Entain reported an 8% rise in net gaming revenue (NGR), when ignoring currency moves and the US joint venture. Performance was driven by a 10% rise in online NGR, with a smaller 2% rise from the retail channel.
The US joint venture, BetMGM, saw a 34% rise in NGR and recorded positive cash profit (EBITDA) of $22mn.
Guidance was reiterated, pointing to mid-single-digit NGR growth and cash profit of around £1.1bn (flat year-on-year). BetMGM is expected to generate positive cash profit for the year.
Stella David has been confirmed as permanent CEO.
The shares rose 3.0% in early trading.
Our view
Entain delivered an upbeat set of first quarter numbers and commentary, with Stella David being confirmed as permanent CEO helping to end some overhanging uncertainty. Trading has been strong in the online channels, with no signs of a consumer slowdown in the wake of global uncertainty.
Bricks-and-mortar operations are holding growth back a bit, but with online firmly the direction of travel, we’re not too concerned. For the purposes of maintaining or gaining market share, we still believe in the importance of a physical presence.
Entain’s biggest revenue generator remains the UK & Ireland (UK&I), which saw some very strong growth at the end of 2024 and continued momentum into the first part of the new year. Comparisons get tougher as we move through the year, so growth is expected to slow from here.
Entain appears to be through the worst of recent regulatory headwinds, but further clampdowns can’t be ruled out. UK&I trading started strongly in 2025 but is expected to normalise later in the year. Fragile consumer confidence and cost headwinds remain risks to be aware of.
But there are more exciting opportunities overseas. One such example is Brazil, the fastest-growing market outside the United States. Entain is already well established here and was an early applicant for a license in a new regulatory framework. This opens up commercial opportunities, but on the flipside new gaming taxes are putting a brake on margins.
Improving profitability is turning out to be harder than expected with online margins expected to remain static in 2025. With 'Project Romer' on track to deliver £100mn of annualised cost savings by 2026 there’s some scope for improvement in future years. But we're not getting too excited until some results come through.
Entain’s hope of cracking the US rests with its joint venture, BetMGM. Recent performance has been strong, and a large part of why Entain shares have seen a bump in sentiment over recent weeks. There’s now a clear path to positive cash profit over 2025 and the business looks to be in a much better place than it was a year ago.
Entain looks to be overcoming recent challenges and there are some attractive growth prospects to go for. For those willing to accept the higher risk that accompanies the sector, the valuation doesn’t look too demanding. There are no guarantees, and risks from tough US competition and the potential for a consumer slowdown are ever present.
Environmental, social and governance (ESG) risk
Consumer services companies are medium risk in terms of ESG, and very few companies excel at managing them. That leaves plenty of opportunity for forward-thinking firms. Product governance concerns are a primary driver of this risk, along with the environmental and social impact of those products and services. Additional material issues to the industry are resource use and waste, and labour relations.
Entain’s overall management of material ESG issues is strong.
Entain has established a board-level ESG committee overseeing issues like safer betting, regulatory compliance, and anti-bribery. The company has strong policies on responsible gambling, anti-bribery, and whistleblowing, but needs improvement in responsible marketing, data privacy, and political involvement.
Entain key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
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