Tabcorp posts $1.5B revenues in FY23 in first full year following demerger

Australian gambling company Tabcorp reported a net profit after tax (NPAT) of AUD 66.5 million ($42.7 million) in FY23, its first full year of operation following the demerger of the Lotteries and Keno business in June 2022. The wagering giant’s shares climbed more than 5 per cent on Thursday following the report.

Revenues stood at AUD 2.4 billion ($1.53 billion), up 2.6% from the previous year. Group EBITDA before interest, tax, depreciation and amortization was AUD 391 million ($251.2 million), up from AUD 381.6 ($245.25 million) for the previous year. Growth was driven by a hefty boost from retail caused by the re-opening of stores that were closed at the same time the previous year.

The NPAT was recorded after incurring a non-cash impairment charge of AUD 49 million (before tax) relating to the Gaming Services business and other significant items benefit totaling AUD 16.4 million (before tax), the company said in its annual report.

The company announced it will pay a fully franked dividend of 1.0 cents per share. This represents a payout ratio of 60% of NPAT before significant items and equity accounted loss.

The company said its TAB25 vision, a three-year strategic business mission announced in February this year, is well on track. “Year one was a foundation year where we created the products, the policy settings and attracted the right people to position the business for growth and achieve our TAB25 aspirations," the report said.

The initiative aims to achieve a 30% digital revenue market share, 10% return on invested capital (ROIC) and operating expenditure (Opex) of AUD 600– AUD 620 million in FY25. However, the market share of digital revenue fell from 24.9 percent to 24.5 percent, as per the report.

One of the objectives of TAB25 is to achieve a level playing field in every Australian state and territory "so that foreign-owned online bookmakers licensed in the Northern Territory pay the same taxes and fees as Tabcorp." The company also said it will ensure greater investment in the racing industry and its participants.

“We now have a level playing field in Queensland, with legislative changes implemented in December 2022, as well as in the ACT and Tasmania. Victoria plans to be a level playing field from next year under the proposed new wagering lisence, while in NSW a process has commenced and we’re participating in the current review," the company said in its report.

"Pleasingly, we’ve seen an immediate improvement in the performance and growth of the Queensland TAB following reforms in that state – highlighting the opportunities for our Company when we are able to compete on a level playing field."

The company said it successfully launched the new TAB App in time for the Spring Racing Carnival in FY23, which has garnered 805,000 active customers in the fiscal. Tabcorp also released new products and features subsequently, including new social betting features such as Bets Friends, Same Race Multi, and upgrades of its Same Game Multi.

“We’ve now closed product gaps to our competitors and are focussed on becoming market leaders. To complement our new digital strategy, we also made a strategic investment in a 20% equity interest in social digital wagering platform, Dabble, providing exposure to a fast-growing, innovative business,” it added.

“The days of old Tabcorp where defensive behavior and underperformance were rewarded are now gone,” Tabcorp chief executive Adam Rytenskild told investors. “We’ve had 10 updates to our app in nine months – in old Tabcorp that would have taken over two-and-a-half years.”