4th May 2022 17:54
(Alliance News) - Shares in Flutter Entertainment PLC rallied on Wednesday after the sports betting firm reported strong US growth in the first quarter of 2022.
Shares in the Paddy Power parent closed up 5.1% at 8,716.00 pence in London on Wednesday, though the stock remains 26% lower since the start of 2022.
The Dublin-based company said in the first quarter, total revenue was 5% higher year-on-year at GBP1.57 billion from GBP1.49 billion. This was a 6% increase on a constant-currency basis.
Average monthly users rose 15% to 8.9 million.
US revenue rose 45% to GBP429 million, as it acquired over 1.3 million new US customers in the period. FanDuel sportsbook launched in New York and Louisiana in January, and also expanded into Ontario in April, after the quarter.
Broker Peel Hunt called the US growth "remarkable", while Davy said the performance reflects its "enviable position in the all-important US market".
Peel Hunt said: "Within 18 months the US should start to become materially profitable and cash generative while still driving the growth of the group overall. We believe this prospect is not reflected in the share price and we reiterate our Buy recommendation."
Meanwhile, UK & Ireland revenue dropped 8%.
This was led by online revenue which declined by 20%. This was expected, Flutter said, following the introduction of safer gambling measures and the Covid restriction-induced peak from the year before.
The online drop was somewhat offset by the recovery of UK&I retail, which brought in GBP65 million, compared to no revenue the year before during Covid closures. UK retail levels were just 6% lower than pre-Covid levels in the first quarter of 2019.
An 8% lift to revenue in Australia was more than offset by a 5% decline in International revenue.
Wednesday's trading update shows how Flutter's bet on the US is paying off, said Hargreaves Lansdown's Susannah Streeter.
By expanding in the US, said Streeter, Flutter is "insulating the business" if regulation tightens up in the UK.
"A consultation into affordability checks is set to be unveiled by the Gambling Commission in the UK in the coming months and the government's gambling review white paper due later this month is also expected to include broad similar proposals. If strict affordability checks such as proof of pay levels are introduced to protect problem gamblers, they could considerably disrupt earnings given that the UK market represents a sizeable chunk of income," said Streeter.
By Elizabeth Winter; [email protected] and Lucy Heming; [email protected]
Copyright 2022 Alliance News Limited. All Rights Reserved.
Related Shares:
Flutter Entertainment