Yesterday, bet-at-home reported mixed Q3 results with a slightly weaker than expected topline, but lower OPEX. In detail:

Sales came in at € 10.3m (-17% yoy, -6% qoq), slightly below our estimates of € 10.9m, mainly due to lower betting GGR (€ 9.6m vs eNuW: € 10.0m) caused by lower betting volumes of only € 83m (vs eNuW: € 91m), as result of competitive pressure and regulatory changes (i.e. implementation of cross-product and cross-provider monthly betting limits). Gaming GGR stands at € 0.7m, in line with expectations. Margins in both segments declined as expected to 11.5% (betting) and 6.7% (gaming).

Q3 EBITDA was not as weak as expected with € -2.1m (vs eNuW: € -2.7m), as personnel expenses as well as other operating expenses further declined sequentially, showing that streamlining of operations paired with numerous cost-cutting measures is bearing fruit and overcompensating for marketing expenses that doubled yoy to € 6.2m (vs eNuW: € 5.3m), Unsurprisingly, the positive effects of the high marketing spendings are not yet visible in the numbers and should materialize within the next quarters.

With Q3 in the books and by taking into account the positive effects of the high marketing spending, bet-at-home should easily reach its new sales guidance of € 44-48m (eNuW: € 47m), as well as the upper end of its EBITDA guidance of -3m to € 1m (eNuW: € 0.7m) as positive effects from outsourcing and streamlining operations as well as declining new customer claims bode well for bet-at-home. Still, the risks associated with the liquidation process of the Entertainment Ldt. and provisions for current and potential new customer claims make it difficult to adequately project EBITDA.

As only € 9.5m in accounts receivables against the Entertainment Ldt. are at risk (according to the final Q2 figures) and new customer claims are fading, which limits potential new provisions, we are cautiously optimistic that both topics are off the table at year end. Further the implementation of cross-product and cross-provider betting limits should not burden the topline beyond 2023. That, paired with the promising long-term trends (shift towards online and increasing acceptance of betting and gambling) makes bet-at-home an interesting turnaround candidate for 2024 and beyond.

For now, we reiterate HOLD with an unchanged, PT of € 3.80 based on FCFY´23e.