H2 global performance tracker: gambling revenue up 11% in Q2

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With the Q2 2022 reporting season now finished, H2 Gambling Capital has released its analysis of the industry’s performance through its newly expanded corporate research service. The first edition of the tracker shows global revenues were up by 11% year-on-year in Q2.

H2 has recently expanded its company coverage to over 65 businesses in the global gambling sector – whether operators, suppliers or affiliates – generating annual revenues of over €100bn.

Q2 2022: Key takeaways

Q2 2022 gambling company revenues are yet to break back through their pre-Covid levels, with revenue still 2.9% lower than in Q2 2019. However, they are up 11% year-on-year and up 5.5% compared to Q1 2022.

There still remains a significant divergence in performance between the retail and online segments, and on a geographic basis, though.
The key takeaways from the quarter are:

• Q2 online revenue is up 8% year-on-year and up 77% vs Q2 2019
• Q2 retail revenue is up 11% year-on-year but down 21% vs Q2 2019
• Significant geographical differences – weakness in Asian land-based gambling continues to be driven by Macau, while non-Asian retail gambling is up 6% vs Q2 2019.

Online revenue performance

Online revenues are up 8% year-on-year and 6% quarter-on-quarter.

• Within this, the main driver of the year-on-year growth was B2B, up 17%, compared to B2C revenues which were up 7%
• However, the sequential growth was driven by B2C, up 7% when compared to Q1 2022, whereas B2B was down 0.5% – the first quarterly decline since Q2 2020

Not all operators split their B2C operation by product, but among those that do provide a split:

• Sports betting was up 5% year-on-year but up 11% quarter-on-quarter
• Gaming was up 10% year-on-year but up only 2% quarter-on-quarter

Land-based revenue performance

Land-based revenues are up 11% year on year and 5% quarter on quarter.

• However, land-based revenues remain 21% below pre-Covid levels, recorded in Q2 2019
• There is a significant divergence in geography, with Asian revenues still down 74% compared to Q2 2019, whereas non-Asian revenues are 11% higher than Q2 2019

Asia continues to get dragged down by the lack of a recovery in Macau:

• Macau revenues remain 85% below pre-Covid levels vs Q2 2019
• By contrast, other Asian revenues are down 8% compared to Q2 2019

Earnings growth

We note that some major companies do not report earnings on a quarterly basis (such as Flutter, Entain, 888) and therefore the quarterly earnings before interest, tax, depreciation and amortisation (EBITDA) is taken from a smaller number of companies than the revenues. However, for those that report quarterly data:

• There has been a year-on-year decline of 5%, but a significant quarterly improvement, with Q2 adjusted EBITDA up 18% compared to Q1 2022
• However, this remains 29% below that reported in Q2 2019
• Land-based EBITDA remains 35% below that reported in Q2 2019
• Online EBITDA for this group of companies is 5% below that reported in Q2 2019, however, this is significantly skewed by the reporting of US-facing operators with large quarterly losses.

H2’s new add-on corporate research service covers over 65 global gambling operators/suppliers/affiliates, providing analysis of company results/newsflow, conference call notes and financial models for each company. This analysis is aggregated to provide further insight into industry trends and combined operator financial performance.

The new service also includes market share analysis of major markets such as the UK, Italy, Sweden, and Australia, as well as monthly state-by-state market share for the US sports betting and iGaming markets.