Flutter Entertainment makes significant progress against strategic objectives

Paddy Power Betfair

Flutter Entertainment plc (LON:FLTR) has announced interim results for six months ended 30 June 2022.

 Reported1
H1
2022
£m
Reported1
H1
2021
£m
Reported1
YoY %
Adjusted2
H1
2022
£m
Adjusted2
H1
2021
£m
Adjusted2
YoY %
Adjusted2
CC3
YoY %
Average monthly players4 (‘000s)8,7167,625+14%
Group Revenue3,3883,053+11%3,3883,053+11%+9%
Group EBITDA5434562-23%476597-20%-19%
Group EBITDA excluding US608684-11%-10%
(Loss)/Profit after tax(112)(86)177306-42%
(Loss)/Earnings per share (pence)(64.7p)(50.4p)97.2p171.1p-43%
Net Debt at period end63,0042,682

Operational Highlights:

•     Group: Positive revenue momentum of +9% driven by recreational player growth

–     Average monthly players (‘AMPs’) 1.1m or 14% higher at 8.7m

•     US: Adjusted EBITDA positive in Q2

–     Sports betting market share accelerated to 51%7 in Q2 driven by FanDuel’s superior product, efficient customer acquisition and strong operational execution

–     Increasingly profitable player base underpinning confidence in full year 2023 EBITDA profit8

•     Group ex-US:

–     UK & Ireland: H1 performance reflects safer gambling initiatives and prior year Covid frequency benefit; product improvements delivered in H1 support expected return to revenue growth in H2

–     Australia: AMPs 10% higher with strong customer retention driving revenue growth

–     International: Investments in high growth markets generating strong returns, partially offsetting known headwinds; Acquisition of Sisal completed on 4th August 2022

–     Three-year compound growth in revenue of 10% and in Adjusted EBITDA of 6% demonstrating growth through regulatory change, driven by operational execution, scale and diversification

•     Sustainability: Positive Impact Plan launched in March; Safer gambling tool usage at 34.8% of online customers, two percentage points up from December 20219

Financial Highlights:

•     Adjusted EBITDA of £476m (Reported EBITDA of £434m), in line with expectations

–     Increased US investment as the business scales and builds towards full year profitability in 20238

–     Proactive safer gambling initiatives and International regulatory changes improved sustainability of Group

•     Reported loss after tax of £112m (2021: £86m) after £286m charge for amortisation of acquired intangibles

•     Net debt increased £322m year-on-year to £3,004m at 30 June 2022 including H1 completion of Tombola acquisition. Leverage ratio of 3.4 times6 (June 2021: 2.3 times), or 2.6 times excluding US losses

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Outlook:

•     H2 has started in line with expectations. No discernible signs of a consumer slow down currently, but we are closely monitoring key spend indicators given the uncertain macro economic outlook. Assuming normalised sports results, we anticipate full year EBITDA to be in line with market expectations:

–     US: Net revenue ahead of expectations at between £2.3bn and £2.5bn ($2.85bn – $3.1bn) and Adjusted EBITDA loss of between £225m and £275m

–     Group ex-US: Adjusted EBITDA of between £1,290m and £1,390m including a five-month contribution from Sisal (completed 4 August)

•     Hosting an investor day on our US business on 16 November 2022

Peter Jackson, Flutter Entertainment Chief Executive, commented:

“The first half of 2022 was positive for the Group with significant progress made against the strategic objectives we outlined in March. We expanded our recreational customer base by over one million players in the half and increased the proportion of customers using safer gambling tools to over one third.

We are particularly pleased with momentum in the US where we extended our leadership in online sports betting with FanDuel claiming a 51% share of the market and number one position in 13 of 15 states, helping contribute to positive earnings in Q2. We remain firmly on the path to profitability in 2023, driven by our compelling customer economics and disciplined investment.

Outside of the US, the business remains well positioned thanks to its leadership positions in its mature markets and the investment we are making in attractive, high growth markets such as India, Canada and Brazil. In the UK, while the delay in publishing the Gambling Act Review White Paper has been disappointing, we are confident that the safer gambling changes we have already made to date position us well for the future. In Australia, we delivered another excellent performance with revenue and players continuing to grow. We were also delighted to welcome Sisal to the Group earlier this month, a business that performed strongly during H1.

The second half of the year has started well and we look forward to the start of the football seasons in both the US and Europe. Being part of the Flutter Group provides unique strategic advantages to our portfolio of brands, giving access to expertise, technology and resources to drive performance and capitalise on further growth opportunities we see ahead.”

Analyst briefing: The Group will host a questions and answers call for institutional investors and analysts this morning at 9:30am (BST). Ahead of that call, a pre-recorded presentation will be made available on the Group’s corporate website (www.flutter.com/investors) from 8:00am. To dial into the conference call, participants need to register here where they will be provided with the dial in details to access the call.

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