Betfair upgrades full year forecast as profit soars 51%
Product and marketing investment pays off as H1 EBITDA reaches record £74m and firm pledges £200m return to investors
Soaring gaming revenues and favourable sporting results helped Betfair post a 51% rise in profit to a record £73.9m for the six months ended October 2014, the company announced this morning.
And the strong performance, which CEO Breon Corcoran attributed to the “strong delivery against our strategy”, has led Betfair to upgrade its FY2015 EBITDA forecast to between £97m and £103m.
“We have substantially strengthened our competitive position by investing in products that differentiate Betfair and by enhancing our marketing capabilities in a crowded market place,” Corcoran said.
Group revenue was up 26% to £237.6m with Betfair although the firm said that stripping out World Cup revenues and unusually high gross win margins revenue grew by a more modest 12% in the period.
Sports betting revenue – combining the exchange and fixed-odds products for the first time – rose 24% year-on-year to £166.6m while gaming revenues were up 44% to £42m.
The operator said revenue from the World Cup amounted to £15.9m, approximately double the revenue generated during the Euro 2012 football championships following “significant marketing investment” that saw the operator clinch a lucrative advertising spot with ITV.
Betfair’s mobile sportsbook revenues soared on the back of the tournament and accounted for 70% of total sportsbook revenue throughout H1, with mobile gaming revenue also reporting impressive growth of 145% year-on-year.
Betfair’s focus on sustainable markets, which it defines as the UK, Bulgaria, Denmark, Gibraltar, Ireland, Italy, Malta, Spain and the US, contributed 81% of group revenues, up four percentage points on the figure in the corresponding period a year ago.
Betfair also announced a cash return of £200m to investors after the group saw its cash reserves swell to £271.4m in the period, boosted by underlying free cash flow of £114.1m.
“This will leave Betfair with a more efficient capital structure whilst retaining flexibility to invest in the business and pursue strategic options,” Corcoran said.