Aug 10: Catena seeks European exit?

Catena media strategic review, Wynn Resorts, Light & Wonder and Red Rock Resorts Q2s, earnings in brief +More

Earnings+More

Aug 10

Good morning. Another packed day of earnings including:

Catena Media expands the scope of its ongoing strategic review to its entire European-facing affiliate business.
Wynn Resorts says it will invest in Massachusetts online but avoid the cash burn.
Light & Wonder sees good news from its gaming operations.

Breaking up is hard to do.

Catena widens review scope

Not so super: Affiliate giant Catena Media has announced it has expanded its previously announced strategic review to encompass the entire European online gaming and betting affiliation business.

Hemmed in: The company said the regulatory issues in the UK, Germany, Sweden and now the Netherlands as well as “general market developments” prompted the widening scope.
Cutting: Catena said it hoped to “identify efficiencies” and increase the focus on “higher-margin opportunities” in the region.
Go west: Freed-up resources would be focused on the North America, Asia-Pacific and LatAm businesses.

Consultation: Catena said it aimed to pursue “at least” €5m of annualized costs savings from operational and capital expenditures. In light of this, it was entering into a formal consultation process with its UK and Malta-based staff.

Recall, previously Catena said it was undergoing a review of the AskGamblers and financial trading businesses. It said today that it “continues to assess the best outcome” for these brands and was “engaged in dialogue” over the sale.

Q1 recap: Catena recorded an 11% rise in revenues to €45.2m; adj. EBITDA was up 2% to €25.6m, but organic growth down 9% on continued issues in Germany and the Netherlands. North America revenues were up 32% to €29.5m.

Diary date: Catena will report its Q2 results on Aug 18.

Better Collective breaking news

Opposite direction: Meanwhile key affiliate rival Better Collective has renewed its focus on a key European market with the announcement of its deal to provide sports betting content and data to the German sports channel SPORT1.

The channel is part of the SPORT1 Medien Group and has c9m unique monthly users.
The partnership will be co-branded with Better Collective’s Germany-focused brand Wettbasis.com.

Diary date: Better Collective will report its Q2 results on Aug 23.

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Wynn Resorts Q2

Revenues down 8.2% YoY to $908.8m, adj. EBITDA down 13.3% to $179.2m.
Las Vegas adj. EBITDA up 70% to $226.7m, Boston Encore Harbor adj. EBITDA up 35.5% to $63.7m.
Macau: EBITDA losses of $90m, revenues down 78.2% to $211.7m at Wynn Palace and -67.5% to $58.6m at Wynn Macau.
Interactive EBITDA property loss down 34.3% to -$21m.

LV strong: Las Vegas was the stand-out in Q2. Occupancy rates stood at 90.5% and CEO Craig Billings praised that on top of record revenues from the Strip with group bookings were up 40% on 2019.

Billings noted the company has scaled back some of the lower profitability channels.
“It's a bit of a rich man's problem as we have very healthy casino and group businesses,” he added. “We're attuned to how we optimize that mix.”
Quality and quantity: Billings did not discount macro concerns, saying Wynn was paying close attention to them, but the “Las Vegas teams had done an amazing job at balancing quality customer experience with costs.”

Buy it back: Asked how much capital was being allocated to share buybacks, Billings said the group was opportunistic, “not programmatic” about buybacks.

Wild thing: However, “the wildcard is Macau” added Billings. “Once we have more visibility on that we can take more positive action on buybacks.”

Clear as crystal: Wynn Macau President Ian Coughlan said the group was in the “process of crystallizing” the company’s response to the renewal of its Macau tender.

Intent: “I think the government's intent is clearly before the end of the year to announce the successful operators,” added Coughlan.

Future burn: Wynn will invest in the online opportunity in Massachusetts but it “will not reproduce the marketing spend levels it did at the start of last year’s NFL season”.

Don’t waste time: Asked about future interactive burn rates, Billings said: “I wouldn’t spend a bunch of time trying to forecast it.”
Virtual rationality: “From Q321 the irrationality in the advertising market has declined and that’s encouraging,” he added.
Home, sweet home: “Massachusetts regulation is always positive for Wynnbet as we’re on home turf… but will not repeat the same actions as at the start of the (last) NFL season.”

Light & Wonder Q2

Revenue rose 5% to $610m but adj. EBITDA fell 8.6% to $212m.
Net debt fell by $4.9bn to $4bn following the completion of the sale of the lottery business.
$203m of share buybacks were completed over the period or 4% of the market cap.

Long as I can see the light: Gaming operations enjoyed its eight consecutive quarter of growth in the North American premium install base and asked on the earnings call about the visibility for the next six months, CEO Barry Cottle said “I think there's great news here”

“The gaming and mobile game industries have historically been very resilient, and we're seeing that today,” he added.
Talking about the real-time data that LNW is privy to, CFO Connie James noted that recent coin-in trends “continue to be elevated” across all markets.

See beyond: Cottle said US igaming revenue rose 47% YoY. The company also noted that 70% of its top 20 games are now original content.

Recall, the renegotiated $700m sale of the sports-betting supply business OpenBet to Endeavor is due to complete before the end of this year.

Just capital: James repeated that the company believes it can reduce the net debt ratio - currently 3.6x to a range of between 2.5-3.5x while on the share buybacks program, she noted that the company has used 27% of its $270m authorization.

SciPlay: Revenue up 4% to $160.1m but adj. EBITDA was down 13.6% to $41.1m. The company said it grew market share in the social casino segment even as the business saw softer revenues due to the seasonal impact.

Red Rock Resorts Q2

Revenues were down 1% to $422.2m while adj. EBITDA was off by 10% to $188.9m.

Steady as she goes: Coming off the back of a record Q221, CFO Stephen Cootey noted the stability of the business and expressed confidence in the company’s ability to produce EBITDA and EBITDA margins well above pre-pandemic levels.

The EBITDA margin was steady at 48.9% and Cootey noted that this was the eight consecutive quarter where margins were above 45%.

Wrecking ball: Speaking about the decision to demolish the three properties that remained unopened since the start of the pandemic, Cootey said that the amount of business captured by other properties in the Red Rock stable meant it was uneconomic to reopen them.

Build back better: Alongside the Durango project (expected to open Q423), the company announced it has bought a parcel of land on Cactus Ave/Las Vegas Blvd S for $172m.
Due diligence is also being conducted on a smaller land purchase in North Las Vegas.
Waiting game: Frank Fertitta, CEO, said the company would wait until the Durango project was open “and see the operating results” before breaking ground on the new development.
No REIT time: Cootey noted the company would fund the new projects from free cash flow.

Earnings in brief

Inspired Gaming: Revenues rose 72% to $71.3m while adj. EBITDA more than trebled to $26.1m. Performance was driven by a 71% surge in virtual sports revenue to $14m but interactive revenues were flat with results in the UK impacted by the implementation of operator-driven player protections.

Note: Inspired will conduct its earnings call tomorrow.

Accel Entertainment: Q2 revenue increased 13% to $227.9m while adj. EBITDA was flat at $42.7m. The acquisition of Century Gaming completed on June 1. Pro forma revenues for 2022 including Century Gaming are expected to come in at between $1.07bn-$1.13bn.

Note: Accel will conduct its earnings call tomorrow.

Bragg Gaming: Revenues for Q2 rose 34.2% to €20.8m while adj. EBITDA rose by 63% to €$3.1m. The company completed the acquisition of Spin Games in the quarter and said it hopes to release 22 proprietary games this year, a 120% YoY improvement.

Raised guidance: The company also raised its FY guidance for revenues to between €76-80m from €68m-€72m and adj. EBITDA to €10-11m from €9.5m-€10.5m.

Nuvei: Online gaming-related revenues at the global payment firm rose 22% YoY for the period. The company said the run-rate for revenue in the online betting and gaming vertical in North America is now approximately $25m and is on pace to deliver $100m of annual run-rate revenue.The company did not specify any dates.

Total revenues rose 19% to $211.3m while adj. EBITDA was up 17% to $92.9m however both were below forecast due largely to unfavorable FX movements.

Bet-at-home: H1 GGR was down 18.5% to €26.7m YoY thanks mainly to the closing down of its Austria division which enabled the group to avoid c€24m in customer payouts and benefit from a $13m windfall. H1 EBITDA was down 82% YoY to €1.1m.

The group said it would move away from its in-house platform to a managed services solution that will be provided by EveryMatrix.

Analysts in brief

AGS: Being ahead of the R&D curve when it comes to gaming machines is paying off for AGS according to the team at Roth who suggest the increased capex guidance from the company is an indication that the company's installed base metrics are improving.

Cattle prod: Roth suggests it takes less to move the needle with a smaller supplier such as AGS vs. its larger competitors and the team believes Texas, where AGS has strong connections among the tribal operators, will provide just such a nudge.

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Newslines

BetMGM is now an official sports betting partner of the NFL in Canada after agreeing on an extension to its partnership with the league.

Kambi will supply its sportsbook and PAM platform to the Ondiss group in Argentina which operates BetWarrior, Casino Magic and Casino Club.

Sportradar will supply its Universal Fraud Detection System (UFDS) to Twain Sport, a new sports streaming service from Hybrid Sports League and live dealer and casino games provider BetGames.

What we’re writing

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