In March, we presented our 2024 results to the market. In the following weeks, Stella and I have been on the road meeting with many of our investors and we wanted to share some of the key themes of those discussions.
Scale and earnings quality really matters
A cornerstone of Entain's investment case is the strength and breadth of our business and our quality of earnings.
One of our key assets is our iconic brands and their strong positions in their local markets. In fact, 85-90% of our revenues come from markets where we have podium positions. That means we are in the top three by market share in those markets, and that matters because scale is important. It’s important in many sectors, but it is particularly important in ours as it provides resilience and increases barriers to entry for competitors. In our sector, scale really matters.
As well as our enviable scale and market positions, we reminded the market about the quality of Entain's revenues. Of these, 98% are locally licensed, which means that we are already adhering to the rules and regulations on the ground and paying taxes. The quality and sustainability of our revenues has never been higher and compares extremely favourably to many global operators around the world.
Not only are our podium positions in regulated markets, importantly they are also in growth markets, and 98% of our revenue now comes from markets that in our growth. Within that, 93% of our online revenue comes from markets that are growing by at least mid-single digits which is an incredibly strong position to be in.
Trends in cashflow
Another area of investor’s focus is cashflow, and the health of our balance sheet.
This is an area where we’ve been a little more challenged in the last couple of years. Despite seeing revenue growth and EBITDA growth, this has not translated into improving cashflow.
At our FY24 Results we talked about why cashflow has gone backwards but more importantly why we think it improves going forward.
One of the pressures on our cashflow are interest rate rises around the globe. Entain carries debt as a result of acquisitions, and therefore, those higher interest rates impacted our cash flow.
Secondly, our online business in the UK and the regulatory challenges we have faced has resulted in a decline in revenue, EBITDA, and therefore cash.
Thirdly, BetMGM is a business we built from scratch seven years ago, and I am delighted to say that is forecasted between £2.4-2.5bn of revenue this year, but it has taken a lot of investment to get to this stage.
So, our growth in both Entain and BetMGM are compelling reasons why we see a pathway to strong cash generation.
This will be a landmark year for BetMGM where we expect to be EBITDA positive. Therefore by 2026 we can expect dividends starting to flow back from BetMGM to both Entain and MGM Resorts International.
Organic growth is another key driver of our future cashflows. We are back into organic top line and EBITDA growth which will then come through to cash flow from operations.
Another factor is the DPA, which is a repayment schedule agreed with UK HMRC. It concludes at the end of 2027, so is another material benefit to our future cash flow.
When you add all that together, our forecast suggests that by the time we get to 2028, Entain should be generating over half a billion pounds of cash, pre-dividends.
Strong prospects for Entain in the future
We also spent a lot of time talking about 2024, which was an inflection year for us and an important moment in the lifecycle of Entain.
Our online business ended 2024 with organic revenue growth of 6%. ing that 12 months earlier, our guidance to the market was that we expected to decline by low single digits, so ending the year at +6% versus the expected decline is an important illustration of our turnaround.
This was a much better performance than we had anticipated, driven by a number of things and a lot of hard work in their execution and delivery.
In November 2023, we set clear priorities to improve the performance of three ‘must win’ markets, and we accomplished that in all three markets in 2024.
In the UK, our largest market, our online business turned around a decline of 8% in the first half of the 2024 into growth of 14% in the second half of the year. We had anticipated being back in growth by the end of the year but tracked ahead of schedule with the whole of the second half, delivering double-digit growth.
Brazil is another must win market, and our focus on operational execution saw us achieve 41% growth for 2024, which was, again, significantly ahead of expectations.
Our third must win market was the US, and BetMGM’s year of investment, product improvement, and refined strategy saw it accelerate its growth throughout the year. BetMGM exited 2024 with adjusted growth of 20% and importantly with our market share stabilised.
So, for all three of our must-win markets, we had a good 2024, and they were not the only ones, as we enjoyed revenue growth across our global portfolio in 2024. Group NGR grew +9% on a constant currency basis, with Online NGR +6% with all segments in year-on-year growth.
Our EBITDA came in at just under £1.1billion, up 12% in constant currency, and 5% on pro-forma basis. This was at the top end of the range we guided the market to, so we are delighted with both the top and bottom-line performances delivered in 2024.
However, we still have a lot of work to do - further accelerating our revenue growth, gaining market share, growing our EBITDA margins and improving our cash generation.
So, in summary, the quality and sustainability of our business and earnings is clear and our strategic progress is evident in our performance and results.
We are pleased with where we are, our momentum is strong as we kick off 2025 and we are excited for the many opportunities ahead.