’s remarks Barry Gibson, Chairman Strategy Agenda 3 Q3 2023 Financial review Rob Wood, CFO & Deputy CEO overview Jette Nygaard-Andersen, CEO 4 Strategic update Satty Bhens, CPTO 5 Q&A 37
Slide 38: Q&A
Q&A 38
Slide 39: Appendix
Appendix 39
Slide 40: Football margin | 3 loss-making weeks since 2019
Football margin | 3 loss-making weeks since 2019 Entain1 football2 online gross win margin3, by week Jan-19 to Oct-23 2019 2020 2021 2022 2023 3 loss-making weeks since 2019, of which 2 were the last two weeks 1. Includes all digital labels on Entain platform and BetMGM 2. Football / Soccer, exclude
Slide 41: Regulation | Breakdown of impacts
Regulation | Breakdown of impacts 2023 estimated Online markets EBITDA impact Drivers New regulatory measures (e.g., spend thresholds, increased affordability UK c£165m checks, AML); impacted our UK online 2021-2023 NGR CAGR by c10pp New sports-betting & gaming license conditions; lack of enforcemen
Slide 42: Financial guidance
Financial guidance 2023 ex-US guidance1 Project Romer efficiencies ▪ c£70m gross Opex savings in 2025 and c£30m Cost of Sales savings ▪ NGR ▪ FY23 Online NGR growth expected to be low double digit positive £m 2023 2024 2025 ▪ FY23 Online proforma NGR growth expected to be low single digit negative O
Slide 43: Financial guidance
Financial guidance Online EBITDA margin1 progression Online EBITDA margin profile (excluding TAB NZ accounting) 2023-2028 Numbers below include the impact of the TAB NZ acquisition (dilutive to margin in early years), but exclude the accounting treatment benefit, i.e. 30% accounting for profit share
Slide 44: TAB NZ guidance and accounting treatment
TAB NZ guidance and accounting treatment Guidance (excluding TAB NZ accounting treatment) Example profile of Income Statement charges under an arrangement of this nature (example shows a 6 year agreement for illustration purposes): ▪ No EBITDA contribution in 2023 & 2024 as business invests in new p
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