Entain plc

Good morning everybody and welcome to Entain's 2025 results presentation. I'm delighted to be here to present a strong set of results. I'm joined this morning on stage by Rob Wood, our CFO and Deputy CFO and I also have members, by the way can you hear me? Good, good. OK. Always helps in a presentation to be heard, I think. Anyway, I'm also joined by the IR team here in the audience. We also have senior members of the executive team in the audience as well. And we have our new CFO designate, Michael Snape, who's in the front row as well. So welcome to everybody. And now onto the agenda. I'm going to start with the headlines and some of the highlights of our strong progress. After that, Rob will then take you through the financials and provide you with the guidelines for 2026. And then it's going to be back to me to discuss our strategic delivery, how our priorities are evolving to further accelerate our performance, and why we have confidence in our pathway to earnings growth, margin expansion, and cash generation, including our conviction that we are going to hit at least $500 million of annual adjusted cash flow from 2028. And then finally, I will briefly wrap up before we open everything to your questions. But before I actually do move on to 2025 financial performance, this is the first time that I have spoken publicly since the UK budget back in November. The UK government's decision to dramatically increase taxes on the gambling sector was extremely disappointing. It opens the door to the illegal black market who pay no tax, do not have a license, and offer no player protections. However, During this period of turmoil, we will invest wisely in the UK and we will seize the opportunity to gain share from the long tail of subscale operators who quite frankly are ill-equipped to withstand this impact. Okay, now turning to our results. 2025 has been a good year for the group. We delivered against our strategic priorities and achieved a strong financial performance. with EBITDA for both Entain and BetMGM ahead of expectations. Importantly, growth was broad-based and underpinned by strong volume growth, which demonstrates the underlying health of the business. Online volumes were up 7% year on year in 2025, and impressively, it was up 9% in Q4. Throughout 2025, online business consistently delivered growth, and we now have seven consecutive quarters of revenue growth online. And that is despite starting to lap some tough comps. The UK continues to be a standout performance, but also there are markets like Spain, Canada, Greece, Georgia, New Zealand, all showing strong double-digit growth. And our joint venture, BetMGM, produced an excellent year of strong and profitable growth. We also enjoyed efficiency improvements. Entain's EBITDA was up 8% year on year to 1.16 billion pounds. And including our share of BetMGM, EBITDA was up an impressive 28% to 1.244 billion pounds. The EBITDA performance and the stronger than expected cash return from BetMGM has driven a meaningful improvement in our adjusted cash flow, again, ahead of expectations. So our improvement journey is working and it is delivering. Our diversified portfolio of podium positions provides resilience and scale advantages that matter more than ever now. Building on this momentum, we have evolved our strategic priorities to further optimize how we work. Enhance profitability, drive meaningful cash generation. So in summary, 2025 has been a strong year. The business is in good shape, and we're confident in our ability to not only navigate the challenges, but to emerge stronger. And with that, I'll temporarily hand over to Rob.

Thanks, Stella. Morning, everyone. So for the eighth and final time, I'm delighted to be delivering the full year results presentation. And it's a pleasure to present strong numbers again before I hand over the baton to Mike. It's a familiar format for me this morning, so let me jump straight in. And as usual, all revenue and EBITDA growth numbers that I quote are in constant currency unless stated otherwise. So starting with revenue, and I'm really pleased with the growth we delivered across the whole group. Total revenue, including 50% of Bed MGM, was up by nearly half a billion pounds to 6.4 billion, or up 8% year on year. Within that, online NGR XUS was 3.9 billion pounds, up 6% year on year. And barring adverse sports results in Q4, that growth number would have been 7% in line with volume growth for the year. Onto EBITDA, which came in ahead of expectations for both BetMGM and Entain. Ex-US EBITDA of 1.16 billion pounds beat our guidance and was up 8% year on year despite digesting new taxes from Brazil following their new regulatory regime. Online EBITDA margin also beat guidance, and I'm delighted to say it was up 0.4 percentage points year on year, despite a 1.4 percentage point drag from Brazil taxes. So that means that our scale growth and improving operational execution drove an underlying 1.8 percentage point margin improvement, which is a key highlight of the year. So with EBITDA beats from both Entain and BetMGM, total group EBITDA was 1.24 billion pounds, which was up a very strong 28% on the prior year. And that EBITDA growth led to equally impressive EPS growth, which more than doubled to 62 pence. Moving on to adjusted cash flow, which is a key measure for us, and I'm delighted to report a strong year-on-year improvement from an outflow in 2024 to an inflow of 151 million pounds in 2025. 151 million pounds is comfortably ahead of expectations and was driven by both the Entain EBITDA beat and higher than expected cash from BetMGM. Onto dividends, we've declared a final dividend of 9.8 pence per share, up 5% year on year, which is consistent with the half year and our progressive dividend policy. Finally, leverage, we've added a look through leverage metric, which better reflects the group's leverage position. What do we mean by look through? On the debt side of the equation, we include the outstanding DPA payments and the balance sheet value of the CE minority. And on the EBITDA side, we include our 50% share of BetMGM. And as the slide shows, look through leverage at year end was 3.6 times, which is down significantly from 4.3 times at the end of 2024 due to both EBITDA growth, but also paying down the DPA. On a reported basis, leverage has come in at 3.1 times, flat year on year as expected, and available cash remains strong at over 900 million pounds. Let's turn now to our online revenue performance, XUS, over recent quarters. And this chart shows two lines, one for NGR growth, which includes volatility from sports margin, and one for volume growth, which adjusts NGR to remove any impact from sports margin, and is therefore a clean measure of underlying growth. Two particularly satisfying call-outs. Firstly, we've now delivered seven consecutive quarters of growth, all on an organic basis, evidencing the structural growth in our business model. And secondly, we maintain strong volume growth into the second half of the year, despite lapping the voluntary code in the UK in the summer. No doubt there'll be some recycling benefit to volumes in H2, given margin was below expectation in both Q3 and Q4, but volumes were consistently strong and grew 7% across the year. So that means we're growing at least in line with our markets and we enter 2026 with continued momentum. Now for the eagle-eyed amongst you, you'll note this chart's not quite the same as we've shown previously. The prior version normalized for Euro 2024, and it adjusted the current year margin to a normalized margin, meaning that volatility from the prior year margin still impacts the picture. But that version is included in the appendix. Now to our usual market breakdown. And again, it's a strong picture with growth coming from across the portfolio. Our largest market, UK&I, continues to be a standout performer, delivering growth of 15% in online, well in excess of market growth as we continue to regain market share. We also saw sustained double digit volume growth in the UK throughout every quarter of 2025. And UK retail also saw market share gains as we were flat like for like across the year in a market which declined by mid single digits. International online NGR grew 2%, slightly behind volume growth of 4% due to soft margins, especially in Brazil and also Australia. Importantly, the second half saw an acceleration in volumes from 1% in H1 to 7% in H2, helped by lapping the regulatory changes in 2024 from Belgium and Netherlands. If we look now by market within international, Brazil had a tough sport margin in H2, falling three percentage points year on year. So consequently, NGR declined in H2 and brought growth for the year down to flat. However, on the plus side, volumes were up 13% over the year. Market share was maintained over H2, so we know other operators were hit by a poor margin too. And we delivered a positive contribution to EBITDA, despite the new regulation and high competition. Australia Next, where customer-friendly results at several tentpole events suppressed NGR, particularly in the second half of the year. Volume growth fared better, with 3% growth in H2, as our refresh management team have been a catalyst for improving performance and improving profitability. Italy online was up 5%, growing NGR consistently by mid-single digits in every quarter of the year. And Italy retail also fared well, with 7% NGR growth over the year. Other large markets in international continued to see double-digit growth, including New Zealand, Georgia, and Spain on this page, but also Canada, Greece, and parts of the Baltics and Nordics as well. CEE next, and both Croatia and Poland deliver growth in both NGR and EBITDA and retain their market leadership positions in those markets. And finally, BetMGM also reported an outstanding performance with 34% growth in online revenue. The key takeaway from this slide should be the unrivaled broad-based growth that Entain enjoys across the diversified portfolio. Looking forwards, we're targeting growth across every one of these online markets in 2026, which positions us very well for 26 and beyond. Moving on now to EBITDA which came in ahead of expectations for both Entain and BetMGM. This slide shows our year-on-year bridge with EBITDA excluding BetMGM on the left and then EBITDA including BetMGM on the right. Starting on the left, Entain's EBITDA grew 7%, or up 71 million pounds on a reported basis. That 7% becomes 8% on a constant currency basis, and it would be 14% excluding the new Brazil taxes. As usual, as the left-hand side chart shows, our online business is the main growth engine, adding 136 million pounds year on year. Where did that come from? Three things. Firstly, NGR growth, as we've looked at on the prior slides. Two, efficiency savings, particularly within cost of sales, as our online gross profit margin increased a whole percentage point before Brazil tax. And thirdly, improved marketing returns, enabling us to hold spend broadly flat year on year in absolute terms, thereby improving margin. Retail now, and we saw EBITDA up 16 million pounds year on year, helped by a favorable margin versus our expectations. Then, in addition to Entane's £71 million year-on-year increase from the left-hand side, the right-hand chart adds our share of BED MGM's significant EBITDA improvement of £178 million year-on-year as it inflected to profitability, which gives an all-in total group EBITDA of £1.244 billion, up almost £250 million year-on-year. That's an impressive 25% growth on a reported basis and a touch higher at 28% in constant currency. And that's all organic growth. And as I mentioned earlier, that EBITDA growth is the primary driver of why EPS more than doubled last year. Let's now take a closer look at cash flow and leverage. And as always, there's a detailed cash flow provided in the appendix. As a reminder, adjusted cash flow is effectively a distributable cash, i.e. cash flow pre-equity dividends, and we also exclude working capital noise and strip out M&A and debt movements. In 2025, we delivered adjusted cash flow of £151 million, which is meaningfully ahead of expectations. You'll remember a year ago, I had guided adjusted cash flow to be broadly neutral, and then by Q3, we were ahead of plan, particularly thanks to BetMGM, and so guidance effectively moved from neutral to £75 million, and then we beat that too. So what drove the outperformance? Firstly, Entain's EBITDA beat guidance. And secondly, BetMGM returned more cash to parents than guided, $270 million in total for 2025, which far exceeded expectation. And finally, a net favorable movement across other cash items, including lower interest costs following our debt refinancing efforts last year. Net debt ended the year at 3.6 billion pounds, with the improvement in adjusted cash flow offset by an FX translation bad guy of over 100 million pounds, and the working capital outflow that was as expected. So overall, reported leverage of 3.1 times is in line with where we expected it to be, but more insightfully, look-through leverage of 3.6 times saw a meaningful improvement, down from 4.3 times in the prior year, reflecting EBITDA growth, improved cash flow, and a reduction in the remaining DPA balance. So our cash flow and look through leverage improved significantly. Our available cash remains strong at over 900 million pounds. And we have a healthy debt maturity profile with our next significant maturity of around 20% of the debt, not falling due until 2028. A few quick comments on BetMGM now. Won't be new news, but it's still important given its significance to the group's priorities, particularly cash generation. BetMGM had a fantastic year and delivered ahead of its upgraded expectations with total revenues up 33% and EBITDA up over $460 million year on year as it moved into profitability. This inflection triggered the start of cash returns to parents, with $270 million distributed in 2025, including excess cash from the 2024 year end. The strong performance last year was driven by BetMGM's disciplined execution, underpinned by a leading iGaming offering, and BetMGM remains on track to deliver approximately $500 million of adjusted EBITDA in 2027. Since we created BetMGM around eight years ago, total net investment between parents now sits at almost exactly $1 billion So with approximately 500 million of EBITDA next year, it's easy to see that the ROI on that investment has been excellent. Now, last slide from me, the outlook for 2026. And remember, the appendix includes a detailed guidance slide for modeling purposes, as well as a slide on the BetMGM parent fee mechanics. To be consistent with prior years, when I referred to Entain EBITDA, this is before parent fee income, which does start in 2026. So for 2026, we expect online NGR growth of 5% to 7% on a constant currency basis, with broad-based growth across the portfolio. Online EBITDA margin is expected to drop to 23 to 24% in 2026, following the increase in UK gaming taxes, including our expectation of mitigating approximately 25% of that cost in 2026. Stella will talk about it more shortly, but our upgraded mitigation expectation today is to improve cost mitigation to over 50% of the UK tax impact from 2027 onwards. The efficiency plans which Stella will take you through will support an upward trajectory for both EBITDA and EBITDA margin from 2027. So with 5% to 7% online NGR growth and 23% to 24% online EBITDA margin, we're comfortable with current market expectations for 2026 Entane EBITDA, which represents a small decline year on year. However, when combined with growth in the US, EBITDA, including the US, will be broadly stable year on year. And broadly stable, of course, represents significant underlying growth before absorbing the UK gambling tax rises. Another consequence of the UK tax rise is that we lose a year on a deleveraging profile because now look-through leverage will be broadly stable in 2026 before resuming deleveraging thereafter. Two more bits of guidance to touch on. Firstly, marketing phasing. Because 2026 is a World Cup year, we expect approximately 55% of marketing spend to be in the first half, consistent with previous tournament years. And then secondly, now that BetMGM is sustainably profitable, our ETR guidance going forward is on an including US basis. and the new ETR, so effective tax rate, the new number is 30%. This is higher than 2025 due to the UK tax increase as we'll now have less profits in the UK, which are taxed at a below average ETR. And so that adverse change in geographical mix pushes up the group's blended ETR. In addition, There's a slide in the appendix which takes you through expected tax accounting treatment of our share of the $1 billion of available brought forward losses in BetMGM. In short, a deferred tax asset is expected to be recognized in 2026, which will give a boost to EPS in 2026, but then available losses are no longer benefiting EPS in the following two to three years. Cash tax is not impacted. So in summary from my section, we expect 2026 total group EBITDA, including best MGM, to be stable year on year, despite digesting the significant increase in UK taxes. How do we achieve that? We operate in growth markets where we have the most diverse set of podium positions globally. So we have structural sustained growth built into our model. We also have a gaming-led business in the US without material exposure to prediction markets. So those combined give us confidence that underlying growth will continue into 2026 and beyond. And on a final note, I'm proud to say that our EBITDA of just under one and a quarter billion pounds is now twice the size of the first EBITDA number that I reported seven years ago. and is many multiples bigger than my early days at Gala Coral. It's been quite a journey. It's been hugely eventful. It's been highly rewarding. And I'm delighted to be leaving the business with great momentum across an outstanding global footprint, yet still with so many great opportunities ahead. And it's also clear that in Mike, I'll be handing over the CFO reins to a hugely capable replacement. With that, I'll hand back to Stella.

Thank you, Rob. It's difficult to beat that, because he's got all the numbers, and I've got all the fluffy stuff. And this isn't the audience for fluffy stuff. You like numbers. So I'll do my best, OK? So look, Entain in 2025 did deliver strategically and financially. So that is a really good starting point. But now our priorities have to evolve because we have to reflect the next stage in our journey. And it's an improvement journey. And we have to build on some of those achievements, but we also have to be bolder in our mindsets. We have to address the significant challenges from the dramatic tax increases in the UK. So what are we doing about it? Well, we're intensifying our focus on cash generation and disciplined capital allocation. And importantly today, we reiterated our confidence in delivering at least $500 million in annual adjusted cash flow from 2028. Cash generation being a key component of long-term value creation. And as you can see from this slide, it is now an explicit strategic priority. Called out in our bonusing for our people, called out in our long-term incentive plans, it's a very important part of where we're trying to go. But before discussing our achievements and progress during 25 in detail, these next two slides are an important reminder of Entain's foundations. We are a global leader in an industry that is in long-term growth. And we are well positioned. This slide is a powerful visual representation of the breadth and the quality of our business. In Entain's 16 largest online markets, we have a podium position in 13 of them. And we're in the top four in all 16. And excitingly, many of these positions have the opportunity for significant growth. So for example, if you take New Zealand, where we are the partner with the New Zealand government for sports betting, we now have a great opportunity in iGaming when it becomes regulated at the end of 26th stroke, beginning of 27th. And in Spain, we have the great revitalization of our beautiful BUIN brand. And we're really hopeful that by the end of 2026, it will also have a podium position. And this next slide is also going to be familiar. I'm a bit boring. I keep showing the same slides. But that's consistency for you. Consistency is good. The left-hand bar chart shows that over 98% of our NGR is locally licensed. And 97% of our online revenue is from markets estimated to grow at least by mid-single digit CAGR. That is a truly impressive statistic. 97% of revenue coming from markets in good, sustained, long-term growth. And the pie charts on the right showcase the diversity of the portfolio by both geography and by product. And it's the combination of all of these things that gives our business the resilience that it needs, underpinning our ability to deliver long-term shareholder value. And now I'm going to share a few of the highlights from across our portfolio in 2025. In the UK, one of our many initiatives was refining our bonusing, using real-time player data to increase segmentation, reduce bonusing as a percentage of GGR, while increasing player value. This bonus optimization on our central platform is also driving benefits in markets like Brazil, Spain, Portugal, and Canada. Our UK retail team continued to raise the bar with an estate-wide rollout of our group bet stations. And this has driven an increase in our market share as well as an increase in our bet builder staking. In Australia, our new leadership team adopted a disciplined and returns-led approach, retiring some of the inefficient legacy marketing initiatives whilst also leaning into AI to produce high-quality creative assets more quickly and at a fraction of the cost. Across the group, we've also reduced non-working marketing spend, centralised performance marketing, and improved our allocation of investment. Our strong performance in Spain reflects that reawakening of the Bwin brand. And also markets like Canada, Brazil, Georgia, all benefiting from refining how our brands engage with our customers. And also some things on product and tech. In Poland, STS migrated onto our Croatia sportsbook, rebuilt its mobile app, and now has a slicker, faster user experience. And in Brazil, we launched SportingBot for the Club World Cup, an AI personalized assistant to help our customers enjoy the product more. And it's proved to be such a success that it's being rolled out across more markets and more sports this year. So that's just a flavor of the strategy in action. We're seeing improvements to the portfolio because we have shared learnings that generate a powerful multiplier effect, supporting our momentum and our operational efficiency. Moving on now to customer acquisition and retention. And again, this slide will be familiar. Net revenue retention is holding strong. It's above the 85% benchmark, and it has been north of 90% for the entirety of 2025. And this reflects the work that has been done to close product gaps and improve our customer journeys. You'll see there's a slight drop off in Q4, but that is due to customer-friendly sports results, and it's nothing structural. Customer acquisition also remains comfortably above the 15% level. So if you get the combination of strong net revenue retention and healthy acquisition, that underpins our sustainable growth. And these metrics remain strong as we enter into 2026. As I mentioned with our strategic priorities, Entane is now in the next phase of its improvement journey to accelerate forward. Project Roma delivered over 100 million in savings annually. But we can and we have to do more by continuing to improve on our cost of sales, by optimizing marketing rates as a percentage of NGR, and a continued focus on operating efficiencies. We already have multiple work streams identified to deliver against these three key levers. And we're also excited by the opportunities that our continued AI enablement program will have for improving the customer experience, the colleague experience, and importantly, for increasing our bandwidth. Whether that's resolving legacy issues with old code, can't say that, old code, I can't say it, but you know what I mean. I hope you know what I mean. Speeding up development cycles to improve the user experience, improving our customer care handling, automating low-quality contracts and legal work, or dramatically cutting the cost of asset generation in our marketing areas. So delivery of these type of group-wide initiatives support our expectations to now offset over 50% of the UK tax increases from 2027, up from our previous estimate of 25%. I just want to do a slight call-out on that. When the tax rates went up, we said immediately we would mitigate 25%. That was the right thing to say because we hadn't done the work at that stage. You need to take the time to add up the numbers, go through the figures to have the confidence. So we didn't come out of the block shouting it's going to be 50% or 60% because that would have been, quite frankly, a made-up number. Now we've done the work, and we've got increasing confidence in our ability to deliver against that. And that is the right way to do these things. Engage into the business, build the confidence, and start to solidify those initiatives. So I just wanted to give that flavor. We're not being dramatic and changing our minds. We're just building on what we started to do immediately after the tax increases. Really important point. So let's bring this all together. Despite the jump in those taxes in the UK, we now remain comfortable with the market expectations for 2026. And when you combine BetMGM and Entain, that means we're delivering a stable set of numbers in 26 versus 25. From 27 onwards, organic growth and those optimization initiatives means that we're going to grow both EBITDA and cash flow, and both on a year-on-year basis, and importantly, versus 2025. And by 2028, we've got the building blocks in place to achieve at least $500 million in annual adjusted cash flow. And therefore, that will support our journey to getting our leverage back to our target range of two to three times. So let me briefly wrap up before we go into Q&A. 2025 was definitely a strong year. We delivered growth across the portfolio, and that is a highly attractive portfolio that is well diversified. And our relative scale means that we will be winners in the UK because we will gain meaningful share from the regulated market. So execution is definitely improving. There's definitely a lot more to do. There always is. That's how you keep being competitive. And we have a clear pathway ahead. So we are confident in it, we are getting more disciplined and we are accelerating forward. And on that note, I would like to open the floor to your questions and I will return back over here.