Entain plc

Good morning all and thank you for joining us for the NTEN Group 2025 Q3 trading update. My name is Carly and I'll be coordinating the call today. If you'd like to register a question during the call, you can do so by pressing star followed by one on your telephone keypad. To remove yourself online or questioning, we'll be star followed by two. And now it's time to hand over to our host, Stella David, CEO. Please go ahead.

Good morning everyone and welcome to today's Q3 results call. I'm delighted to be speaking to you all again and sharing another set of good Entain results. I'm joined by Rob Wood, our CFO and Deputy CEO, and our investor relations team. So sticking with our usual running order, I will start with the Q3 headlines and some highlights of our operational progress. Rob will then dig into the trading performance and outlook for the balance of this year. And then we are going to open it up to your questions. So let's kick off. Entane's transformation continues at pace, and we continue to make strong progress with our strategic priorities. We are definitely getting stronger and fitter every day, and our improving operational execution means we can expand our bandwidth, enabling us to do more across more markets in our portfolio. Our technology underpins everything we do, and it's thanks to our hard-working product and tech teams who are supporting our commercial organizations with better capabilities. And these ongoing tech upgrades are the cornerstone to both Entain and BetMGM's improving performances. All of this hard work is focused on delivering for our customers, providing players with improved product and enhanced experiences. Importantly, our efforts continue to deliver results. Entain is back to consistently delivering growth. Q3 is our fifth consecutive quarter of online growth. having started on our transformation journey at the start of 2024. And importantly, we are rebuilding the resilience of our business to deliver sustainable growth. And I'm incredibly proud of both Entain's high-quality portfolio and the teams around the world who are highly committed to delivering results. Looking at the Q3 headlines, total group NGR, so that's including our 50% share of BetMGM, grew 7% in constant currency. Entain Group NGR grew 5%, with online up 6%, while retail grew 3%. Growth was seen across our portfolio, including the UK, Italy, Croatia, New Zealand, Georgia, Spain, Canada, Austria, and Greece. And, as some of you may well already know, September had very customer-friendly sports results. And statistically, it just happens. So, net of digesting that, Q3 was a really pleasing performance. Similarly, BetMGM's impressive year to date is evidence of the success of the tremendous work that the BetMGM team have been delivering and also Entain's product and tech teams in supporting BetMGM. As you heard from Adam and Gary yesterday, Q3 was another quarter that beat expectations. Driven by the significantly strengthened sports product, our leading iGaming offering, as well as BetMGM's successful player engagement approach. As well as BetMGM updating its 25 guidance, its inflection to sustainable profitability means that we are now comfortably in a position to start returning cash to the parents. We had mentioned this expectation during our H1 results presentation in August, as it is a key pillar of Cashflow Outlook. And I'm delighted that BetMGM confirmed yesterday it is estimating at least $200 million coming back to the parents before the end of the year. So in summary, Entain has a high quality and diverse portfolio of podium positions in our attractive markets. And we're embedding a growth mindset in our business. Our transformation is progressing well and we are delivering tangible results. We've reiterated our guidance for 25 and the strong momentum for both Entain and BetMGM supports our confidence in delivering consistent underlying growth and generating over half a billion of annual cash in 2028. There is clearly still a lot of hard work to do, but the prospects are positive and we are excited about the opportunities ahead. So on that note, I'm now going to hand over to Rob to take you through the trading in more detail. Over to you, Rob.

Thanks, Della. Morning, everyone. I'm delighted that Entain's Q3 results saw us deliver another quarter of consistent growth, including particularly strong results from BetMGM, as you heard yesterday. So let's dig in. And as always, all revenue growth numbers that I quote will be in constant currency. Group NGR, including a half of BetMGM, was up 7%. And within that, online XUS was up 6% and retail was up 3%. Let me start by unpicking the sports margin impact, which took a little shine off the quarter's performance after a run of very customer-friendly results in September. Firstly, and importantly, if we adjust out sports margin noise, then online volumes growth was pleasing at 7% year-on-year in Q3, yet NGR growth was 6% year-on-year. So you can see only a small margin impact on the year-on-year growth. However, the impact versus expected margin was larger than that. And across the quarter, it equated to approximately 20 million pounds of EBITDA. So sports results were unhelpful, but a little volatility is par for the course. And across the year to date, margin is almost exactly in line with expectations. Moving on, and our iGaming business was up strongly again in the quarter with 9% NGR growth year on year. Gaming therefore helped to offset lower sports growth, as sports ended with NGR growth of 1% year on year, on wages growth of 5%. Looking at our markets now, and UK and Ireland continues to perform well, with NGR up 8% in total, with particularly strong growth again in online at 15%. Whilst 15% growth in online is slower than the 21% delivered in H1 as we start to lap the acceleration in the prior year, 15% is likely to again represent market share gains as we benefit from a level regulatory playing field and improved product and marketing. It's also worth noting that UK retail returned to growth in Q3 after a slight decline in H1. Moving to international, where online NGR was up 1% in Q3, as volume growth of 5% was offset by the customer-friendly sports results in September. The impact of adverse results was most pronounced in Brazil, where Q3 NGR was down 11% year-on-year, despite volumes growing by a pleasing 14%. We, of course, expect sports margin to normalize over time, and the volume growth shows why we continue to be excited about the future in Brazil. In Australia, we saw stabilized volumes, but NGR was down 7%, again reflecting adverse sports results. Italy continues to perform in line with expectations and maintain share, with online up 5% year-on-year and retail up 8%. In addition, our high-quality, diverse portfolio saw many other sizeable online markets performing strongly. New Zealand, Georgia, Spain, Canada, Austria and Greece all delivered strong double-digit growth in Q3. This not only showcased our strength across many geographies, but also helped us to digest declines in the Netherlands and Belgium following regulatory changes in 2024. We are now lapping those changes in both markets and therefore expect to see a more stabilized performance looking forwards. Entain CE continues to perform well with NGR up 10%. Online was up 9% and retail was up 11%. Both Poland and Croatia reported strong growth and we continue to be leaders in those markets. Finally, BetMGM, and as you saw from yesterday's updates, Q3 was another quarter of outperformance coming in ahead of expectations. Moving on to Outlook for the rest of the year, and I'm pleased to be reiterating our 2025 EBITDA guidance range of £1,100,000 to £1,150,000. we've managed to absorb the sports margin impact of approximately £20 million and remain comfortable with where consensus sits. We also continue to expect 2025 online NGR growth of approximately 7% on a constant currency basis or mid-single digits on a reported basis. BetMGM continues to see strong momentum and yesterday upgraded both its NGR and EBITDA guidance for the year, to NGR of at least $2.75 billion and EBITDA of approximately $200 million. Significantly, BetMGM also confirmed they anticipate returning cash of at least $200 million to Entain and MGM before year-end. Entain's share of this distribution can be added to our previous guidance of neutral adjusted cash flow for the year, which did not anticipate cash from BetMGM this year. So in summary, Entain is firmly back to continuing to deliver consistent growth quarter after quarter, growing at least in line with our markets. We're making great progress with our strategic priorities, in particular underpinned by significant tech improvements, and we have pre-fits working, both at Entain and BetMGM. Our Q3 results also demonstrate the quality of our business, the sustainability of our earnings, and the strength of our podium positions across our diverse portfolio. Coupled with Entain's earnings growth, BetMGM's milestone of starting to return cash to parents reinforces the clear pathway to our target of at least £500 million of adjusted cash flow from 2028. We're excited for the final few months of 2025, and we're well-placed to deliver on our many opportunities through 2026 and beyond. With that, I'll hand the call to the operator to open for Q&A.