Five talking points from Paddy Power's IMS
Some of the key takeaways from the Irish operator's interim management statement, including a major mobile upgrade
1. Australia continues to shine
Paddys’ Australia-facing Sportsbet business was undoubtedly the star performer, with stakes up 33% and net revenue up 23%. Growth was driven by increased marketing around the Spring Carnival, and the launch of its Punters Club offering. The club allows players to create a single betting account for themselves and their friends, and set their own rules, betting rounds and contributions. The operator said 5,000 clubs had already been created, and expects Punters Club to drive future revenue growth. Peel Hunt analyst Nick Batram said Paddys’ performance in Australia was “impressive” and part of its market share growth had likely come at the expense of William Hill.
2. Mobile gets major upgrade
Differentiated product has long been at the core of Paddy Power’s strategy, and earlier this month the operator began to roll-out a major upgrade to its mobile offering. The operator released its new native iOS app for its core PaddyPower.com product earlier this month, designed and built entirely in-house. It said the new app delivers “significantly improved customer navigation” with faster price updates and bet placement. So far 90% of iOS users have upgraded to the new app, with Paddys saying feedback had been positive. New Android and web apps will launch next month, and are expected to drive sportsbook growth, with total PaddyPower.com stakes already up 25% in the two weeks following the iOS launch.
3. Gaming drives growth in Italy
Paddy Power may still have a way to go before it achieves profitability in Italy, however the 3% YoY increase in revenues reported in its IMS shows progress is being made. Growth was driven by egaming following the launch of a raft of new proprietary titles from Paddys’ Cayetano development studio in Bulgaria. CEO Andy McCue said Italy was a “large and focused slots market” and that leveraging its proprietary content was starting to pay dividends. “We are very happy with the game launches we have had so far. We are now in a position where we can now launch most of the games [from Cayetano] quite quickly following their introduction to PaddyPower.com,” he added.
4. How they compare
Paddys’ results compare favourably to rival William Hill. While the Irish operator saw total online revenues increase 7% during the period, Hills online revenues fell by 3%, albeit during a slightly different reporting period. The Irish bookmaker also out-performed on sportsbook, with total revenues up 23% compared to a 9% decline at their competitor. And while Hills reported a 2% increase in sports stakes, Paddy Power trumped that with a 23% uptick in wagers. Paddy Power also compares well to Ladbrokes, which saw a 6.4% increase in digital revenues during Q3, while its Australia-facing business reported a 26% rise in revenues.
5. Betfair merger on track
The merger between Paddy Power and Betfair remains on track to complete in the first quarter of 2016. The operator said it had submitted all the relevant filings to applicable regulators, and that it expects to publish shareholder documentation in the coming weeks. The IMS barely mentioned the merger however Batram said the proposed coming together of two of the sector’s power players had been “rightly embraced by the market” but was reflected in Paddys’ share price, which has risen 45% to a record high of 114.10 from when the merger was first announced to the time of writing.