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Why the Tabcorp (ASX:TAH) share price plunged today on FY24 Q1

The Tabcorp Holdings Ltd (ASX: TAH) share price dropped 6% today after the gambling business announced a quarterly update.

TAB is Australia’s biggest multichannel wagering brand, offering a broad range of betting activities. Other brands within its portfolio include Sky Racing and Sky Sports Radio, and MAX.

Tabcorp Holdings Ltd (ASX: TAH) share price

Tabcorp FY24 first quarter update

In the first three months to 30 September 2023, compared to the first quarter of FY23, group revenue fell 6.1%.

Wagering turnover went down 0.9%, while wagering and media revenue declined 5.4%. This reflected the adverse impact of lower fixed odds because of racing and sports results. Fixed odds yields were 14.8% compared to 15% in the prior corresponding period and a preceding three-year average of 15.6%.

Digital wagering turnover increased by 1% and digital wagering revenue fell 3.9%.

Gaming services revenue dropped 12.7% because of the eBet sale (so revenue is no longer included) and lower contracted EGMs in the MPS business. The previously announced sale of MPS is currently expected to be completed by the end of the first half of 2024.

Tabcorp said that this update was given in the context of softer economic conditions and keeping the market informed. This seems to have harmed the Tabcorp share price.

Managing commentary

Tabcorp Managing Director and CEO Adam Rytenskild said:

Given the softer trading environment, I’m pleased we grew digital wagering turnover, which highlights that customers are responded to our new digital customer offering. We continue to be relentless in the way we execute TAB25 strategy and remain focused on making the right decisions for the long-term success of the business.

As we head into the Spring Carnival and the start of the NBA season, I’m excited to have released our 13th update to the TAB App since it was launched last Spring.

We’re in the midst of implementing significant change as a company and industry. Our strategy is on track as level playing field and licence reforms commence, our customer reputation grows, and cost base reduces. Our transformation continues at pace and I am confident we will deliver the value laid out in our TAB25 strategy.

Final thoughts on the Tabcorp share price

The Tabcorp share price is back to where it was a couple of years ago and pre-COVID. I’m not sure it’s the type of business that can deliver solid compounding growth, so it’s not one I’m looking to invest in.

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