Flutter: Reduced full year guidance despite the strength of Q3 trading – Edison Comment

Richard Sloss, Investment Director, Edison Group:

“Sports betting and gaming operator Flutter Entertainment PLC has today reported a 9% increase (12% at constant currency) in revenue to £1.439 billion in the three months ending September 30. Its Sports revenue rose by 17% to £906m from £798m the same time last year while its gaming revenue increased by 5% to £534m from £527m. With strong customer growth in UK, Australia and US markets, Flutter’s average monthly players rose by 13% to 7,257,000, up from 6,401,000 in the previous year. UK & Ireland revenue dipped slightly by 5% compared to 2020, a tough comparative following last year’s condensed sporting activity.

“The group’s 2018 acquisition of FanDuel continues to pay dividends in the US division, as revenue grew by 85%, with FanDuel accounting for 94% of the total. The group’s official sports betting partnership with the NFL should cement their position as US market leader, while Australia’s extensive travel restrictions resulted in a 24% increase of average monthly players.

“Flutter further highlighted its efforts in customer protection and new measures to protect younger customers, with a £500 spending cap for under 25s. Undoubtedly, these measures are designed to respond to an increase in regulation, with the suspension of business in the Netherlands costing the group an estimated £10m in EBITDA in 2021, and £40m in 2022. Despite the strength of Q3 trading the group has reduced its full year EBITDA guidance following a period of unfavourable sports results in the first few weeks of October.

“With the group continuing to flex its muscles in M&A, Flutter has recently announced a takeover of B2B gaming software developer Singular, in a bid to expand reach into CIS member states. The group’s expansion ambitions will give investors confidence, while the opening of its Leeds-based landmark technology and innovation hub demonstrates the group’s credentials as a tech innovator.“

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