Tabcorp Annual General Meeting, Q1FY23 Trading Update

The company’s recent demerger of lottery and keno has meant that each company will have its own focus and will be able to create its own strategy moving forward. The latest financial results for Tabcorp indicate that the main goal it had set for itself is on course to being met, and quickly.

Expected Financial Results

Tabcorp Holdings Limited (Tabcorp) released an ASX announcement on Wednesday, detailing the company’s result for the first quarter of the 2023 financial year. This was part of Tabcorp’s Annual General Meeting (AGM) which included addresses and a presentation by Bruce Akhurst, chairman, and Adam Rytenskild, managing director and chief executive officer of the company. A highlight of the update was the 18.7% growth in group-wide revenue when compared to the same period last year.

Wagering and Media were up 14.2% in revenue, with a small increase in digital revenue market share, which went to 24.7%, up from 23.9% in Q4FY22. The latter is great news as digital market share had dipped below the 24% in FY22 and now seems to have stabilized. This is a very important step, as with the global pandemic loosening its grip, the retail cash market is making a return and a steady digital revenue means that this return isn’t happening at digital’s expense.

Gaming Services revenue was reported at a fantastic 91.7% growth, which Rytenskild noted that this figure is affected by the fact that there were venue closures and fee reliefs for the venues in the comparative period of Q1FY22, all thanks to COVID-19 cycles. The group guidance for FY23 cost growth is retained at around 3-4% on FY22 pro forma, with an increase expected in 1H23. The presentation also focused on retaining the FY23 capital expenditure forecast of up to $150 million, and $250-260 million for Depreciation and Amortization.

Sweeping Changes in Tabcorp

Akhurst’s address, on the other hand, focused on the demerger and changes in operational conditions, outlining a few key events. The demerger of Tabcorp’s lottery and keno businesses was the focal point in the address when it came to generating value for the company’s shareholders. He went on to say that since the demerger, the two businesses will be able to create more focused strategies for development thus creating the necessity for more sustainable growth. This also allows for shareholders to value each business on its own merits, he says.

The other events helped to level the playing field, as per the company’s own understanding, and two of them pertain to tax reforms in two different states: New South Wales and Australian Capital Territory. Both states changed their point of consumption tax, equalizing the rate at which foreign online operators are being taxed. Queensland also made changes in its taxes, along with other reforms, with most being beneficial for the industry’s long-term sustainability and development, as well as the final consumers.

Another important change that the company’s working towards lies in its digital focus, with its sports betting app receiving a long-awaited revamp. This is only one of the pieces the company is adopting in a series of sweeping changes that help it grow its digital market share, which Akhurst made clear will be a focus for future updates.