Bet-At-Home: Marketing Investment Pays Off
Edison | Mar 13, 2017 09:40AM ET
bet at home com AG (DE:ARTG) is a long-established sports betting brand with positive online growth drivers. An aggressive 2016 marketing campaign has boosted customer numbers and strong EBITDA growth is expected to continue into 2017. A high cash balance of €91.8m, together with a remaining €29m shareholder loan, supports the special dividend in May 2017. At 15.9x 2017e EV/EBITDA, the shares have traded well, helped by inclusion on the SDAX, as well as an attractive 7.1% 2016 dividend yield.
Long-established European sports betting brand
bet-at-home’s main markets are Austria (24% of gross win), other western Europe including Germany (47%) and eastern Europe (28%). The mix of gross gaming revenue (GGR) between sports and eGaming (casino, games, poker) is roughly 50/50. In 2016, 33% of revenues came from mobile, below the peer average but growing fast. Some of its markets are fully licensed (eg 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. There is some risk that earnings may be affected by new taxes in regulating markets such as the Netherlands and Poland, but this is in line with peers such as GVC, Betsson and Kindred.
Strong growth and high cash balance
With a strong Q4, 2016 EBITDA rose from €31.7m to €33.0m, in line with recently raised guidance. Major sporting events such as UEFA Euro 2016 are an excellent way to attract new customers and bet-at-home spent €44m on advertising in 2016, 31.7% of GGR (vs 30.0% in 2015). Customer numbers increased to 4.6 million (vs 4.3 million in 2015). With fewer major tournaments in 2017, we would expect lower marketing spend, and EBITDA guidance is €34-38m (vs consensus of €39.1m). bet-at-home ended the year with €91.8m cash (€82.3m excluding player balances) plus a remaining €29m loan receivable from Mangas (Betclic). It will pay a special dividend in May 2017, with a total payout of €7.5/share for 2016.
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