bet at home com AG (DE:ARTG) has started the year very well, with Q119 gross gaming revenues (GGR) increasing by 12.1% y-o-y to €37.2m, and an EBITDA of €12.7m. This is especially encouraging in light of management’s recent guidance of €130–143m GGR (0–10% decline) and an EBITDA of €29–33m for FY19. While this guidance seems conservative, we are leaving our forecasts broadly unchanged until there is further clarity on the impact of the Swiss IP blocking. The stock trades at 13.1x EV/EBITDA and 18.1x P/E for FY19e, which is at the top of the peer group, although its ability to pay high dividends is very attractive.
Q119 results: 12.1% growth in GGR
Benefiting from marketing momentum in 2018, BAH has reported impressive Q119 GGR growth of 12.1% to €37.2m, with an EBITDA of €12.7m. This compares to €33.2m and €9.3m in Q118. The number of registered customers now totals 5.1m vs 4.9m at Q118. During the quarter, marketing costs of €8.2m represented 22% of GGR, which is lower than long-term trends (25–30%) due to the lack of any major tournaments. Excluding customer balances, net cash at Q119 was €78.9m and the FY18 final dividend of €6.50 (€45.5m cash) will be paid in May.
Guidance reiterated, estimates broadly unchanged
Management has reiterated FY19 guidance of €130–143m GGR and an EBITDA of €29–33m. Although this appears very conservative in light of the strong Q119 performance, we note that uncertainties in Switzerland (IP blocking effective from July 2019), as well as the lack of any major tournaments, are likely to weigh heavily on volumes. Pending further clarity on Swiss volumes, we have left our forecasts broadly unchanged, other than some minor adjustments due to IFRS16 (slightly higher depreciation and leasing expenses). The company continues to face regulatory uncertainty across many of its markets - please see our March initiation report for details.
Valuation: High dividend yield supports stock
Despite regulatory concerns, BAH’s shares have rebounded over 50% ytd, largely due to the company’s ability to continue paying generous dividends. The stock trades at 13.1x EV/EBITDA and 18.1x P/E for FY19e, which is at the top end of the peer group, but its healthy net cash position and 7.1% forecast dividend yield are very attractive. In our view, a major catalyst for a further re-rating would be concrete evidence of positive regulation in core markets, especially Germany and Austria.
Business description
Founded in 1999, bet-at-home is an online sports betting and gaming company with c 300 employees. It is licensed in Malta and headquartered in Dusseldorf, Germany. Since 2009 bet-at-home has been part of Betclic Everest, a privately owned French online gaming company.
