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Entain FY23; NGR up, but operator reports £936.5m loss

Despite growth across its metrics, pro forma results show limited internal growth.

net loss

Entain has released its full-year financial results for 2023. Net gaming revenue (NGR) totalled £4.83bn ($6.15bn), up 11% from FY22.

Underlying EBITDA was up 1%, reaching £1.01bn compared to last year’s £993.2m. Gross profit was also up year-on-year, rising 7% to £2.91bn. 

Despite this, Entain reported a loss in FY23, despite reporting a profit after tax last year. Loss after tax from continuing activities was recorded at £878.7m, compared to a profit of £32.9m in FY22. The total loss (including discontinuing operations) was £936.5m.  

This loss is, in part, due to fines paid by the company in 2023, including a £585m settlement with the UK Crown Prosecution Service (CPS) for Bribery Act breaches from legacy Turkish operations. 

Interim CEO Stella David said: “2023 presented a number of challenges for the group, both industry-wide and Entain-specific. I am extremely proud of how our people around the world came together to navigate the business through an eventful and at times difficult year.  

“We remain confident that our continued focused execution will drive organic growth into 2025 and beyond.” 

Pro forma 

When looking at revenue pro forma, which includes all the company’s acquisitions as if part of the company from 1 January 2022, total group NGR, which includes a 50% share in BetMGM, was up 14%, up 2% on a pro forma basis. Group NGR excluding US operations was up 11%, though was down 2% on a proforma basis. 

Online NGR was up 12%, though down 3% on a pro forma basis. 

Pro forma, retail was up 2%, as was online gaming. However, online sports gaming fell 9%.  

These minimal increases and even losses reported on a pro forma basis indicate that Entain’s acquisitions in 2023 have been a key factor in its annual growth. This is despite complaints placed against the company and former CEO, Jette Nygaard-Andersen, which called the company’s acquisition strategy “tone deaf.” A statement from Eminence Capital in June even went on to say: “While we can support the company pursuing seemingly rational acquisitions, funding them with highly undervalued equity is an empire building, shareholder value-destroying strategy.”

That said, the fact Entain is not growing outside of those acquisitions points to another reason it may not have worked out for the former CEO.

Despite this, Entain remained positive in its choices, stating in November: "We remain confident in our ability to deliver on the significant growth opportunities that are ahead of us.” 

Clearly, these acquisitions have delivered on their promise of improved financial results, though it raises the question of whether the company can deliver on internal growth when its development in FY23 has been so reliant on acquisitions. 

Examples include the acquisition of STS for £750m, Angstrom Sports for £203m and 365scores for £120m.  

BetMGM 

BetMGM is a joint effort between Entain and MGM, of which Entain currently holds a 50% share. In 2023, BetMGM generated $1.96bn, up 36% year-on-year. We reported a detailed breakdown of these results in February.  

BetMGM now owns a 14% market share in sports betting and iGaming in the areas that it operates, including New Jersey, Kentucky and Ohio. We recently spoke with BetMGM VP of Gaming Angus Nisbet about its recently launched Star Trek-themed game in Michigan.  

Q4 Performance 

As well as releasing full-year results, Entain also broke down its Q4. Reported total online operations grew 12%, with online sports up 12% and online gaming up 9%. Retail grew 7%, with BetMGM up 21%. 

Pro forma, total online operations fell 6%, with online gaming down 1% and online sports down 12%. Retail also fell 2%.  

The total group trading performance, including its 50% share in BetMGM, was up 12%, down 1% pro forma.

Entain's share price, however, has suffered this week. Stocks are back below £8: £7.83 to be precise at the time of writing, which represents a 15.7% fall over five days.

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