Betsson AB year-end report 1 January – 31 December 2025

Betsson reported Q4 2025 revenue of EUR 303.9m (-1% y/y, organic +5%) with casino revenue +3% and sportsbook revenue -9% (margin 8.8% vs 9.8%). Q4 EBITDA was EUR 69.3m (-20%) with an EBITDA margin of 22.8%, EBIT EUR 53.2m (-24%) and net income EUR 35.0m (EUR 0.24/sh); operating cash flow weakened to EUR 23.1m. Full-year revenue rose to EUR 1,197.0m (+8%, organic +13%) with FY EBITDA EUR 313.7m (‑1%) and net income EUR 182.4m (EUR 1.29/sh); net debt was a net cash position of EUR -157.7m. Management cited higher gaming taxes and increased product/tech investments as drivers of lower quarterly profitability, while proposing a EUR 0.66 ordinary dividend, initiating a EUR 40m buyback and refinancing a EUR 75m bond at 275bp over EURIBOR.

Analysis

Market structure: Betsson (BETS-B) shows resilient top-line: FY revenue +8% (organic +13%) and casino up, but Q4 EBITDA margin fell to 22.8% from 28.2% as regulated-market mix rose to 68% (vs 60%) driving higher gaming taxes. Winners include regulated-market incumbents with scale (ability to absorb higher tax) and bond investors (recent 4-year senior unsecured at +275bps signals improving credit). Losers are thin-margin sportsbook operators and B2B providers exposed to single-client concentration — one B2B customer drove Q4 B2B decline.

Risk assessment: Key tail risks are adverse regulatory moves (additional tax hikes or licensing restrictions) and a larger-than-expected B2B client churn; both could compress EBITDA by >300–500bps over 12 months. Near-term (days-weeks) volatility will centre on the webcast and Q1 guide; medium-term (3–12 months) drivers are World Cup 2026 demand and execution of product investments; long-term risks include sustained higher tax footprint and talent-driven opex inflation.

Trade implications: Tactical long in BETS-B is justified (support from EUR40m buyback + ordinary dividend €0.66) but size and protection matter. Consider entry via a 6-month call spread (long 0–5% ATM call, short +12% call) sized 2–3% NAV, funded by selling 3-month 10% OTM puts sized half notional; hedge tail risk with 6-month 10% OTM puts if regulatory headlines spike.

Contrarian angles: Consensus may underappreciate upside from product investments and World Cup 2026 customer acquisition — incremental sportsbook margin rebound of 50–150bps during tournament is plausible, lifting quarterly EBITDA by €15–30m. Conversely, market may underprice B2B concentration risk; a short vs Entain (ENT.L) or Kindred (KIND-SDB) pair could isolate Betsson-specific execution/tax downside.

Key Decisions for Investors

• Establish a 2-3% long position in Betsson (BETS-B) within 1-4 weeks, using a 6-month bull call spread: buy ATM call, sell +12% call (size = 2-3% NAV). The spread caps cost and captures upside from World Cup and buyback/dividend catalysts.
• Sell 3-month puts 10% OTM on BETS-B sized at 50% of the call-spread notional to fund the spread and collect premium; if assigned, accept a larger long at lower basis but cap downside with protective puts below -10%.
• Buy 6-month protective puts 10% OTM for existing BETS-B exposure if position >3% NAV to guard against regulatory/tax shock; budget 1-1.5% NAV for this hedge.
• Execute a relative-value pair: long BETS-B (2%) vs short Entain (ENT.L) or Kindred (KIND-SDB) (1.5%) to isolate Betsson’s buyback/dividend and product execution upside versus larger peers with different regulatory exposures; review P/L at quarterly updates.
• For credit desks: monitor secondary spread on Betsson senior unsecured bonds; consider buy if secondary spread >300bps (offers yield pickup vs current 275bps issue) and balance against improved liquidity and net-cash (-€157.7m).