- EBITDA Growth: Total group EBITDA surged to GBP 1.244 billion (+28% YoY), driven by BetMGM’s 34% online revenue growth.
- Online Momentum: 7% year-on-year online volume growth with 7 consecutive quarters of revenue expansion, supported by double-digit growth in 6 key markets.
- Cash Flow Resilience: Adjusted cash flow rose to GBP 151 million ahead of expectations, with leverage dropping to 3.6x from 4.3x by yearend.
- 2026 Guidance: Online EBITDA margin target of 23-24% amid UK tax rate hikes, with 5-7% NGR growth and GBP 500 million adjusted cash flow goal by 2028.
- Tax Mitigation Plan: Strategy to offset 25% of UK tax impact in 2026 and over 50% from 2027 via cost optimization and AI-driven efficiency gains.
Segmental Performance
The UK, Spain, Canada, Greece, Georgia, and New Zealand showed strong double-digit growth, while BetMGM produced an excellent year of strong and profitable growth with 34% growth in online revenue. The company's diversified portfolio, with 97% of revenue from markets estimated to grow at least by mid-single-digit CAGR, drove revenue growth.
Guidance and Outlook
For 2026, Entain expects online NGR growth of 5-7% and online EBITDA margin of 23-24%. The company aims to mitigate approximately 25% of the UK tax impact in 2026 and over 50% from 2027 onwards. Analysts estimate next year's revenue growth at 4.1%. The company's guidance for 5-7% growth comes from a uniform improvement across segments, with international, UK, Australia, and Brazil expected to perform better.
Valuation and Metrics
Entain's current valuation metrics are as follows: P/E Ratio at -5.6, P/B Ratio at 4.2, P/S Ratio at 0.71, EV/EBITDA at 6.02, Dividend Yield at 2.85%, Free Cash Flow Yield at 14.72%, ROIC at 7.62%, and ROE at -57.07%. The Net Debt / EBITDA ratio is -0.36, indicating a healthy debt position. The EV/EBITDA ratio of 6.02 suggests that the company's valuation is reasonable compared to its earnings.
Strategic Priorities
Entain's strategic priorities now focus on cash generation and disciplined capital allocation, with a goal to deliver at least GBP 500 million in annual adjusted cash flow from 2028. The company aims to offset over 50% of the UK tax increases from 2027, up from 25% previously. The optimization plan, effective from 2027, brings together various initiatives to improve efficiency, including payment service providers, automation, and AI.
Regulatory Outlook
The company believes the worst may be behind it in terms of regulation, but challenges remain, particularly in the Netherlands, where high taxes and friction regulations fuel the black market. There are also potential positive developments in Germany, where the slots cap may increase, currently driving 70-80% of the market to the black market. Entain's diversified portfolio provides resilience to absorb regulatory changes.