Betfair H1 profits up 56% after UK revenue boost
Sustainable territories now represent 77% of total revenue as UK and Ireland customer base rockets during H1 FY14
Betfair profits soared 56% to £32.5m during the six-month period ending 31 October as the operator continued to benefit from a focus on the UK and Irish market and growth in its fixed odds sportsbook.
Revenues from sustainable sources, defined as the regulated markets of the UK, Ireland, Denmark, Malta, Gibraltar and US, grew 11% during the company’s second quarter and now represent 77% of total group revenue.
Betfair’s fixed odds sportsbook product grew 39% in the period to £11.4m, but its core exchange product fell 7% year on year to £122.5m in H1 on the back of a 13% year-on-year drop in Q2.
Total revenue slipped 6% year-on-year to £188m, partly reflecting the operator’s withdrawal from markets in Greece, Cyprus and Germany during FY13 as part of CEO Breon Corcoran’s strategy to reduce Betfair’s reliance on unregulated markets.
Betfair’s UK and Ireland customer base grew by 25% in the period with the number of new customers acquired from the region up 77% in the 12 months since the company re-focused on sportsbook-led customer acquisitions.
Growth came on the back of a big increase in marketing spend with the sales and marketing budget in excess of £100m for the year, with Betfair targeting a “top tier presence” on broadcast mediums including Sky Sports and Channel 4 Racing.
Roughly a third of new UK and Ireland customers joined via the sportsbook, while 38% of customers used both the sportsbook and the exchange during the period and is a figure the company has targeted for further growth.
“This overlap is set to increase in the coming months following innovative developments to our bet matching technology, bringing the benefits of exchange-based pricing to sportsbook customers,” Corcoran said.
The automated integration of the operator’s exchange and sportsbook products is expected in Q4, and Betfair said it was making progress towards launching the exchange in Italy having released sportsbook in the country last month.
Betfair also said it expects strong revenue and margin performance from Betfair US following last week’s launch of regulated online gambling in New Jersey, having noted a start-up loss of £10m for the state.
And the operator will hope its burgeoning US business will be able to boost flagging gaming revenues which suffered a 25% fall during H1.
Poker revenues were hardest hit as they slumped 60%, a fall the company attributed to the impact of migration from the Ongame network to iPoker and a general decline in the poker market. The vertical now represents only 2% of total Betfair revenues.
While also taking into account a £5m start-up loss for operations in Italy, Betfair is forecasting full year EBITDA of between £82-87m and Panmure Gordon director Simon French said the consensus is currently at the top-end of that forecast.
“We have left our forecast unchanged which implies c£85m EBITDA post share-based payments,” French said.
Betfair’s share price had risen 28p to 1,058p this morning at the time of writing.
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