Entain H1 conference call: ‘We are reawakening sleeping giants’

Key points:

– Entain has focused on improving technology, leading to better data insights, payback periods and different verticals being able to transform without too much red tape from other departments

– Emphasis on deploying local teams and customer-led advertising

– Understanding how to make the business as flexible as possible in current markets, while knowing which brands to reinvest in

Entain has held its conference call to discuss its interim results, hosted by Stella David, CEO; Rob Wood, CFO and Deputy CEO; and Satty Bhens, Chief Product and Technology Officer.

First of all, the call itself immediately created the impression that Entain was stepping up its game.

It was not the standard format of an audio-only call; instead, it was a full conference hall with a panel desk set up with a live video stream, all accompanied by a PowerPoint presentation, both in-person and on screen for those joining remotely – impressive and immersive.

David took to the stage first to introduce the general results for the business, before handing over to Wood to get into the financial results, which were released earlier today.

The biggest point Wood kept emphasising was that while cash flow is expected to be broadly neutral in 2025, he expects this to reach £500m ($672.5m) by 2028.

However, H2 2025 EBITDA will be lower than expected, because the company is investing a lot into marketing this period.

Marketing

Entain has made a reputation for itself in recent years for completing a multitude of M&A deals and then not doing an awful lot about them.

David was insistent that this will no longer be the case: “Among some of our biggest brands, we’ve got some sleeping giants we’re only just beginning to reawaken.”

Ironically, this initiative is being spearheaded by one of the companies Entain acquired in 2023: 365scores.

365scores dove deep into all of the M&A investments – that David herself admitted the company didn’t have much data on as recently as 12 months ago – and made entirely new insights into all of them.

“We need real people talking to real people in real time solving real problems… Then we will have a winning culture” – Entain CEO Stella David

These led to 11% improvement in payback periods while performance marketing spend increased by 16%.

In Spain, 365scores uncovered a legacy brand that Entain is now reinvesting in, which includes a new localised marketing campaign.

Group-wide, brands have benefited from emotional, story-driven advertising that connects with the customer, such as Ladbrokes’ “Ladisfaction” campaign that launched last week.

These efforts led to 15% of  net gaming revenue (NGR) coming from new players, with net revenue retention at 93%.

Different markets

When discussing how the company is still growing in multiple markets, David was clear: “Consistency is the magic ingredient.”

Any recent setbacks at Entain have not dampened the company’s spirit, with David also emphasising that “we have expanded bandwidth and ambition” and “all three of our must-win markets (UK online, Brazil and BetMGM) are performing well.”

In the UK, player volume and spend are increasing, which David attributes to product improvements.

Brazil is seeing minimised customer disruption despite new regulations, while BetMGM is entering “a new phase,” as discussed in the operator’s own results.

David praised Entain’s tech teams, who are working alongside those in BetMGM to improve player experiences, which she believes will lead to £500m in Adjusted EBITDA each year.

David concluded: “My goal for this business is to become a true learning organisation.”

She explained that Entain needs to be constantly learning and relearning about its customers, listening to what they want, their behaviours and what they like; learning how to do business in this industry; and learning how to use its talent to get betting at solutions and innovation.

“We need real people talking to real people in real time solving real problems… Then we will have a winning culture.”

But how can Entain juggle all of these different markets at once? Well, there were a few pillars to this: Flexibility, accessible platforms and regional focuses.

Technology improvements

Bhens took to the stage to highlight the major improvements Entain has made to the platform in the last few months: “We’re pivoting from catching up, to going beyond.”

These include app speeds improving by 40%, around 90% of withdrawals completed under 60 seconds and the platform managing two billion spins a week – or 2,000 spins a second.

In total, 20% of the 150 games added each month are either early access or exclusives to Entain, while 40 billion in-house coins (such as Foxy Dollars) have been redeemed – meaning customers are getting on board with the idea of in-house currency and redeemable prizes, both of which help with retention.

Bhens also noted that the previous company structure was “stifling”, and the reorganisation efforts have been positive. The company has also deployed “local squads” who live locally and can help the business integrate with the community and create specialised feedback on initiatives.

A new in-play football bet builder will roll out this week ahead of the season. Finally, Bhens talked about another key pillar of Entain’s business at the moment: The Central Platform.

Nothing to do with the Central Line, this central platform already exists for many key markets. However, the local platforms give the company a local edge: “We don’t want to compete, we want to lead.”

How can Entain focus on improving so many aspects of its business at once?

Flexibility.

Good to know: Entain’s share price has fallen 12% within the past five days, and while it has fallen 4% since the conference call and the time of writing, there is still room for it to stabilise

Marketing, player accounts, casino and sports betting can all evolve in their own time without waiting for the others to catch up, thanks to them being separated.

The tech teams have made the frameworks as friendly as possible to work on, meaning there is less red tape in the way when upgrading one of the areas. Compliance as a Service (CaaS) also makes this process even faster.

Each step has flexibility, scalability and minimal disruption in mind.

Q&A

Before the Q&A session started, David did want to address one thing: AUSTRAC.

Entain has set aside £50m provisionally for a potential penalty, after the Australian financial regulator confirmed it will pursue proceedings against Entain over alleged AML/CTF breaches in December.

The operator, however, is still in early-stage mediation.

On media speculation about tax

David: Entain is a Great British company that creates massive amounts of tax for the country. We’re a top 20% taxpayer. However, “people should be cautious about the law of unintended consequences,” because tax hikes can lead to less tax if people flee to the black market. This was covered by the KSA recently: “It has been an own goal.”

Wood: Our tax contribution is growing organically, and it’s reassuring that the Treasury does understand the concept of a black market and how higher tax can affect channelisation. It does not matter whether they raise taxes on sports betting or casinos, because the consequences will be the same. If the Government focuses instead on clamping down on the black market, this will create a tax boost.”

“We don’t want to compete, we want to lead” – Chief Product and Technology Officer Satty Bhens

On different markets

Wood: You have to make room for risks and opportunities when branching out to new markets. On one hand, we have the predicted New Zealand 2026 launch with new gambling regulations, while gambling in Poland is being pushed out because of politics. There are also risks with taxes, new regulations after launch, etc.

David: Poland is a long-term competitive market where people have been anticipating the liberalisation of the casino industry. If you race to the bottom to offer a cheap product, you do not set yourself up for long-term success. We are balancing our leading position while waiting for liberalisation with other markets that are doing well, and this is the power of localisation.

The Netherlands has been a challenging market with all the regulations, but we are ahead of where we expected ourselves to be. We expect it will level itself out in time. As for Brazil, it’s very volatile there because regulation has just come in, so the size of the black market is yet to be seen. This will depend on taxes and restrictions, so we will remain agile in our approach to the market.

Wood: With Poland, you have to choose between top-line and EBITDA. There are only two operators making money and we are number one. In Brazil, gaming is performing lower than sports in Brazil. However, in regions like the Netherlands where marketing is so strict, this actually helps our EBITDA.

On spending

David: We’re building a better muscle internally with the 365scores team who keep everything balanced. When looking at different markets, it’s important to be dynamic with the maturity curve and keep learning how best to evolve alongside it. We are always looking for ways to optimise this, and we’re very different from where we were even 12 months ago.

We now have a wealth of data on our investments, thanks to the 365scores team, especially in Spain. A year ago, we would not have invested in legacy brands in Spain, but now that we have a team creating data, it makes a lot of sense to do so.

Wood: We’re happy with the performance of UK retail, the Gambling Commission is also looking into Adult Gaming Centres (AGCs) ran by others that may not have licences, so the retail scene is changing in that way. We’re an omnichannel business, so while our retail might be decreasing by 1-2%, online is still increasing by 11%.

Read this week’s GI Friday for an exclusive interview with Entain CFO and Deputy CEO Wood.