Winning ticket: Tabcorp (ASX:TAH) share price jumps 5% on record lotteries result

What did the Tabcorp half-year results show? We take a closer look.

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Key points

  • Tapcorp share price is up 5% today on the back of the company's half-year results
  • Lotteries and Keno revenue surged by 10.9% on the previous corresponding period
  • COVID-19 heavily impacted the wagering and media business 

The Tabcorp Holdings Ltd (ASX: TAH) share price is climbing today amid record growth in its lotteries business.

Tabcorp shares are swapping hands at $5.43 apiece, a 5.44% gain. In comparison, the S&P/ASX 200 Index (ASX: XJO) is rising less than 1%.

Let's take a look at what the gambling entertainment company reported today.

Tabcorp share price in the green on half-year results

Highlights of the company's half-year (H1 FY22) results include:

  • Group revenue of $2,934 million, up 2.2% on previous corresponding period (PCP) of H1 FY21
  • Earnings before interest, taxes, depreciation and amortisation (EBITDA) fell 5.5% on PCP to $529 million
  • Statutory net profit after tax (NPAT) of $175 million, down 5.4%
  • NPAT before significant items of $187 million, down 9.7%
  • Interim dividend of 6.5 cents per share, down 13.3% on PCP. This is a payment ratio of 77% of NPAT before significant items.

What else happened in the half?

Lotteries and Keno revenue grew by 10.9% on the PCP to $1,784 million, while EBITDA grew 15.1% to $358 million. This was a record result for Tabcorp.

Active registered customers in this business grew by 5% to $3.88 million. The digital share of lotteries turnover grew to 36.7%, a 4.6% improvement on PCP. Saturday Lotto turnover also surged 16%. Keno revenue fell 9.8% due to the impact of COVID-19 lockdowns.

Wagering and Media revenue fell 9.8% to $1,073 million, while EBITDA dropped 34.8% to $148 million. Revenue was "heavily impacted" by retail shutdowns in NSW with 102 lost days in city venues and 74 lost days in regional NSW. Once venues reopened in 2022, growth and performance improved.

Active TAB users in Q2 FY22 grew 7,000 from the PCP to 641,000.

Finally, gaming services revenues surged 6.8% to $78 million, while EBITDA fell 4.5% to $21 million. Revenues were impacted by COVID-19 given the significant fee relief provided to customers. Gaming Services returned to a full fee model on 1 December.

Management commentary

Speaking on the results helping to fuel the Tabcorp share price today, managing director and CEO David Attenborough said:

The record result from the Lotteries and Keno business again showcased the broad appeal of the business' much-loved products and brands, and the success of its omni-channel strategy.

While the wagering and media business was significantly impacted by the retail lockdowns imposed in NSW and Victoria, its performance across all channels improved once restrictions were lifted.

Gaming Services maintained its ethos of supporting its licensed venue partners in challenging times and provided significant fee relief to customers whose trade was impacted by COVID-19 restrictions.

As we have throughout the pandemic, our focus was on managing the operational and financial impacts on our businesses, as well as prioritising our people's wellbeing and supporting the recovery of our business partners.

What's next

Tabcorp is working on growth initiatives across the company. A new TAB app will be launched in 2022, while improvements to Oz Lotto are also on the way.

The demerger of the Lotteries and Keno business is on track to take place in June 2022 subject to approvals. This business would be known as The Lottery Corporation. Planning and execution on this demerger is making good progress.

Tabcorp is targeting $20 to $25 million in EBIT savings from its optimisation program in FY22.

Tabcorp share price summary

The Tabcorp share price has surged nearly 23% in the past year, while it is up around 8% year to date.

For perspective, the benchmark S&P/ASX 200 Index (ASX: XJO) has returned around 6% over the past year.

Tabcorp has a market capitalisation of roughly $12 billion based on today's share price.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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