Tabcorp CEO and Managing Director Gillon McLachlan said during the operator’s results on Wednesday, that the group’s turnaround plan was on track, but there is still work to do.
Revenue for H2 amounted to AU$1.34 billion (US$953.4 million), up 1% year-on-year. This came after growth across Tabcorp’s two core business segments: wagering and media, and integrity services.
EBITDA before significant items was also higher year-on-year, as was net profit after tax, again before significant items. However, certain costs hit the group’s bottom line, with statutory net profit down 14.2% to $21.7 million.
Still work to do for Tabcorp
Overall, McLachlan was positive about the period. Speaking during an earnings call, he was keen to highlight Tabcorp’s progress with its turnaround efforts, saying the group is now halfway through its transformation.
The turnaround has focused on resetting the cost base, modernising wagering technology and stabilising earnings. This followed several years of competitive and operational pressure, while Tabcorp also lost digital momentum to rivals and was carrying an inflated post-demerger cost structure.
With this, it switched attention to reducing expenses, simplifying operations and rebuilding its product capability. McLachlan said the group has now moved beyond restructuring and into execution mode, with improved underlying earnings, tighter balance sheet control and a renewed push to close the digital competitiveness gap in Australia.
“The numbers reflect the progress we’ve made and we’re steadily building a culture of doing what we say we will do,” McLachlan said. “For me, that’s critically important. I want to stress that we’re midway through our turnaround plan, and there’s still work to do.
“Through TAB and SKY, our digital, retail and media assets are more closely connected, creating a genuine omnichannel experience for our customers and I expect that to evolve further in the second half of the year. TAB Takeover, TAB Time, Mega Pot and Miss By One products are examples of the differentiation we are creating
“We’re not yet at the level I want us to be. But I’m pleased we’re on track against our FY26 objectives, and we made good progress in the first half.”
Wagering growth despite digital dip
Taking a closer look at the H1 figures, wagering and media remained Tabcorp’s core revenue source. For the six-month period, revenue edged up 0.8% to $1.25 billion.
Wagering revenue increased 1.6% to $1.16 billion, with domestic wagering up 1.1% to $1.05 billion. Tabcorp said domestic growth was helped by changes to its licence in Victoria, with this having also helped drive revenue up in FY25. Excluding the impact of the reformed Victoria licence, domestic wagering revenue decreased by 2.5%
This increase came despite a 0.5% decline in digital revenue to $536.9 million, with digital active users down 4.4% year-on-year and turnover falling 0.2%. In contrast, cash domestic wagering revenue climbed 2.8% to $511.1 million after a 1.2% rise in turnover.
International wagering was up 6.6% to $115.1 million, helped by an increase in customers. Some $192.5 million was noted in media revenue, 0.2% ahead of last year, driven by international export performance.
As for integrity services, revenue was 4.1% higher at $91.7 million.
Significant items hit bottom line in H1
Turning towards profit performance, operating expenses were marginally higher (1.1%) at $350.2 million. However, such was the impact of the wider turnaround effort, particularly the ongoing cost reduction programme, that EBITDA rose 14.3% to $217.4 million.
Depreciation and amortisation costs were 9.9% higher at $107.2 million but earnings before interest and tax before significant items was up 18.9% to $110.2 million, with cost savings having flowed directly into operating profit. Net profit after tax but before significant items was also 61.5% higher at $35.7 million.
However, certain significant items hit Tabcorp’s bottom line. These included Victorian licence remeasurement costs, although reform helped revenue growth and ongoing transformation expenses, thus masking improvements in the underlying operating performance. As such, statutory net profit was down 14.2% to $21.7 million.
What next for Tabcorp?
Looking to this year, there is generally a positive outlook. Wagering turnover is expected to reach the same level as H2, helped by this summer’s World Cup. Some additional operating costs associated with the tournament are also expected.
Tabcorp added that its focus will continue to be on executing against its evolved strategy, in particular delivering an omnichannel experiences for customers. Phase one changes to the retail commercial model are expected to yield some benefit in FY26, but will likely be largely reinvested into venues to drive increased customer engagement.
“Our turnaround plan is on track,” McLachlan said. “Earnings have increased. We continue to deliver meaningful cost savings and our balance sheet is in good shape. We are focused on executing our strategic agenda over the remainder of FY26 and beyond, and we’re going to be relentless in executing it.”
One venture that will not go ahead in H1 this year is the proposed purchase of BetMakers, with talks over a possible deal between the two companies having concluded at an early stage.
Tabcorp had sought out BetMakers to accelerate its technology transformation and initial discussions took place in December. However, BetMakers said while the talks highlighted opportunities for BetMakers’ wagering technology products, this was at an early stage and “no formal offer was received”.
Original article: https://igamingbusiness.com/finance/half-year-results/tabcorp-turnaround-plan-on-track-h2-growth/
