Topic: bet-at-home cut its FY23 sales guidance but remains optimistic to reach the upper end of its EBITDA guidance range. In detail:

Sales are now expected to come in at € 44-48m, 14% below previous year (at mid-point) and 11% below our estimates (eNuW old: € 51.9m). The reasons for the guidance cut are: 1) Lower expected margins in the betting segment (eNuW: 11.0% vs 13.1% in Q2) as result of a higher than usual number of favorite wins in Q3 and 2) lower betting volumes on the back of competitive pressure and regulatory changes (i.e. implementation of cross-product and cross-provider monthly betting limits).

Despite the weaker expected topline, management remains optimistic to reach the upper end of its EBITDA guidance of € -3m to € 1m. Key drivers are positive effects from partially outsourcing and streamlining operations as well as declining new customer claims. Still, we expect a negative EBITDA to the tune of € -2.7m (after positive Q1 and Q2) as marketing efforts were intensified over the summer (€ 5.3m vs € 2.8m in Q2) in order to support the start of the new soccer season.

Assuming positive effects from Q3 marketing spending on the topline in Q4, coupled with a normalization of marketing spending, FY23 sales are seen to come in at € 47.4m with € 0.8m EBITDA (eNuW).

Apart from the operating performance, the risks associated with the liquidation process of the bet-at-home.com Entertainment Ldt. and provisions for current and potential new customer claims continue to burden the case. Still, as only € 9.5m in accounts receivables against the Entertainment Ldt. are at risk (according to the final Q2 figures) coupled with fading new customer claims, which limits potential new provisions, we are cautiously optimistic that both topics could be off the table by year end.

Further, regulatory changes 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.

Despite the fact that we see a lot of light at the end of the tunnel, we remained cautious for the moment. HOLD with a reduced, conservative PT of € 3.80 based on FCFY´23E.