Full Year 2022 Entain PLC Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ed Young - Morgan Stanley - Analyst : Good morning. I've got three questions, if that's okay. The first one is on online revenue growth. You mentioned, there were continued online revenue growth headwinds this year. What are you accounting for in particular? And really driving that, what is your implicit assumption for your underlying organic pro-forma growth this year? And the second two on M&A. You talked about in time moving across, I guess, it's about 30% of group revenue that doesn't go to your main platform, what would the margin benefit be, if you did in time, move that across? And on slide 10, can you just elaborate what you mean by doubling value? I assume it means doubling EBITDA, but you've not said that, so just wanted to check what that thought process means for how you talk about the M&A track record. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 26, 2023 / 3:00PM, ENT.L - Full Year 2022 Entain PLC Call

Question: Ed Young - Morgan Stanley - Analyst : Okay, understood. So if margins are similar, I think your OpEx is the percentage of NGR is mid-teens and 30% of revenue's a GBP1 billion. So you're saying that could be GBP130 million, GBP150 million, that kind of number? Is that -- that's what you mean by applying the OpEx across those other businesses?

Question: Ed Young - Morgan Stanley - Analyst : Yes, okay. Thank you very much.

Question: Kiranjot Grewal - Bank of America - Analyst : Hey, guys. Three questions from me. If we think about online into '23, ex-acquisitions, what are the countries that are your biggest contributors to growth that you're expecting for '23? Secondly, we've seen a step-up in competition in Australia as of late last year, how have you been performing in terms of market share there? And are you considering any risk or a step-up in competition there? And then thirdly, you have a pretty strong balance sheet as it stands, especially at a time where others are more levered and face increasing financial costs. In this backdrop, are you seeing a step down in competition for M&A? Thank you.

Question: Kiranjot Grewal - Bank of America - Analyst : Perfect. And just to confirm on your online guidance, you're including the UK and Australian headwinds, right? As part of it, correct?

Question: Kiranjot Grewal - Bank of America - Analyst : Perfect. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 26, 2023 / 3:00PM, ENT.L - Full Year 2022 Entain PLC Call

Question: Joe Thomas - HSBC - Analyst : Good morning, Jette, and good morning, Rob. A couple from my side, please. The first thing is just on the EBITDA margin guidance that you're talking about, Rob, talking about 26%. You've previously flagged that you were expecting it to be down year on year. I just wanted to clarify exactly why you think it's moving. I think I heard, and I may be wrong that it was to do with some of the market withdrawals, I think, the non-regulated markets, but that's different to prior messaging. So perhaps you could just clarify, help me with my confusion there. And then secondly, just returning to the point about slide 10, can you tell us what you're doing on the multiple when you work out the value uplift. But I'm just conscious that a lot of these businesses are being bought on relatively low multiples compared to what one typically think of as an online multiple in the UK. So perhaps you could just give a bit more color around, that would be helpful.

Question: Joe Thomas - HSBC - Analyst : Okay. Thanks very much for clarifying.

Question: James Clark - Barclays - Analyst : Hi, good morning. I have three main questions, please. In the introductory comments, Barry mentioned the legacy issues that you still have to face as a business. Could you just update us on the HMRC investigation, and also any color on what those other issues are in return to [appeal]? And then secondly, on new opportunities, could you perhaps provide a little bit of color on the shape of the GBP25 million loss for innovation and for new opportunities through H1 and H2, and would that Unikrn be breakeven in the second half? And then finally, on BetMGM. I know you're looking to breakeven in the second half and I guess your market share at the moment is just sitting a touch below your long-term target. Could we expect that new markets, one of them to break even to invest a little bit more to regain share? And I actually might be a slight headwind to the profit uplift for BetMGM the next couple of years. Thank you.

Question: James Clark - Barclays - Analyst : Great. Thank you very much.

Question: Ivor Jones - Peel Hunt - Analyst : Good morning. I'm trying to work out the implications if the commitment to only have revenue from nationally regulated markets by the end of the year. I can see from the graph on page 2, that Brazil's about 7% of online revenue, others about 12% of online revenue. If -- how much of the other is not domestically regulated, if we're trying to think about what might happen if Brazil doesn't regulate and if other markets don't regulate as you were expecting, what's the possible rate revenue impact? Thank you.

Question: Ivor Jones - Peel Hunt - Analyst : Good morning.

Question: Ivor Jones - Peel Hunt - Analyst : And when you're coming up with that percentage, you're excluding BetMGM, you're talking about the online revenue that's reported in the group.

Question: Ivor Jones - Peel Hunt - Analyst : But it's a bigger percentage of the group's online revenue.

Question: Ivor Jones - Peel Hunt - Analyst : Okay. And given the commitment to only be domestic by the end of the year, does that -- will that commitment hold or if you get to the end of the year and some of those markets have not met licensed to give you a license. Would you then continue to operate in then 2024?

Question: Ivor Jones - Peel Hunt - Analyst : Oh, okay. So the commitment referred to in the January statement could flex beyond the end of 2023?

Question: Ivor Jones - Peel Hunt - Analyst : That's really helpful. Thank you. And just one other thing, you referred in the presentation to 2,000 employees involved with MGM -- with BetMGM. How do you think about the costs of supporting BetMGM? Can we refer back from those some of the time of those 2,000 employees to work out to a cost within the group?

Question: Ivor Jones - Peel Hunt - Analyst : So if I wanted to project out a contribution to Entain from BetMGM, net of costs required support it, have I got enough information to get there?

Question: Ivor Jones - Peel Hunt - Analyst : Okay. Great. Thank you very much.

Question: Louise Wiseur - CBS - Analyst : (technical difficulty) Germany. I just wonder if you could please go back on there. Any indication of what you've seen in Q4 and maybe year-to-date? You mentioned in the past that you expect a greater regulatory oversight by the regulator on non-compliant operators and should help you win back some of the business that you lost in the last three years. Have you seen any change so far and maybe year to date? And the second one is on the US from responsible gambling. You mentioned in the past release that the MGM-led US online operators' commitment to the first responsible gaming standard for the industry. I was wondering if you could give maybe some more color on that, and how this has been received by the regulators for each state? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 26, 2023 / 3:00PM, ENT.L - Full Year 2022 Entain PLC Call And the last question is on the consumer backdrop, have you seen any change versus what you've said in the past? I think in Q3 and Q4, there was no change versus Q2, but may be any change year to date. And if so, which region have been maybe more impacted. I would assume, given your comment today, that there hasn't been much change, but I just wanted to check on that, please. Thank you.

Question: Louise Wiseur - CBS - Analyst : Okay, thanks very much.