Focus on ‘sound’ long-term strategy overshadows in-line Q323

Entain reported largely in-line Q3 23 trading numbers, accompanied by an implied FY23 EBITDA downgrade. The latter was a result of unfavourable sports results as well as persistent regulatory headwinds. However, the bigger news was the update provided on the firm’s strategy and longer-term targets. While this means the near-term growth and margin trajectory will be slower than previously anticipated, the longer-term targets offer strong upside potential considering the currently-beaten-down valu

HMRC settlement overshadows the decent H1 23 showing

Entain exceeded estimates in 1H23 (revenue +2.8%, EBITDA +0.4%), driven by BetMGM’s US performance. Pro-forma revenue reached £2.38bn, up 8% including the US share, with retail compensating for soft online growth. BetMGM’s positive H1 showing with revenue up 55% to $944m, underlines its strong position in the US market. FY23 Group EBITDA is expected to come in at £1bn-£1.05bn. Regulatory challenges impacted ex-US markets, while a £585mn provision for the HMRC investigation settlement surprised t

Broad-based Q1 23 momentum; BetMGM continues to impress

Entain’s Q1 23 revenue was up 15% YoY, with double-digit reported growth in both the online and retail channels. US JV BetMGM registered 76% growth, putting it on course comfortably to achieve its FY23 guidance. The previously-flagged headwinds in the UK (affordability) and Germany (regulatory challenges) weighed on online growth (+1% pro-forma vs +6% ex-UK and Germany). We do not expect any significant changes to our estimates, given our above-guidance BetMGM estimates as well as the mostly in

Strong FY22 overshadowed by a soft margin outlook

Entain reported estimate-beating FY22 earnings. Net gaming revenue (NGR) increased by 12% in the year, driven by a 66% rise in retail. BetMGM performed strongly and is expected to be EBITDA positive in H2 2023. Entain completed five transactions during the year, further diversifying its revenue base. Underlying EBITDA was up 13%, and adjusted diluted EPS up 15%. However, the guidance was softer than expected and should result in a low single-digit cut to our FY23 estimates.

Good end to FY22, EBITDA target upgraded

Entain reported Q4/FY22 growth in line with estimates. Importantly, the online segment returned to growth, after four consecutive quarters of decline. The firm now expects FY22 EBITDA to come in at £985–995m (5%/3% ahead of consensus/AV, respectively). BetMGM continued to outperform expectations and is on track for EBITDA break-even in H2 23. We will be upgrading our estimates by low-to-mid single-digits to factor in the FY22 EBITDA upgrade as well as the stronger trajectory of BetMGM.

Q3 22: BetMGM shines amidst expected ex-US trends

Entain reported soft Q3 2022 trading numbers as retail growth (+10%) offset the 2% decline in online with the former maintaining its growth momentum vs the pre-Covid level (+8% vs +6% in Q2). In the all-important US market, BetMGM continued to perform well, with revenue up 18% QoQ to over $400m. Although the management maintained the FY22 EBITDA guidance at £925-975m, we will trim our estimates by mid-single digits to reflect the slower-than-expected momentum online.

BetMGM and M&A aspiration tide over H1 miss

Entain reported softer than expected H1 22 profit numbers even as BetMGM, on course for EBITDA break-even in 2023, continued to perform strongly. In other positive developments, Entain re-initiated dividends and also announced the setting up of Entain CEE, the firm’s acquisition vehicle focused on Central and Eastern European markets. FY22 EBITDA outlook of £925-975m is in line with consensus but ~3% below our estimates. Hence, we expect to trim our estimates marginally, largely on account of

Q2 22: Retail surprises in face of online turbulence

Entain reported soft Q2/H1 22 trading as revenue was up 6/18%, respectively, in cc terms. The expected retail recovery (79/244% in Q2/H1) more than offset the decline in online (-8/-7% in Q2/H1), which faced multiple headwinds. BetMGM maintained its number two position in the US with a 24% market share and same-state growth of >30%. We will trim our FY22 estimates by high single digits to reflect both the soft Q2 as well as the downgraded online growth guidance.

Q1 22: Solid retail recovery eats into online growth

Entain reported a strong start to FY22 with Q1 revenue up 34%, benefitting from a 10x increase in retail revenues as volumes reached within 5-10% of their pre-Covid levels. As expected, online growth (-6%cc) was hurt by the previously-flagged regulatory headwinds. BetMGM continued to gain momentum with market share at 24%. The JV re-iterated its target of reaching positive EBITDA in 2023. We will upgrade our FY22 estimates marginally, to reflect the stronger than expected retail recovery.

FY 21: online momentum and resilient retail leave us hopeful for 2022

Entain reported a 5% rise in FY21 EBITDA, resulting in a 1.4% surprise. Importantly, retail operations in various regions were within 5% of pre-COVID-19 levels. BetMGM continued to gain share and expects revenue of $1.3bn in FY 22 (+53% yoy) with EBITDA breaking-even in 2023. The board decided against a dividend, which was the only sore spot of the FY 21 performance. We do not expect any significant changes to our estimates, following the largely in line showing (vs AV estimates).

In line Q4 21 even as BetMGM momentum accelerates

Entain reported a largely in line Q4/FY 21 trading update, registering cc growth of 6/8% for Q4/FY21, respectively. As expected, online revenue was down 6% in Q4, while retail was up 62%. BetMGM performance was well ahead of consensus as well as our expectations. Entain now expects FY21 EBITDA to come in between £875m and £885m (vs £850-900m previously). We will raise our BetMGM estimates as well as the valuation to factor in the strong US momentum.

Q3 21: expected German headwinds; BetMGM powers ahead

Entain registered Q3 21 top-line growth of 6%, driven largely by online (10%). In the all-important US market, BetMGM surged ahead with a further expansion in market share of (23% in three months to August vs 22% in Q2 21). FY21 EBITDA guidance of £850-900m was re-iterated, a positive given the recently announced headwinds from Dutch regulations. We do not expect any significant change to our estimates, given that the performance was largely in line with our estimates.

PROGRESSIVE: Zoo Digital: Recovery continues as pipeline accelerates

This morning’s trading statement from ZOO confirms that customer demand has continued to recover following the end to the industry-wide strikes of last year, with FY24 expected to be ‘at least’ in line with current market consensus. We maintain our FY24 estimates, which we increased slightly at the recent March update, with revenue at $39.9m and an adjusted EBITDA loss of $13.4m. New productions are translating into a healthy order pipeline, with market commentators forecasting a return to 2022

Allenby Capital TMT Update - 13.05.24 - MIRI.L, MBT.L, PPS.L, CSFS.L, LST.L, DNM.L

Please find below our weekly update covering themes that we feel that are of interest to investors and participants in the small and mid-cap TMT sector as well as commentary on recent newsflow.

Allenby Capital - Nightcap plc - Interims

Nightcap’s interims for the 6m to end December 2023 were in line with expectations, as such, we make no changes to our forecasts. The number of bars at the period end was 46 up from 36 a year earlier – the expansion driven by the June 2023 acquisition of Dirty Martini. The portfolio expansion led to a year-on-year revenue increase of 42% to £33.4m and 5% growth in underlying EBITDA (IAS 17) to £2.1m. Post period end the Company announced the acquisition of Piano Works funded by a £1m equity rais

Cornerstone FS+ (CSFS, House Stock at 40p) - FY23A results beat, further upgrades

Hybridan Small Cap Feast - 14 May 2024

14th May 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: 7th May: Time To ACT plc, an engineering business focused on technology for the energy transition sector, has announced its intention to seek Admission to trading on the Aquis Stock Exchange

Various Eateries - H1 trading update; focused on delivering a high quality estate

Various Eateries is an owner, developer and operator of all-day club, restaurant and hotel sites in the UK. This morning, the group has provided an update for the 26-weeks to 31 March 2024, with revenue in the period increasing by 10.2% to £22.7m, driven by new openings, while LFLs moved marginally lower, reflecting a particularly wet winter and the strategic decision to absorb the majority of cost increases rather than increasing menu pricing. Overall trading for H2 to date is reported to be re

Morning Note – 29 April 2024

Domino's Pizza - Growing the base

Domino’s Pizza Group’s (DOM’s) new CEO has set an ambitious long-term growth target, including an acceleration in its net store opening programme. With better alignment between the company and its franchisees, management believes DOM should be capable of generating improved profit growth, versus that achieved in recent years, and potential higher returns.

Hardman & Co Healthcare Index: 2023 – Capital demands dent performance

The Hardman & Co Healthcare Index (HHI) has been running since 2009. Its main function is to highlight the attractions of life sciences investments over the long term. For the second year running, apart from global economic influences affecting world markets, performance in 2023 was dented by the capital-intensive nature of the sector. The HHI fell 3.7%, to 483.8, underperforming the main London markets – FTSE 100 (+3.8%) and FTSE All-Share (3.8%) but outperforming the FTSE AIM All-Share Index (

B90 Holdings (B90 LN) - Successful transition, outlook unchanged

2023 revenue is expected to be in line with expectations. Adjusted EBITDA loss is expected to be higher than we expected.

Zeus Building Products and Construction Round-Up - 3 May 2024

Market sentiment turned more cautious in the month of April, particularly regarding interest rates, with economic data producing mixed results. Despite housing transactions and net mortgage approvals continuing an upward trend, with the latter at an 18-month high and +20.1% YoY and +1.4% MoM to 61.3k (seasonally adjusted), Nationwide’s House Price Index dropped 0.4% MoM (seasonally adjusted) in April, below the +0.2% expected. This comes as mortgage lenders nudge rates up to factor in the potent

Morning Note – 8 May 2024

easyJet remains optimistic about the new FY, despite the Q1 challenges

easyJet’s FY23 results were broadly in line with the preliminary figures and the market’s expectations. The group is resuming a regular dividend distribution and expects to raise the pay-out next year. It continues to believe in a positive outlook for the FY, despite the Q1 net loss affected by the conflicts in the Middle East. No major changes are expected to our current estimates.

Initial Equity Trading Comments - 19 February 2024

HeiQ - Forecast update and Ecolab contract

HeiQ reported its interim results for the 12-months to December 2023, a period characterised by challenging conditions in the markets in which the company currently operates. In-line with the recent trading update, the company reported revenues of $41.7m for FY23 and closed the period with a cash balance of c$10m and a net debt position of $2.2m. We have updated our forecasts to reflect the FY23 results and HeiQ’s outlook in 2024, leaving our revenue forecast unchanged but adjusting gross margin