Tabcorp reports 11% uptick in revenue for H1 2023 despite digital wagering dip

Tabcorp has reported an 11% year-on-year (YoY) increase in revenue for H1 2023 as the Australian operator confirmed it is looking to snare 30% digital market share by 2025.

The group recorded H1 2023, or the six months ending 31 December 2022, revenue of A$1.275bn (£730m), up from the A$1.152bn recorded in H1 2022.

Tabcorp’s wagering and media division saw revenue rise by 9% to A$1.17bn, with EBITDA increasing by 12% to A$154.4m, driven by a 58% increase in cash wagering revenue following the return of customers to venues post-pandemic lockdowns.

However, the group’s digital wagering revenue fell by 15% YoY from A$579.9m to A$493m. Active digital users did tick up from 780,000 to 797,000 but digital turnover slipped from A$5.3bn to A$4.9bn during the reporting period.

Despite the downturn in digital wagering revenue, Tabcorp maintained its 25.1% digital revenue market share during H1 2023.

The firm was pleased with the strength of the result, given the launch of Betr during the reporting period and the ongoing challenge posed by Flutter and Entain in the market.

Active digital customers did increase by 8.3% following the launch of the new TAB App with Tabcorp noting it had upped its total revenue market share from 31.2% to 34.8% for the period.

There was also an uptick for Tabcorp’s gaming services division, which saw revenue increase 37% to A$109m, with EBITDA more than doubling to A$43m.

The firm reported group EBITDA of A$197m, representing a 24% increase from H1 2022’s return of A$159m.

EBIT skyrocketed by 349% from A$16.3m to $73.2m while net profit amounted to A$52m.

Adam Rytenskild, MD and CEO of Tabcorp, said the firm’s performance was a direct result of the company’s transition period following the divestment of its lottery and keno section.

He said: “Today’s results highlight that our transformation strategy, which commenced on 1 June 2022, is working. Our business has rebounded strongly from a Covid-impacted first half last year to experience strong growth in group revenue and EBITDA.

“The Covid lockdowns presented an opportunity for digital-only operators, but our retail customers have quickly returned, and our digital transformation is amplifying that opportunity.

“I’m particularly pleased that, with new entrants entering the market and retail venues reopening, TAB held digital revenue market share for the first time since 2019. To retain our market share, while a new entrant took share from competitors and retail reopened, highlights that customers are loving the new TAB App,” he added.

Touching on the demerger, Rytenskild said the process had been “seamless” and the separation of New Tabcorp and The Lottery Corporation remained on track.

Rytenskild went on to detail the firm’s new financial target strategy for full-year 2025, TAB25.

The operator is aiming to secure a 30% digital revenue market share while also reducing operating expense to at least $620m. Opex in H1 2023 amounted to A$323m.

Tabcorp also confirmed its would aim to “level [the] playing field” in Australian states so that rival bookmakers would pay the same taxes and fees as the firm.

Rytenskild commented: “I’m excited to announce that we are targeting 30% digital revenue market share by FY25. We’ll do this with a transformation of our entire wagering ecosystem, including new products for punters, a reinvigoration of Sky Racing that will include greater integration with TAB and the implementation of our new marketing strategy.

“The successful launch of the new TAB App, which helped us retain digital market share despite the introduction of a new competitor, has provided a strong launch pad to reach our 30% target.

“Now that our demerger has been successfully implemented, we are in a position to create a new operating model that is simpler, more agile and delivers faster for customers. The cost discipline will also deliver stronger results for shareholders,” the CEO concluded.

At the time of writing, Tabcorp’s share price had climbed 4% to A$1.04.