- BetMGM revenue and profit upgraded
- Strong growth continued into Q2
- On track to deliver $500 million EBITDA
Shares in global sports betting and gaming group Entain (ENT) jumped 10% to the top of the FTSE 100 leaderboard after the firm upgraded full-year earnings guidance for its US joint venture BetMGM.
The shares notched-up a new yearly high of 832p, having gained roughly 20%% year-to-date, comfortably ahead of the blue-chip FTSE 100 advance of 7%, reflecting increasing momentum in the business.
ONGOING US MOMENTUM
BetMGM is a 50/50 partnership with MGM Resorts International (MGM:NYSE) operating under the BetMGM, Party Casino and Borgata Casino brands.
In the first quarter, the business delivered strong trading with net revenue growing 34% year-on-year driven by strength in online sports and iGaming.
That momentum appears to have continued into the second quarter, for the period up to 13 June, giving management ‘increased confidence’ for the full year to December.
Consequently, the group now expects 2025 net revenue to be ‘at least $2.6 billion’, up from a prior range of $2.4 billion to $2.5 billion, and EBITDA (earnings before interest, tax, depreciation, and amortisation) of ‘at least $100 million’, up from prior guidance of ‘positive.’
Longer-term, the company reaffirmed confidence in its future growth prospects putting BetMGM on tack to deliver $500 million of EBITDA in future years.
FULL YEAR SET CONSERVATIVELY
Shore Capital’s Greg Johnson notes that with circa 30% growth in net revenue already in the bag, the full year expectation of $2.6 billion implies only modest progression in the second half, so ‘a beat is likely’, although Johnson also points out comparatives get tougher as the year progresses.
Analysts at Jefferies believe the new guidance implies a circa 12% upgrade to earnings per share for 2025.
AJ Bell investment director Russ Mould believes the upgrade lends credibility to Entain’s longer term ambitions for earnings from the joint venture.
‘The latest update from Ladbrokes owner Entain revealed why the US is seen as the promised land for UK gambling outfits as its BetMGM joint venture came up trumps’, commented Mould.
Disclaimer: Financial services company AJ Bell mentioned in the article owns Shares magazine. The author (Martin Gamble) and the editor of the article (Ian Conway) own shares in AJ Bell.
