Flutter matches trading expectations as Jackson ups FanDuel’s US growth projections

Flutter Entertainment Plc has underlined the scale, efficiency and product excellence of its global brand portfolio that has registered a 40% increase in active monthly players (AMPs) to 7.6 million.  

Publishing its H1 2021 interim results (period ending 30 June), the firm recorded group pro-forma revenues of £3 billion, up 30% on corresponding H1 2020 results of £2.4 billion. 

Headline revenue growth was attributed to the ‘excellent online performance’ of its sports betting units, which generated combined revenues of £1.89 billion (H1 2020: £1.19bn) – as UK&IRE, Australia and US units benefited from a normalised sporting calendar.

Sports growth was supported by Flutter’s global gaming units which maintained combined revenues of £1.15 billion, matching the ‘elevated performance’ recorded during last year’s lockdown period.

“The first half of 2021 exceeded our expectations as we made substantial progress against our operational and strategic objectives while maintaining excellent momentum in growing our player base,” commented Group CEO Peter Jackson.

“Our global sports businesses benefited from further enhancements to our products and the return to more normalised sporting calendars while we sustained our strong performance in gaming despite the challenging comparatives set last year.”

A breakdown of individual unit performance saw the AMP’s customer base of Flutter’s UK&IRE online brands increase to 3.3 million (H1 2020: 2.3m) as Betfair, Paddy Power and Sky Bet online sportsbook brands achieved combined wagering of £5.2 billion – driven by a “strong Euro 2020 performance by recreational customers”.

Flutter’s UK&IRE portfolio achieved combined online revenues of £1 billion, boosting period operating profits of £297 million (H1 2020: £193m) – helping Flutter offset continued retail closure headwinds that accounted for losses of £59 million.

“SkyBet, Paddy Power and Betfair continued to deliver a differentiated proposition to recreational and more engaged customers alike as our team pursued its ‘complement and compete’ strategy,” commented Flutter on its UK & IRE results.

It added: “Good progress has been made on integration following the merger, with ‘centres of excellence’ created across key areas. This has enabled the sharing of greater insights in areas like pricing and risk management, leading to improvements in our product offering across brands.”

Period headwinds were cited by Flutter’s ‘international unit’, maintained by PokerStars, as having registered a 3% decrease in active players to 1.95 million.

Trading against peak comparatives, which boosted H1 2020 revenue performance by +£200 million, PokerStars registered an 11% revenue decline to £680 million with a further 52% EBITDA downturn of £179 million (H1 2020: £397m).    

PokerStars EBITDA decline was attributed to post TSG merger compliance adjustments and adverse German regulatory demands – which Flutter anticipates will reduce the unit’s annual contribution by circa £115 million.

Elsewhere, Flutter’s Australia unit led by Sportsbet AUS continued its uninterrupted growth momentum, delivering a 56% EBITDA increase to £201 million, driven by a combination of 27% revenue growth to £585 million, as the performance was maximised by merger-related cost synergies which reduced total operating costs by 8%.

“In Australia, Sportsbet delivered a phenomenal H1 performance with high customer retention rates during a period of reduced COVID disruption, suggesting that the business has experienced a permanent step change in scale,” the group detailed.

“In International, which faced particularly challenging revenue comparatives following the growth in poker last year, revenue declines were less pronounced than anticipated as we continue to reposition and invest in the business for long-term sustainable growth.”

Flutter H1 trading was dominated by the significant US developments of its FanDuel unit, which registered period revenues of £652 million ($906 million).

The fast-growth unit reports that it has acquired over 2.2 million customers since the stateside launch of regulated sports betting, at an average cost of $291 – in which Flutter projects 1.2X return on return on investment.

Flutter continues to prioritise the acceleration of FanDuel’s proprietary US platforms and risk management solutions for US sports (and maximum % operating margin) – which saw the unit record period costs of £1.1 billion.

Providing a FanDuel outlook, Flutter maintains that the unit will be EBITDA positive by 2023, with the outcome dependent on further US state openings.  

“In the US, we remain the number 1 online sports betting operator by some distance thanks to the quality of our products and the extensive reach of the FanDuel brand,” Jackson noted on FanDuel momentum.

“The customer economics we are seeing in the US bode very well for the future, with early FanDuel customers generating positive payback within the first 12 months of acquisition.

“We remain absolutely focused on extending our sports product advantages and replicating our market share success in further states as they regulate. In gaming we see an opportunity to grow our market share and look forward to further enhancing our product offering in the coming months.”

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