Live blog: Flutter Entertainment H1 2019 financial results

Flutter’s share price is currently up more than 4%

Eilers & Krejcik analyst (and former EGR editor) Alun Bowden is not overly impressed by this morning’s results

https://twitter.com/gamblinglamb/status/1159031841007054848

Investor presentation now over

Stayed tuned throughout the morning for more updates on Flutter’s H1 results.

Flutter exec team are now taking questions from analysts

Could we see a more benign period of regulation with a new UK government and DCMS? Jackson: There is a 50% chance on the Exchange of an election this year, so I’d better go meet DCMS because they might not be there for long. Broadly, we are doing the right thing in driving a more sustainable industry. Its important to share the progress we’ve made because people don’t appreciate how much we’ve done. You might have heard me on Radio 4 talking about this and that’s something we’ll be doing more of.

More M&A? Hill: We are really pleased with integration of Adjarabet – its been bang in line with expectations. We know we can do this and run that process well. If we find more opportunities with the right payback we’ll consider those. We will give ourselves flexibility.

How much will Flutter invest in the US? Jackson: Its very hard to make forecasts in US. We don’t know how products will land, don’t know what competitors will do. We are working out a model for how much we’ll invest in big new states. It does end up costing money when new states come online.

Will Flutter roll out the My Betfair Rewards scheme with variable exchange rates from Ireland to rest of UK? Jackson: We need to give it a little time to mature – it’s performing in line with expectations and if that continues to be the case you will see us roll this out more broadly.

Could Betfair return to international markets it has exited? Jackson: Its been an unprecedented level of market switch offs . I have started to dread Dan [Taylor] coming to see me – we haven’t seen that level in the last several years. A lot of the international plan is to re-enter markets we’ve been forced out of but is dependant on price of licensing.

Flutter’s own summary of its H1 performance?

• Very productive first half

• Good underlying performance across the business

• Focus remains on growing a more diversified and sustainable business

• Confident we can make further progress in the second half

Online rev up 8% to £497m; team delivering ongoing momentum in Paddy Power, new product initiatives within Betfair, and ongoing integration of Adjarabet #FlutterResults pic.twitter.com/PQOVtdIYzl

— Flutter plc (@FlutterPLC) August 7, 2019

Morgan Stanley’s take on this morning’s results

“Following today’s results, we do not expect to change our overall forecasts, though these results suggest a stronger Australian result and weaker Online result than we previously expected.

We continue to appreciate Flutter’s strong US position and generally improved KPIs, offset by lower geographic diversity,enduring regulatory risk and a more expensive valuation than peers, though recent private equity bid speculation (note here) should continue to support the stock for now.

We rate the shares Equal-weight with a £62 price target.”

US market

Pennsylvania staking levels already 20% of New Jersey just weeks after launch.

Has now embedded casino content in FanDuel’s New Jersey app – led to meangnful uplift in Europe.

Jackson says US market could actually be bigger than previously expected – 10 states have passed online betting legislation now.

Jackson now turns his attention to the operator’s US business

How does Sportsbet stack up against its competitors?

Flutter Down Under…

Sportsbet CEO Barni Evans: New POC tax in Australia is equivalent to 11% of revenues. Reduced marketing spend across the market in digital – Google PPC rates coming down, competitors relinquishing rights to headline media assets.

Has launched My Betfair Rewards in Ireland. Customer can choose to pay more commission on the Exchange in return for rewards like free spins and free bets.

“Pleased with increase in player engagement we’ve seen so far with no fall in commission,” CEO Peter Jackson says. “We will be ramping up free bets on Exchange, to help us compete more directly with low margin sportsbooks and address a historic weakness perceived by our customer base about offering promotions”.

Flutter’s online marketing spend to drop £10m in H2.

US guidance assumes Indiana will launch online betting in H2.

Hill says US marketing spend is a little bit unknown as its a new area for the business: “The timing of the quantum of investment does have variability. But we will invest with discipline.”

CFO Jonathan Hill’s financial guidance for the rest of the year

The group had to turn off various “unforeseen” international markets this year including Switzerland, Serbia, Slovakia, Albania.

The switch-offs will cost around £14m in annual profit going forward and had/will have a disproportionate effect on the Exchange

CEO Peter Jackson gives an update on Flutter’s four pillar strategy

Flutter investor presentation now about to start…

What Regulus Partners had to say about the results

“Flutter is demonstrating continued operational momentum, albeit not at levels that seem to be growing the market, outside the strong regulatory tailwind (and strategically powerful collection of assets for early-mover advantage) of the US.

While the US continues to provide a growth story, doubling only means 15% growth at group level.

Flutter still needs to convert operational momentum into strategic growth, in our view, against a headwind of core market maturity and increasing regulatory scrutiny everywhere.”

What Flutter CEO Peter Jackson had to say on the operator’s European business

“In Europe, Paddy Power’s recreational focus and great marketing execution has helped deliver continued growth in customers. The build out of functionality for Betfair continues to make good progress, with sportsbook country specific pricing launched, along with additional languages and currencies.

“The requirement to switch off a number of international markets has illustrated how important these initiatives are. We have started to trial the second generation of our responsible gambling model and have been pleased to work with the industry in making a number of commitments to promote responsible gambling, which will improve the sustainability of our industry, even if it impacts sector earnings in the short term.”

Flutter’s share price movements so far this morning

Source: London Stock Exchange

The key online figures from Flutter’s results

And we’re off…

Stay tuned for all the latest insight into Flutter Entertainment’s H1 2019 results. The operator’s presentation for investors and analysts is coming up at 9am (IST/BST).