Paddy Power Betfair plc Good Q2 revenue growth

Paddy Power Betfair plc (LON:PPB) announced interim results for the six months ended 30 June 2018.

Financial highlights (in constant currency3):

· H1 revenue up 7%, with Q1 flat and Q2 up 13% (up 9% in period pre-World Cup)

· Good Q2 revenue growth in all operating divisions:

– Online: revenue up 13% with sports +12% and gaming +14%

– Australia: revenue up 19%

– Retail: revenue up 6%

– USA: revenue up 20%

· H1 underlying1 EBITDA2 up 1% to £217m, or up 6% excluding changes in betting taxes & levies and losses in DRAFT (Q1 flat, Q2 up 13%)

· Net cash of £148m at 30 June; £201m returned to shareholders via dividends & share buybacks in H1

Strategic and operational highlights:

· Good progress on returning the Paddy Power brand to growth

· Sportsbet using scale advantage to increase investment in marketing and customer value to further enhance its leadership position ahead of potentially disruptive tax changes

· Combination of Betfair US with FanDuel completed in July, creating a unique platform to address the nascent US sports betting market opportunity

Outlook:

· Full year 2018 underlying EBITDA, pre-US sports betting, now expected to be between £460m and £480m, reflecting recent trading momentum, the introduction of additional taxes in Australia and the inclusion of losses from the FanDuel daily fantasy sports business

Paddy Power Betfair, Peter Jackson, Chief Executive, commented:

“It has been a busy and successful few months for Paddy Power Betfair. We have made substantial progress against our strategic priorities and trading in Q2 was good, with all brands and operating divisions contributing to the Group’s double-digit revenue growth.

In Europe, product enhancements and improved cross sell rates have led to stronger gaming revenue growth over the past few months for both brands, whilst customer satisfaction with the Paddy Power sports app has stepped up. Recent marketing campaigns have also been successful with the Betfair brand increasingly identified as having the best odds. The World Cup was a showcase event for Paddy Power, with a series of successfully executed marketing campaigns leading to it being one of the UK’s most talked about brands in social media conversations around the tournament.

In Australia, despite significant upcoming tax headwinds, Sportsbet continues to target further market share gains by using its scale to increase investment in marketing, product and its value proposition.

In the USA, we were delighted to add FanDuel to the Group’s portfolio of leading sports brands, creating the industry’s largest online business, with a large sports-focused customer base and an extensive nationwide footprint. Our FanDuel sportsbook is now available in New Jersey and with our recent partnership with Boyd Gaming we’re looking forward to launching in further states as the legislation progresses.

We now have much better visibility of the regulatory and fiscal changes in the UK, Australia and the USA, and believe that our scale, leading customer propositions and strong balance sheet mean we are well positioned to build a business that can generate sustainable shareholder returns over the long term.”