bet at home com AG (DE:ARTG) is a long-established sports betting brand, successfully cross-selling into gaming. FY17 revenues grew 4.8% to €145.4m, with an EBITDA of €35.5m, in line with guidance but lower than consensus of €146.4m and €37.3m respectively. Guidance for FY18 is also 8% and 13% below revenue and EBITDA consensus. Nonetheless, the company now has 4.8m customers and is well positioned to benefit from the 2018 FIFA World Cup. Largely due to regulatory concerns in Poland, the stock has fallen over 35% from its highs and now trades at 14.9x 2018e EV/EBITDA. This is still a premium to peers, but the 7.3% dividend yield for 2017 is very attractive.
Leading European sports-betting brand
bet-at-home’s main markets (as reported in 2016) are Austria (24% of gross win), other western Europe (47%) and eastern Europe (28%). In FY17, the mix of gross gaming revenue (GGR) between sports and eGaming (casino, poker) was 44%/ 56%, demonstrating successful cross-selling into gaming. Some of its markets are fully regulated (eg UK), but formal licensing has not yet been introduced in many of its main markets, where it pays taxes and VAT as applicable and operates under its EU licence. As evidenced by the recent IP blocking in Poland (third-largest market), future earnings may be affected by new regulations, as well as rising taxes.
FY17: In line with guidance, but short of consensus
FY17 revenues grew 4.8% to €145.4m vs FY16 and EBITDA increased from €33.0m to €35.5m, helped by lower marketing spend in the period (€42.0m vs €44.0m in FY16). These results were in line with guidance, but lower than consensus estimates of €146.4m and €37.3m, with the shortfall predominately due to IP blocking measures in Poland, which impacted 2H. For 2018, management is guiding to €150m revenue and €36-40m EBITDA, which is lower than consensus of €163.6m and €43.9m. Nonetheless, the company has demonstrated its ability to retain customers, which grew from 4.6m to 4.8m, and it is well positioned ahead of the FIFA World Cup in Russia this summer.