Five things we learned from Entain’s Q1 trading update

It might be a new job title but it seems like business will continue as usual for new Entain CEO Stella David. The former Bacardi exec was named the Ladbrokes and Coral parent’s permanent CEO yesterday, having stepped in as interim (for a second time) after Gavin Isaacs departed in February after only joining the operator in September.

David had already taken on the job after Jette Nygaard-Andersen’s abrupt exit in December 2023, providing a steady pair of hands. She had been lined up to become Entain’s new chair but her path has shifted, taking on the top job after shareholders, if media reports are accurate, lobbied for her to lead the business.

And, in delivering a Q1 trading update showing signs of growth after Entain exited 2024 in a positive manner, David is certain on one thing: keep the momentum going. After a period of flux for the London-listed giant, it is hoped David and the experienced senior team behind her will be able to march on to a sunlit upland and away from the frustrations of recent years.

Here, EGR picks out some top talking points from the Q1 trading update’s subsequent earnings call.

Consistency is key

Management labelled the Q1 performance as “better than expected”, with revenue up 9% thanks to good performances in the UK, Brazil and the US-facing BetMGM JV. UK and Ireland online NGR leapt 23% on a constant currency basis alone. And while there was softness in retail and Australia, David said there is little appetite to rip up the blueprint given her new position.

David remarked: “I believe fundamentally that continuity and stability is what makes companies work well. Focusing in on the things that matter has been what has driven us to the good results we’ve got in Q1.

“I go back to this time last year when we were sharing the brutal truths about how we needed to improve operational excellence and how we had to get ahead of the curve; [it] absolutely remains the same now.

“The worst thing this company could do right now is take its foot off the accelerator. My focus is about how we take [the business] to the next level of execution. Because there is an awful lot more to do.”

Brazilian bounce

Over in Brazil, where the regulated market launched on 1 January, there had been concerns among industry heads that the transition could have an impact on the P&L. A series of new taxes and requirements to re-register players and push them through KYC again were hinted as having a negative toll on operations. However, Entain’s Sportingbet brand has shown little sign of lagging, with NGR rising 31% year on year (YoY). A front-of-shirt sponsorship of football giants Palmeiras and a boots-on-the-ground management team were cited as core drivers for growth.

David said: “We’re pleased we had a good Q1. I think, like the rest of the industry, transition is always slightly challenging, and we certainly saw an acceleration through January, February and March.”

Entain CFO and deputy CEO Rob Wood added that while the 31% hike looked good on paper, it was a continuation of strong strategy, while implying that Sportingbet hadn’t had too much of its market share snapped away by rivals.

He said: “In Brazil, while volumes were slower in January are we were re-KYCing that database, we actually had favourable margins. When you look at NGR growth through Q1, it was actually reasonably consistent. So, there’s no real story there.

“I would say that we are pleased with April so far and the start of the [Campeonato Brasileiro] Série A. Q2 is already going well, especially leveraging the Palmeiras sponsorship, which has been a good driver of first-time depositors for us.

“What we can say, is there hasn’t been anything by the way of significant new entrants into the market. The environment doesn’t feel like a wholesale change versus where we were pre-regulation. I think all the same players will be the ones that are dominating the market share in 2025, just as in 2024.”

America first

The £203m acquisition of Angstrom Sports a couple of years ago raised a few eyebrows in the sector, with Entain planning to deploy the pricing and data specialists to power its sports betting offering across BetMGM in the US. The key development was around bet builders, or same game parlays in the US, which has proven to be a major battleground in the market.

To that effect, there was a 4.8 percentage point increase in parlay bet mix at BetMGM in Q1, while bets per active were up 28% YoY. Handle was up 29% and NGR rose 68% to $194m. How much of this can be boiled down solely to Angstrom is hard to say, but when asked if Angstrom could be deployed across Entain’s global portfolio, David and Wood both insisted the US piece remained the target for now.

David noted: “The Angstrom integration really is focused on the US right now. It’s not to say there aren’t opportunities elsewhere in the future, but there’s a lot of things we’re doing with Angstrom which will improve the number of choices for our customers.”

Wood added: “I would say 2025 continues to be US-focused and that’s clear. Two main aspects: delivering Angstrom-ised in-play propositions for the major US sports is a big deliverable for 2025. Secondly, the Angstrom team are working closely with our trading team to improve our pricing. The focus right now is US sports, but you can see that evolving to other sports over time.”

Back to the burrow

Writing in his CEO commentary yesterday, Betsson AB CEO Pontus Lindwall said the company and the sector at large would be able to buffer the current economic headwinds, championing gambling as effectively recession resistant. Speaking to EGR, the Swede said that while the conditions mean consumers will put a stop to “capital-intensive” investments, betting retains a place among disposable spend.

To that point, David was asked if there were any concerns around softer consumer trends. Following Lindwall’s line of thinking, the new CEO said that historical precedents meant there was an underlying confidence in the stability of the business model.

David: “If you’re talking about [potential] consumer softness, I think it’s a really interesting question about how resilient our category is in a period of volatility. I’m very well aware that there are other categories – whether it’s travel and leisure, whether buying big items such cars – there has been a lot of talk in the media about the softness those sectors are facing. We haven’t picked up anything in our experience to date.

“I think it comes down to consumer psychology. When you’re in a period of volatility, we know from historical situations that people tend to go back to the nest and stay at home more. They don’t commit the long-term funds to doing things. While they are being nervous and cautious in those respects, they still want to engage in their favourite sports and they’re having a bit of fun playing games.

“We’ve started April very positively. I think this historical norm, this being a resilient category, is currently proving to be true.”

Yeah, I’m the taxman

One of the final questions during the call related to the UK government’s planned consultation on introducing a single remote gambling tax, scrapping the existing three-tier system in place at the moment.

The proposed Remote Betting & Gaming Duty would replace the 15% pools betting and general betting duty, as well as the 21% online casino rate with a single levy. The Treasury did not release a projected new tax rate, stating that would be the remit of the Budget process. Plus, it would not come into play until October 2027, at the earliest.

The Betting and Gaming Council has warned the move would be “catastrophic” for Britain’s horseracing sector.

David said: “It’s very, very early days. You’re talking about the potential harmonisation of the rates across gaming and sports. It will be a long journey. There is all sorts of legislation that would have to change to enable a harmonisation, which means the earliest we perceive there’d be some change, whatever way it would be, would be late 2027 or early 2028.

“There’s a huge amount of things that can happen between now and then. The industry will be putting its point of view forward as part of that journey. Nothing’s going to happen in the immediate short term.”

The post Five things we learned from Entain’s Q1 trading update first appeared on EGR Intel.

 EGR picks out the key talking points from the FTSE 100 operator’s earnings call, including new CEO Stella David’s blueprint and how fears of soft consumer spending may not apply to the sector
The post Five things we learned from Entain’s Q1 trading update first appeared on EGR Intel.