Bet365 weathers Covid-19 headwinds as full-year revenue comes in flat at £2.82bn amid 8% rise in online gaming revenue
As a result, total revenue came in flat compared to the prior year at £2.82bn, up ever so slightly from £2.81bn in 2020, as gaming revenue picked up the slack amid an annual rise of 8% to account for approximately £500m of overall revenue.
The wider trend of migration from retail to online, which was accelerated by pandemic closures, also benefitted the business.
Regulus Partners analyst Paul Leyland posted a largely positive note on bet365’s 2021 performance. He said: “Bet365 was always going to underperform during the first lockdown phase given its in-play sport focus and so underlying results are if anything encouraging.
“Equally, with an early licence in Netherlands and a betting-only product in Germany, the disruptions felt by many competitors in calendar H221 are opportunities for bet365.”
Gross profit after the direct cost of sales came to £2.33bn, down 3.4%, although administrative expenses were also down on the prior-year period, at £2.04bn compared to £2.21bn.
As a result of the decreased administrative expenses, operating profit increased by 46.6% from £194.7m to £285.5m. Bet365 said this was driven largely by a reduction in remuneration, with staff costs falling from £870.6m to £701.3m.
Indeed, the salary of CEO Denise Coates fell from £421m in the prior year to £250m, although she also received her share of a £98m dividend alongside brother John and father Peter, taking her total pay package to just short of £300m for the year.The number of active customers using bet365 increased by some 13% during the period, but the amount wagered on sports also fell by 13%.
Bet365 also saw its share of revenue generated by in-play betting reduce from 75% to 68%, driven by the lack of sports competitions available in H1 2020 and reflecting the 13% reduction in sports betting handle.
Commenting on the reduction, Leyland said: “Bet365’s current business model is not necessarily an impressive growth engine or market disruptor any longer. It is a sign of generational development in online gambling that bet365 has moved from being a disruptive generator of global market adoption to a relatively mature business model.
“How one of the best and most consistent management teams in the sector responds to this ‘new boring’ may nevertheless be highly disruptive. That said, choosing to find new ways to disrupt for growth or deciding to enjoy the cash flow is a nice problem to have,” he added.
The decline in the proportion of bets taken in-play may also have been impacted by increased growth in Australia, where only pre-match betting is available.
As equity markets rebounded from a prior-year crash driven by the pandemic, the group’s fair value gains on investments increased to £177.3m during the period.
Profit before taxation came to £469.2m, up 242.3% on the £137.1m declared in the prior year.
After paying £66.2m in taxes, and accounting for other discrepancies including currency translation differences, the business declared a total comprehensive income for the period of £391.2m, up from £129.3m in the prior corresponding period.
The business ended the period with £2.17bn in cash and total net assets of £2.80bn.