Flutter H1 online revenues flat as profits dip on new taxes and US efforts
Online gaming revenues the bright spot for the London-listed operator, up approximately 8% pro forma
Flutter Entertainment has posted H1 2019 revenues of £497m for its digital business, up 8% year-on-year but only 1% when excluding the operator’s Adjarabet acquisition.
Sports revenues were flat year-on-year at £334m, with sportsbook revenue increasing by 1% and exchange and B2B revenues down 2%.
The operator said sportsbook revenue for the Q2 period prior to the World Cup grew by 22% year on year, although this was partially a result of increased margin.
Exchange and B2B revenues were flat in Q2 prior to the World Cup.
The bright spot for Flutter in the six-month period was gaming, where revenue was up 29% in H1, or 8% excluding Adjarabet.
The company said: “The Paddy Power brand continues to enjoy good momentum in recreational customer growth which has been a key driver of gaming revenue growth.
“However, as we noted in our Q1 trading update, the responsible gambling measures we are taking are having an impact on higher value activity across both our UK facing brands and more particularly Betfair. This is partially offsetting good mass market growth.”
Adjarabet pro forma gaming revenues, which make up the majority of the business, were up 25%cc.
Underlying EBITDA for the online division was down 2% year-on-year at £139m, or up 5% when tax increases were stripped out.
“We have had another productive six months at Flutter Entertainment,” said CEO Peter Jackson. “All divisions are performing strongly on an underlying basis and have responded well to the challenges faced. We are pleased with the progress we are making to build a more diversified and sustainable business.”
The exec highlighted a 30% rise in Betfair Sportsbook’s international revenues, as the company launched differentiated pricing for different markets and the addition of new languages.
Overall group revenues climbed 18% to £1.02bn while profits fell 10% to £196m thanks to increased taxes.
US pro forma revenue climbed 55% to £160m, with FanDuel now accounting for half the New Jersey betting market, but Flutter warned it would take a £55m EBITDA loss following investments in customer acquisition.
“We are delighted with our US performance and have been encouraged by the regulatory momentum that has seen 10 states regulate online sports betting since the repeal of PASPA,” JAckson added.
“Cross-sell is an important contributor to our success, with around half our customers in New Jersey coming from our existing daily fantasy business, while strong cross-sales have delivered 15% market share in online casino.
“We have recently gone live in Pennsylvania, where we are one of the first operators to launch online, and we hope to replicate our success there too.”
Follow EGR’s live blog on Flutter’s financial results this morning here.