5th Mar 2015 08:36
LONDON (Alliance News) - Online betting firm Betfair Group Ltd Thursday revised up its full-year earnings expectations following a strong third quarter, its fourth consecutive quarter of double-digit growth as it continues to attract new customers, and said it expects a strong finish to the year with record levels of political betting in the run up to the UK general election in May.
Betfair shares shot straight to the top of the FTSE-250 Thursday morning, after it said it is now expecting full-year earnings before interest, taxes, amortisation and depreciation of between GBP113 million and GBP118 million for its financial year to end-April, having said at its half-year results that it was expecting a figure between GBP97 million and GBP103 million.
Betfair shares were trading up 12% at 1,992.00 pence.
Betfair revised up the forecasts, as it posted a 17% increase in its earnings, before interest, taxes, deprecation and amortisation for the third quarter to end-January, to GBP23.6 million, and a 20% increase in revenue to GBP114.6 million, driven by a 35% increase in active customers to 760,000.
Revenue from sustainable markets - which include the UK, Ireland, US and Italy - was up 27% to GBP92.9 million in the third quarter. In the first-half of the year, Betfair recorded revenue growth of 26%, which at the time it said was driven by a strong customer base growth, the World Cup and favourable sports results. Sports revenue growth of 16% in the quarter continued to be led by mobile.
Betfair said its earnings growth in the third quarter was despite the introduction of the point of consumption based gaming duty in the UK on December 1, 2014, which it said wiped GBP7 million off its profit. It also caused its profit margin to dip to 20.6%, from 21.2% in the third quarter last year. Betfair said excluding the additional gaming duty, margin would have improved to around 27%.
"This was another strong quarter. Betfair has momentum and is continuing to gain share in its key markets by acquiring and retaining customers through product differentiation, attractive odds and generous promotions," said Chief Executive Breon Corcoran in a statement.
"We are entering one of the key periods in the sporting calendar and are focused on finishing the year strongly...The strong third quarter performance and the continuing momentum we are carrying into the final quarter mean we now expect full-year EBITDA of between GBP113 million and GBP118 million," he added.
Corcoran said the business is now two years into its substantial product and marketing investment programme, all of which are helping to deliver sustained growth.
The Cheltenham Festival takes place next week, a key event for Betfair, for both acquiring new customers and increasing engagement with existing users, it said. Its also anticipating record levels of political betting in the run up to the UK general election, which is set for May 7.
"Beyond that, we are set for record levels of political betting around a closely contested UK General Election. Betfair's Exchange is the go-to platform for those either wishing to have a bet on, or understand the most likely outcome of, the election," said Corcoran.
Betfair recently launched a major new marketing campaign called "Tap Tap Boom" advertising its mobile products and latest promotions.
Interestingly, Betfair said that in January, for the first time, the majority of its gaming customers used mobile, which it put down to product improvements and increased cross-sell of mobile Sports customers.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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