Entain Plc

Hello everyone and thank you for joining the Entane 2026 Q1 Trading Update. My name is Lucy and I'll be coordinating your call today. During the presentation, you can register a question by pressing star followed by 1 on your telephone keypad. If you change your mind, please press star followed by 2 to remove yourself from the question queue. It is now my pleasure to hand over to Stella David, CEO, to begin. Please go ahead.

Thank you and good morning everyone and welcome to today's Q1 results call. I am delighted to be speaking to you again and sharing another strong set of Entain results. I'm also very pleased to be joined by Mike Snape for his first Entain update. So welcome, Mike, and it's great to have you on board. This morning's call will broadly follow our usual format. I will begin with an overview of the quarter. Then Mike will take this opportunity to share some initial reflections before he runs through the Q1 trading performance. And then we will finish with your questions. So let's get started. Entane continues its positive trajectory. Our diverse and globally scaled portfolio of podium positions is a powerful engine which is proving it can deliver consistent and sustainable growth. We maintain a relentless focus in executing against our strategic priorities. Which saw us exit last year with strong momentum and this has continued so far this year. I'm also very proud of the leadership team we have in place. who are focused on increasing both our pace and our capacity, enabling us not only to do more, but also continue to improve our delivery. Now turning to Q1. The grid delivered results in line with expectations. Net gaming revenue was up 3%, within which online was up a healthy 5%. Importantly, Q1 being in line was despite most markets experiencing particularly customer-friendly sports results. So a better reflection of our underlying performance and momentum is volume growth. In Q1, our volumes were up 8%, with an impressive plus 10% for online. Our online NGR and underlying volume growth has not only accelerated from our 2025 exit rates, but continues to come from across our portfolio, and I'm delighted that Q1 marks our eighth consecutive quarter of online growth. The UK, once again, was a standout performer, delivering another great quarter. And we fully expect to have gained both share in online and retail. This sets the world to withstand the impact of the draconian tax increases better than the competition. And a point worthy of note, we paid £574 million in UK taxes in 2025. whilst the growing black market pays zero tax. Hence, we remain focused on lobbying government to take action to stop the advertising and promotion of these unlicensed sites. Australia's recovery continued and is now back to meaningful year-on-year growth, and we expect to continue to having made solid market share gains. So a great performance which reflects the new management's disciplined and reinvigorated approach. Elsewhere, Spain, Canada, Greece, Georgia, and New Zealand all continue their double-digit MGR growth. A market that's been steadier than anticipated this year is the U.S. Now, I won't repeat it in detail, but as you heard from Adam earlier this week, Best MGM continues to execute its plan, deliver profitable growth, and remaining rational in a noisy market. This disciplined approach allows them to remain comfortable of delivering EBITDA still within their guided range, albeit at the lower end, despite softer top-line growth. We have strengthened our foundations to improve operational execution and are back to delivering high-quality top-line growth. And we have a strong pipeline of activities to continue that journey. These include the many opportunities from AI enablement, improvements to player journeys, and exciting new features such as side-bet jackpots, revamping the UK Ladbrokes app, and a sporting interaction brand in Canada going forward in a very positive way. The wider rollout of SportingBot, our new AI assistant ahead of the World Cup, as well as deepening our engagement with sport fans across Europe with new campaigns and partnerships. We're focused on driving greater efficiency effective capital allocation, and, as I have said before, we are fully committed to strong cash generation. So, just to summarise before I pass to Mike, we have started 2026 with strong momentum. The business is well positioned, getting sharper every day, and we are navigating the impact of the UK tax raises as well as anyone. We are reiterating our four-year guidance and remain confident in generating over 500 million of cash annually from 2028. We have a strong team and a busy pipeline of initiatives, and I'm excited about the opportunities in the year ahead. And while it is early days, Q2 has gone off to a strong start, and we look forward to the World Cup in June. And on that note, over to Mike. Mike.

Thanks, Stella. Good morning, everybody. I'm delighted to be here. Before I talk through the Q1, and Stella's really captured the key headlines already, just a few thoughts on first impressions and a flavour of what we've been focusing on in my first few weeks. I think it goes without saying this is clearly a strong business with a model that's performing well. To pull your results in March, and this update is a testament to that. We're growing volumes, we're growing share, and we're building growth on growth. The front end of the delivering, and we see continued opportunity to do that across all of our markets, a diverse portfolio that gives us the ability to both trade through different macroeconomic conditions, and most importantly, absorb or mitigate financial shocks, such as the UK tax increases. That said, as you heard from Stella at the full year end today, there is far more for us to do to earn our value here. We have significant potential to optimise our cost base, both to improve operational leverage as we continue to grow volumes, and also, importantly, to accelerate investments in driving the top line, taking advantage of all the opportunities available across the portfolio, particularly in markets like the UK, where the tax increase has changed the competitive landscape. This does not mean a new project. It's not time-bound with an end date or a target. It's putting in place the right model to support the business through its continuous improvements and driving growth, and today from what I've seen, we're aiming in the foothills. We also need to ensure this growth converts to cash. Alongside driving volume and revenue, cash, deleveraging and balance sheet flexibility are our top priorities, and you can expect our approach to capital investment and other actions going forward will reflect this. This again is an area where we see a lot to go for, and will be a consistent theme So lots of exciting opportunities ahead, lots for me still to learn, but Stella and I are looking forward to sharing more of our thoughts and our plans at the entrance in the summer. Coming back to Q1, and as a reminder, all the growth numbers that I quoted there are in constant currency. It's worth highlighting that alongside NGR and sports margins, we've included volume growth in the release today. It's a metric we've often referenced in remarks and in previous presentations, and we think it gives the cleanest picture from sports margins. So as Stella's already said, we've had a strong start to 2026, with the momentum from last year not only continuing, but accelerating into Q1. Group NGR was up 3%, with strong volume growth of 8%, again evidencing the underlying health of our business, adjusting for that sports margin noise. Online NGR was up 5%, with volumes up 10%. Customer-friendly results put sports NGR down 1%, but was more than offset by ongoing high gaming strength, up 9% in the quarter. Similarly, in retail, softer sports margins were supported by wages growth and gaming for overall volume growth of 3%. Importantly, this total result was driven across the portfolio, and with volume growth accelerating through the quarter in our largest online markets. The UK and Ireland turned in another fantastic result, Total NGR was up 6%, with online at 13%, all the more pleasing given we're lacking a 23% comparison from last year. Retail also continues to perform well, flat on a life-like basis, and we see customers continue to engage strongly with our gaming and sports terminals, with that volume and wages growth reflecting our leadership position on the UK high street, which we're taking every opportunity to capitalise on. We can't make any claims on market share yet, as the data hasn't been released, but when it does come through, we're confident it will show we are continuing to recapture share. That high-quality retail offering remains an important omni-channel differentiator for our online business, and we believe makes us best positioned to navigate the UK market as it digests the recent tax changes. Moving on to international, also a strong start to the year across many markets with volumes up 9%, but offset by unfavourable sports results. International online NGR was 2% higher, with gaming performing well, up 8%, dampened by a 1.4 percentage point year-on-year sports margin headwind against a tough margin comp and reflecting customer-friendly sports results, particularly in February. That adverse sports results impact was most pronounced in Brazil and Italy, both of which saw a particularly challenging margin but pleasing volume growth, especially in Italy where volumes were double-digit year-on-year. We also continue to grow strongly in many other markets, and again, a special mention to Australia, which was up 12%, the first double-digit NGR growth quarter since 2022, as we continue to see the benefits of new leadership and the fantastic work the team are doing there. International retail, as many of you know, is predominantly Italy sports betting, so this was also impacted by sports results, but we remain very confident in the quality of our estates and future growth opportunities. On Entane CEE, it's again really a story of sports results offsetting healthy volumes in Croatia. Given the product mix weighted particularly to football betting, a minus 7.1 percentage point sports margin track in Croatia pulled NGR growth lower for the quarter. Poland, however, benefited from the migrations to the CEE sportsbook and the revamp of the app. So in summary, we've seen a good start to the year. We've delivered strong volume growth across our markets, and that's allowed us to digest unfavorable sports results. And so we remain firmly on track for our FY26 expectations, but there's plenty more for us to do. I'll now pass to the operator and open the call for your questions.

Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. The first question today comes from Ed Young of Morgan Stanley. Your line is now open. Please go ahead.

Good morning. Good morning. Two questions, please. First of all, on the UK, you cited some chips in the competitive dynamics. I wonder if you've seen anything so far already. Obviously, the UK growth numbers are very strong today. momentum to be entering that change anyway, but I wonder if you could just give a bit more colour there in what you're seeing. And then second of all, a similar question on Australia, as you mentioned, a long time since we've seen double-digit growth, how much that is market-level support, how much that is share gains, and I guess how do we stitch together the result with the changes from the leadership change we've seen down there and the changes that we've made to business?

Thanks. Hi, Ed. Nice to hear your questions. Let me try and answer those two for you. So I think the first question was, have you seen what impact have you seen in the UK since the taxes went up at the beginning of April? It's really too early to say. I think the more important point is that we have definitely been increasing our share in the UK in advance of those tax increases, and part of our strategy is to continue to increase share And certainly in gaming, if you look at the market, there is a long tail of Tier 2 and Tier 3 operators all having very small percentage shares of the market. So within the regulated sector, we definitely see there's an opportunity to continue to build on that share game. And we will see over time just how much of an impact the black market has on the overall growth of the regulated sector. But as I think I said in my opening remarks, It's very important that we continue to lobby with government to encourage them and others to stop the inroads into the UK of the black market. But we're very tacky with where the UK is performing so far. And then the second one was on Australia. Yeah, it's great to see double-digit growth. We believe that is absolutely driven by market share gains. I think the team there is doing a great job. We've been very strong historically in racing. They're expanding the focus more to sports in general now there, which is a really good opportunity for us because the market is much wider than racing, even though that's very important. So I think the team there have got a good strategy, and we're hopeful that we'll continue to build share as we go forward. Thank you.

Thank you. The next question comes from Estelle Weinberg of JP Morgan. Your line is now open. Please go ahead.

Hi, good morning. Thanks for taking my questions. First, can you comment on the phasing of margin progression, H1 versus H2? I mean, you have the UK getting taxed starting in April, which will therefore be more impactful in H2. But the fading of the World Cup-related investment is likely to be more H1-weighted in June, I believe. and organic growth will likely be more H2O-weighted, given sports comps across international and NCE. Any color would be helpful. Another question on the U.K. as well. Can we get a – maybe it would be helpful to get a clearer read on what's driving the U.K. market, particularly sports. How do you see the competitive environment evolving into the World Cup, and is there anything notable you'd highlight for us in terms of data product developments? And if I may, just the last one on Brazil, we've now seen unfavorable sports results for like I think over the last three quarters. Can we get an idea of what's the underlying volume growth in Brazil at the moment? Thank you.

Okay, so I think we've got three questions there. One is about margin progress during the year. The second one is more of a read on the UK and the competitive environment and Brazil unfavourable sports results.

I think if we pick up the modelling questions offline with the IR team and just go into the UK bit, that's probably the best.

Yeah, I think that's probably the easiest way of dealing with it, so we'll do a follow-up with IR. In terms of the UK... In terms of what's happening, I think we've been on a journey of increasing market share over the last 18 months or so. Our customer journeys have improved dramatically. We've had new features that have been added in. We've got new features that continue to come out. We've got better bet builder, both in football and in horse racing. We've also got a new Ladbrokes experience, which is coming out in advance of the World Cup. In terms of the kind of phasing of activities, yeah, the World Cup starts in June, but it does go on into July. And so therefore it does straddle both halves of the year. I think my observation on the World Cup, it will be great for volumes, but it's going to be a bit of a rollercoaster ride because in the early days there were many more teams playing and margins could be wildly fluctuating because there'll be high-scoring lopsided games. I think towards the second half of the World Cup, it will be more equally based competitors, and I think there'll be some lovely upsides there, particularly given that most of our markets are in the World Cup, you know, with the exception, I think, of Italy and Poland, who we're expected to qualify. Most of our other markets are actually... It's playing in that. Any other comments on that, Mike?

I just feel in the UK, and it relates back to Mike's question as well, because we see the huge potential on the cost base in the business, we've really not taken our foot off the gas in terms of driving that UK business forward. Many other companies, I think, given the severity of the UK tax increases, would really be pulling back off growth drive and investment. We've absolutely not done that. We're taking advantage of everything that we see in the market at the moment. And this is nearly the start of what we think we can achieve with our UK business.

Yeah. Okay. And then I think on Brazil, yeah, you're absolutely right. Sports margins have been very poor in Q1. Volume's been up. So that's a positive. But I think it's something that everybody needs to watch out just in terms of that is probably one of the worst-performing sports margins that we have seen in the short term, and let's see how that goes. The underlying volumes have been positive, which is good news. Have we covered all the questions there? Okay. Thank you.

Thank you. The next question comes from Ben Shelley of UBS. Your line is now open. Please go ahead.

Hi, good morning, team, and congratulations, Mike, on the new role. A couple of questions from me. One in terms of your group online sports wager growth or even more broadly group volume growth. Can you give us a bit of an idea how much you think you have benefited from recycling in the quarter or rather how much you think how much of this is simply strong underlying business performance? And then I guess on online volume growth versus the four-year guidance, online volume growth is at 10% in the quarter and you have the World Cup ahead of you alongside momentum across the business. How are you thinking about that 5% to 7% online revenue guidance for the full year?

I think on the recycling point, it's really difficult to say, and clearly there's a lag in terms of the data that we get through from customer accounts as we close the quarter, but it's something or the previous quarter, more as we get through this one. On the volume piece, as you can see, we're reiterating the previous guidance that we've had. I would draw attention to the fact, and I think you've done it for me, that the volume growth was significantly stronger than that. The NGR growth was at the lower end of that range because of the sports margin. We're very focused on continuing to drive volume across the rest of the year, and we're very comfortable with the guidance that we've got out there.

Thank you.

As a reminder, to ask a question, please press star followed by 1 on your telephone keypad now. The next question comes from Rasmus Engberg of Capital Chevrolet. Your line is now open. Please go ahead.

Yes, hi. Thanks for taking my question. I was just wondering about the World Cup. How much of your 5% to 7% online growth is sort of relating to the World Cup and how much is underlying it?

Okay, so on the World Cup, thanks for the question. It's a good thing for us. It's not as big a thing as you might think. I mean, it's probably worth about 1% or something like that across the year. It's really where we would anticipate that to be as an upside. You know, it's bigger than the Euros, but it's not, you know, as dramatic as you would think. It's important also to recognise, as the point I made earlier, is that we shouldn't over- over-commit to what it's going to give because I think there will be some volatile sports margins, particularly in the early half of the whole activity. What I think it does is it provides a good recruitment drive opportunity because that's where you get a lot of people are interested in signing up to apps. So I think it's more about the recruitment side of it where I would say you get the big value from it. It's an exciting activity. I think it'll be good for some of our markets, particularly the ones which are in the same time zone. So, you know, pick markets like Brazil. We'll be very engaged in it. Markets like Australia and New Zealand also will be very engaged because it's about basically watching it live. But, you know, that's kind of where we're at. It's a positive, but it's not a major driver of overall numbers this year. Okay.

And sorry, just a follow-up question. From an earnings perspective, yes, but for this year it might be invested in attracting and reactivating customers rather than driving earnings in the short term.

Exactly. It is more of a recruitment drive than anything else, yeah.

Yeah, yeah.

Thanks. Thank you. The next question comes from Pravin Gondel of Barclays. The line is now open. Please go ahead.

Hello. Good morning. Thanks for taking my questions. Firstly, on Poland, are you back to winning your sort of lost shares in the lost market share in the country now you have done the migration? And what's your sort of outlook on the iGaming regulation in Poland? And is there any sort of update on iGaming rollout in New Zealand since full year results and other regulatory updates elsewhere in the world? Thank you.

Okay, I'll take that one. So, in Poland, we've always had a process of making sure we have maintained a profitable business. I think most people know there have been a lot of new entrants to the market that have gained share, but at a very high cost. What I think is encouraging is, and I think, before I go that far, I think we make the vast majority of all profit that is made in Poland based on our common sense approach to... to the numbers. It's true we did lose share. I think what we're seeing now is some encouraging signs of starting to gain share back off the back of continuing to support the brand, which is very strong. Also, the migration, as you mentioned, onto the Croatian sportsbook is bearing fruit. And so we're optimistic for the future. In Poland, in terms of iGaming legislation, I think it is significantly in the future. I mean, the current regime there is not open to iGaming at the moment. So I think, you know, in the medium term, we would suggest that, yes, legislation for iGaming will come through, but I wouldn't be putting into any forecasts right now. If you go to New Zealand, iGaming is going ahead, going live at the end of 26, beginning of 27. There's going to be a toleration regime put in place from May. What's exciting about that is we have the only legal betting site, which is with TAB, the New Zealand government relationship that we have. And so when iGaming comes out, there's only about 15 licenses that are going to be allowed. of which we will have TAB, which will be the only one that will be doing casino and sports, and we're hoping to have two other brands as well out of those 15 labels. So our outlook for New Zealand and iGaming is very positive, but the majority of the impact of that will start to hit from 2027 when we can start to advertise and promote iGaming. Thank you.

The next question comes from Jamie Bass of Citigroup. Your line is now open. Please go ahead.

Good morning, guys. Thank you. Just one question from me, please. Stella, as a follow-up on what you were saying there about using the World Cup as a recruitment driver, I was just wondering if you have any data from previous World Cups or potentially the Euros on retention once you have sort of acquired customers who are downloading the app for the first time? Once the World Cup is over, do you have any data on whether they then engage in other leagues such as the Premier League?

Thank you. So we have lots of data about retention and value of customers. We have a team who work on... I've lost the word, actually. I've got a cold. My brain's a little bit foggy. But performance marketing, that's the word I was looking for, performance marketing. Our team who do performance marketing across most of the world now are really, really strong at understanding the payment, paybacks, the recruitment efficiency that we get from investing in areas like this. So, actually, it's kind of day-to-day BAU work. stuff that we do with that team. It's a 365 sports team that do most of our performance marketing around the world. And we would apply the same rules to that as we do for the World Cup as we do for any recruitment drive. So we're very hopeful that we will get some strong retention off the back of the activities we do.

And just to add to that, the performance marketing discipline and model that we have here is one of the most impressive things to me that I've seen at Entane coming from a consumer retail background. And so we're very careful to make sure that we don't waste money. Lots of people obviously in tournaments like the World Cup will bet and then never bet again until the next World Cup. And we have a very, very good model to try and identify and weed out that type of thing so that we don't waste marketing money on it. that's reflected in the level of marketing that we do around the World Cup. So we're absolutely in it and we're absolutely open for business. But you won't see us plastered all over ITV and Sky because we just don't waste money in trying to lean in too heavily. We do think about paybacks in every pound that we're spending.

That's very clear. Thank you. It's time to get well soon.

Thank you. I appreciate it. I've got my meds with me. Any other questions coming through?

No? We have no further questions at this time. We'd like to hand back to Stella.

Thanks so much. So look, thank you so much for participating. We're really pleased with how the year has started. We believe we're firmly underpinning our 2026 expectations and I'm very confident that our strong momentum positions as well to seize opportunities ahead and to be a long-term industry winner. Myself and Mike look forward to speaking to you at the interim. And, of course, if you have any follow-ups, then please do contact the AAR team who will definitely be there to help. And on that note, thank you and goodbye.

Thank you.