Tabcorp Holdings Limited

Tabcorp reported first-half FY26 group revenue of $1.34 billion, up 1% year over year. EBITDA increased 14.3% to $217.4 million and EBIT rose 18.9% to $110.2 million; EBITDA margin improved 190 basis points to 16.2%. Domestic wagering revenue pre-VRI impact declined 2.5% despite modest turnover growth, with management estimating around a $10 million net revenue hit from weaker yields and about $12.2 million of incremental EBITDA from the reform Victorian wagering license in the half. Reported OpEx decreased 1.1%, adjusted OpEx excluding the reform Victorian license fell 3.7%, capex declined 11% to $51 million, and leverage ended at 1.5x net debt to EBITDA. NPAT before significant items grew 61.5%, and the interim dividend was $0.015 per share, a 56% payout ratio and 50% higher than the prior comparable period. For FY26, capex guidance is unchanged at $120 million to $140 million, cash conversion is expected to be 90% to 100%, and management expects second-half wagering turnover conditions to be similar to the first half.

Gillon Mclachlan framed the half as evidence that the turnaround plan is working, while stressing the company is only midway through it and still has work to do. He emphasized execution across retail, digital, media and product innovation, pointing to sell-out TAB Time events, TAB Takeover, younger customer traction and the planned rollout of national tote, TAB Live and next-generation EBTs. His tone was upbeat but controlled: “we’re on track,” “happy with the progress,” and “not overconfident.”

Mark Howell highlighted that earnings growth came from a modestly improving turnover environment, strong execution, and cost and capital discipline, while yields were below average. He quantified the main drivers: a roughly 15 bps yield drag, about $10 million of net revenue impact versus longer-term averages, $12.2 million of incremental EBITDA from the reform Victorian wagering license, $13.5 million of underlying cost improvement, and $51 million of first-half capex. He also noted underlying cash conversion of 86% in the half, expected to be 90% to 100% for the full year, cash interest of $54.6 million including $24.9 million tied to the annual Victorian license payment, and a new $300 million medium-term note at a 5.99% coupon with average maturity now 5.4 years.

Analysts focused on whether turnover growth in the second half means the same pace in dollars or growth rate, and whether cash is outperforming digital; management said they are referring to growth overall and declined to forecast the cash-versus-digital mix, while saying they are pleased with omnichannel trends. Questions also centered on the new retail commercial model, TAB Time, ACMA approval for TAB Live, and the national tote; management said EBT rollout starts in the first week of July, TAB Live will begin in New South Wales now that ACMA approval is in hand, and the national tote is still targeted for completion this financial year. On capital allocation, management said there is room for flexibility but would remain highly disciplined on any corporate opportunity, and on the cost bridge they said most savings came from FY25 actions and timing, with about $5 million of A&P spend expected to shift into the second half for the FIFA World Cup.