Campless Chance: BetMGM Sails through Q1 Nearing Profitability
BetMGM overcomes previous broad challenges in Q1, maintains forecast for FY2025 earnings
Score one for the gambling giants! BetMGM sailed through Q1, battling tough economic headwinds with aplomb, showing promise of reaching profitability by 2025. With a whopping net revenue of $443 million (£330.9 million/€389.1 million), a 34% increase from last year's quarter, this US heavyweight looks ready to swing into the black.
The three-month race yielded an adjusted EBITDA of $22 million, a remarkable improvement of over $150 million from a loss in the first quarter of 2024. The sport betting and iGaming segments saw significant gains, with revenue jumps of 68% and 27%, respectively.
BetMGM CEO Adam Greenblatt tosses out a confident statement: "We've seen the momentum we built in the second half of 2024 roll on into Q1, as we've implemented our iGaming strategy, allowing us to pedal faster than the market and at scale."
Steady as She Goes: No Macro Wobbles in Sight
As earnings season gets underway, economists eagerly sail the economic waves, examining the trade environment. Naturally, the unveiling of President Trump's tariff plan on April 2 sent global markets crashing, with the Dow Jones plummeting to its worst week in five years. The gambling industry felt the heat too, with leading stocks plummeting by more than 10%.
But worry not! The major indices have since steadied their course, responding to news that the Trump administration will delay tariff hikes on most trading partners. In BetMGM's case, CEO Greenblatt assures no signs of "macro" turbulence affecting player behavior.
As players tighten their belts, some operators may be forced to up anchor and stream more promotions to attract and retain customers. However, Greenblatt maintains that the acquisition and promotional costs have remained stable as a rock.
Full Steam Ahead on Retaining the Big Fish
Another key takeaway from the call concerns BetMGM's mission to reel in, and hang onto, the big-money players. In other words, Greenblatt and crew are counting on long-term relationships with high-value customers. The revamped approach to retention is evident in several key metrics:
- Active Player Days: Up 20% year-over-year, reflecting more frequent visits from existing players.
- Handle per Active Player: Up 37% over the same period, signaling higher betting volumes per active customer.
- Bets per Active User: Up 28%, indicating increased activity levels among users.
BetMGM amps up its focus on the cost-to-acquire ratio and the value of each customer. Greenblatt explains, "We're being more surgical in reinvesting in the players that bring the most value to the company." All hands on deck are set, as BetMGM eyes the long-term goal of $500 million in EBITDA, a target comparable to that of rival Caesars Digital.
Bracing for the Future
A series of unfavorable sports outcomes during March Madness took a $30 million bite out of net revenues. Nevertheless, BetMGM stays optimistic, reaffirming its expectation of being EBITDA-positive by 2025. The company also reiterates its net revenue guidance for FY2025, estimating between $2.4 billion and $2.5 billion.
With an unyielding iGaming strategy, focused player retention tactics, and a steadfast resolve, BetMGM braces for a prosperous future on the open seas of the gambling industry.
- Despite the turbulence caused by President Trump's tariff plan, BetMGM, led by CEO Adam Greenblatt, remains unphased, assuring no signs of macroeconomic instability affecting player behavior.
- In a bid to retain high-value customers, BetMGM is increasingly focusing on long-term relationships and the cost-to-acquire ratio, as reflected in key metrics such as active player days, handle per active player, and bets per active user.
- Confident of reaching profitability by 2025, BetMGM is steaming ahead, aiming to achieve a target EBITDA of $500 million, a goal comparable to rival Caesars Digital. Despite a $30 million loss during March Madness, the company remains optimistic about its future, reaffirming its EBITDA-positivity and revenue guidance for FY2025.
