9th Aug 2023 10:22
(Alliance News) - Flutter Entertainment PLC's trickier time in Australia overshadowed the good news of a US "inflection point".
The Paddy Power owner expects earnings in line with market expectations, but warned of softer conditions in Australia. It also said it could list in the US as early as the final three months of the year.
Revenue in the first half of 2023 jumped 42% on-year to GBP4.81 billion, from GBP3.39 billion a year prior. Flutter reported a pretax profit of GBP83 million, swinging from a loss of GBP51 million.
Earnings before interest, tax, depreciation and amortisation soared 76% to GBP765 million from GBP434 million. Its adjusted Ebitda grew 73% to GBP823 million from GBP476 million.
In the US alone, it reported an adjusted Ebitda of GBP49 million, swinging from a loss of GBP132 million a year earlier.
Chief Executive Peter Jackson said: "The first half of 2023 marks a pivotal moment for the group, with our US business now at a profitability inflection point, helping transform the earnings profile of the group and significantly enhance our financial flexibility.
"The US delivered another exceptional performance. We acquired over two million new players in the period, cemented our leadership position in sports and grew our share in iGaming to 23%. The US business was profitable in the first half with FanDuel generating over USD100 million in Ebitda. This profit profile provides us with a clear platform to invest materially in the second half, as we strive to continuously improve our customer offering. Our player acquisition strategy has consistently delivered, generating excellent returns on investment, embedding even greater value into our customer base, and increasing our future profitability."
Looking ahead, the company said its second half has started in line with expectations. Assuming "normalised" sports results, it expects its full-year adjusted Ebitda to land in line with guidance.
Excluding the US, it expects an adjusted Ebitda between GBP1.44 billion and GBP1.6 billion, helped by "strong momentum" in the UK, Ireland and some of its international markets. This will be "offset by softer than expected market conditions in Australia".
In the US, it expects an adjusted Ebitda between GBP90 million and GBP190 million, with net revenue between GBP3.6 billion and GBP3.9 billion.
interactive investor analyst Richard Hunter commented: "Regulation in the sector, as evidenced recently in Australia, is something of a constant overhang which is par for the course. In the UK, the industry has already seen a reduction to a GBP2 maximum stake for fixed-odds betting terminals, a ban on gambling using credit cards and the possibility of stricter affordability checks also being considered. Furthermore, a new white paper by the UK government could add further hurdles in due course following its proposals, which Flutter has welcomed as a 'significant moment' for the sector."
Flutter shares traded 5.1% lower at 14,140.00 pence each in London on Wednesday morning. The stock is up 64% over the past 12 months, however.
Hunter noted the stock has enjoyed a "breathless run" recently, so some profit taking was an inevitability.
"However, this does not detract from the immediate prospects for the group, with the market consensus of the shares as a buy highly likely to remain intact," the analyst added.
Flutter CEO Jackson said the company could add a US listing "this year or early next year".
In February, Flutter said it was considering an additional US listing amid the growing success of its US-based sports betting company, FanDuel.
AJ Bell analyst Russ Mould noted this may "diminish the ranks of an increasingly depleted FTSE 100".
The London Stock Exchange, which has struggled to attract sizeable new listings, and seen companies such as the building materials firm, CRH PLC, move their listings to the US. Softbank Group Corp also chose to list UK chip designer, Arm across the pond.
Plumbing and heating products supplier Ferguson PLC made a similar move to CRH, while miner BHP Group Ltd has also shifted its own primary listing, turning to Sydney.
By Eric Cunha, Alliance News news editor
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