Flutter Entertainment Plc has adjusted its 2023 full-year EBITDA guidance due to customer-friendly sports in Europe and Australia. Yet the FTSE100 gambling group maintains its core target of securing ‘structural profits’ for its US FanDuel property.
Q3 saw revenue rise across the FTSE100 group’s three core segments of the UK and Ireland, the US and International, with company wide income up 8% to £2bn (Q3 2023: £1.9bn). Headline growth was underlined by 16% increase in average monthly players (AMPs) with all Flutter units reporting customer growth.
However, sports betting revenue fell marginally by 2% year-on-year from £1.14bn to £1.12bn, attributed by the firm to a range of ‘customer friendly’ sporting results during the second half of the year.
This dip for sports earnings was offset by a 22% increase in revenue for the gaming segment of the group’s global business, which closed the quarter with a figure of £914m (£748m).
Additionally, the aforementioned acquisition of Sisal in April 2023 continued to have a positive effect on the group’s earnings, having secured Flutter a strong foothold in Italy and in markets such as Turkey and Morocco.
Peter Jackson, Flutter CEO
Peter Jackson, Flutter CEO, said: “The group had another strong quarter in Q3 and even in this seasonally quieter period, the power of our diversified business is clear with revenue growth of 13% to over £2bn.
“We remain the number one choice for sports betting and gaming customers globally, and our 16% growth in average monthly players augurs well for our continued growth and market leadership.”
A geographic breakdown saw Flutter’s revenue in its home markets of the UK and Ireland jump 11% from £506m to £566m with momentum continuing for both its online and retail divisions.
UK and Iris retail – which chiefly consists of the Paddy Power suite of high-street bookmakers across both countries – saw revenue growth of 9% from £66m to £72m, attributed by Flutter to ‘a good start’ to the Premier League and the success of its product proposition.
Online income from the two nations stood at £494m, an increase of 12% on corresponding Q3 2022 results of £443m with positive Premier League trading again cited as a key driver of growth.
A wider 6% uptick in sports betting in both countries was also noted, which Flutter stated was partly due to increased use of bet builders, was also referenced. However, UK&I success has not been replicated in Australia, where the firm acknowledged a continuing difficult environment.
Flutter’s revenue from Australia – where it is active via its Sportsbet brand, fell 7% YoY from £319m to £262m due to an ongoing ‘challenging racing market’ witnessed in Q2 continuing into Q3 alongside a 9% decline in sportsbook stakes.
For the International unit, revenue rose 19% to £539m (£466m), with a 10% increase in sports and a 22% increase in gaming. Although Italian revenue fell 4% Flutter continued to cite the contribution of Sisal to its business, whilst its pan-European profile was further boosted during the quarter via the acquisition of Serbian operator MaxBet.
Jackson remarked: “In Q3, our UK & Ireland brands continued to take share across online and retail channels through our winning product offering. In addition, our Consolidate and Invest markets drove strong momentum within our International business.
“We were pleased to add MaxBet to the Flutter portfolio, in line with our strategy for acquiring “Local Hero” brands in attractive markets. While market conditions in Australian racing remain challenging, as the clear market leader with a player base 1.8 times that in 2019, we are confident that Sportsbet is the best positioned brand in the market.”
As with other quarters, the US remained a standout growth region for the company as revenue rose 20% from £598m to £668m. The FanDuel brand recorded a 37% increase in new betting and gaming layers against the year prior and a 13% increase in stakes.
Flutter added that its stateside performance was bolstered by the popularity of the FanDuel sportsbook, which has been enhanced this year with new features such as a Parlay Hub, Sam Game Parlays.
“We are particularly pleased by the great progress we are making in the US,” Jackson commented. “We are the first online operator to achieve structural profitability, and the strong ramp in EBITDA during 2023 will continue into 2024 and beyond, as our profit margins expand materially.
“The NFL season is off to an excellent start with our product leadership driving average monthly player growth of 38% to 2.6m in the quarter. I am excited about our plans heading into the sports rich months of November and December as we execute on our winning strategy which, combined with the FanDuel Advantage, keep us leading the industry.”
Key corporate directives saw Flutter submit an SEC application for its planned listing on the New York Stock Exchange (NYSE), that is expected to take place in Q1 2024, with the company proceeding to end its listings on the Dublin Euronext Exchange and the LSE.
Providing a 2024 outlook, Flutter expects Australian market challenges to continue, and further notified that India’s new Good-&-Services Tax (GST), applied to all online games income will “postpone the profit turning point for Junglee” – in which it currently anticipates a £30m impact on the 2024 EBITDA outcome.
US prospects are expected to remain positive, however, given FanDuel’s market leadership position in the country. Revenue and adjusted EBITDA from the US is expected to hit £3.75bn and £140m, respectively, within the group’s previously rated guidance range of £3.6bn-£3.9bn in revenue and £90m-£190m in EBITDA.
“We are making good progress towards our US listing which will bring the Group significant benefits from accessing the world’s deepest and most liquid capital markets,” Jackson concluded.
“Overall, the significant potential for US growth and ability to leverage scale benefits across our diversified portfolio outside of the US, underpins our confidence in our significant and sustainable long term earnings growth potential.”
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