Currency in EUR
Last close As at 09/06/2023
EUR4.55
▲ −0.10 (−2.15%)
Market capitalisation
EUR32m
Research: Consumer
bet-at-home (BAH) is a long-established sports betting brand, successfully cross-selling into gaming. 2021 was expected to be challenging, as the new online gaming regulations in Germany took effect, but management’s guidance for FY21 has reduced on two occasions. These reflect transitional changes in Germany that were more negative than initially expected, the June 2021 withdrawal of BAH’s offer in Poland ahead of applying for a sports betting licence, and the suspension of online casino operations in Austria in response to growing litigation losses for reimbursement of player losses. The potential award of new licences in the Netherlands and Poland could lead to an improved outlook from FY22.
bet-at-home |
FY21 more challenging than initially expected
Travel & leisure |
Deutsches Eigenkapitalforum 2021
20 October 2021 |
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bet-at-home is a research client of Edison Investment Research Limited. |
bet-at-home (BAH) is a long-established sports betting brand, successfully cross-selling into gaming. 2021 was expected to be challenging, as the new online gaming regulations in Germany took effect, but management’s guidance for FY21 has reduced on two occasions. These reflect transitional changes in Germany that were more negative than initially expected, the June 2021 withdrawal of BAH’s offer in Poland ahead of applying for a sports betting licence, and the suspension of online casino operations in Austria in response to growing litigation losses for reimbursement of player losses. The potential award of new licences in the Netherlands and Poland could lead to an improved outlook from FY22.
Regulatory and legal risks remain high
At end H121, BAH’s main markets were Germany (17% of betting volume), Western Europe (69%) and Eastern Europe (14%). The mix of gross gaming revenue (GGR) between sports and e-gaming (casino, poker) was 57%:43%. Some of the markets are fully regulated (eg Germany and the 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. Regulatory risks are high with potential new licensing in Netherlands and Poland expected in the next 12 months or so, and there is ongoing legal uncertainty from claims against BAH in Austria.
FY21: Management guiding to EBITDA loss
Management is guiding to FY21 revenue of €93–98m (from €106–118m at FY21 start) and an EBITDA loss of €10–14m (from profit of €18–22m). In H121, BAH highlighted that German customers were proving to be slow at re-registering on the new platform as required by the new regulations, believed to be an industry-wide phenomenon at that stage, and players had yet to switch from recently banned casino games to other games. In October 2021, management announced the suspension of its Austrian online casino (not sports betting) offering due to mounting litigation claims for the reimbursement of player losses following an unexpected and unfavourable legal ruling. Management has provided €24.6m for these losses so far, but this may increase. The expected EBITDA loss would suggest payment of an annual dividend is unlikely.
Valuation: Share price at seven-year low
Consensus estimates are yet to reflect management’s new guidance. The downgrades to guidance have led to the share price trading at a seven-year low.
Consensus estimates
Source: Refinitiv. Note: *Revenue = GGR |
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Reply’s expertise in digital transformation stood it in good stead during FY20, with single-digit revenue growth and margin improvement compared to FY19. While demand moderated in Q220 and Q320 as customers focused on their internal challenges during the pandemic, it rebounded from Q420 and has been robust so far this year. The company continues to develop and acquire innovative technology and expertise to help corporates on their digital transformation journeys.
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