Flutter lauds Tombola and Sisal additions as 2022 revenue jumps 22%

Flutter Entertainment has reported a 22% year-on-year (YoY) constant currency (cc) increase in its group revenue to £7.6bn during 2022.

Delivering its results for the preceding 12 months, the London-listed operator revealed a 4% YoY increase in its group EBITDA, which rose to just over £1bn in the year, or £1.2bn with the exclusion of the US market.

Financials were buoyed during the period by a 21% YoY rise in sports betting revenue across the group to £4.7bn and 23% YoY growth in gaming revenue, which rose to £2.9bn.

At a group level, Flutter’s average monthly player numbers also grew over 2022, jumping to 10.2 million, an increase of 26% YoY.

Flutter cited the benefits of both its Sisal and Tombola acquisitions, both completed in 2022 as lifting company financials, as well as strong organic growth across the business.

However, these numbers were offset by a £160m impact arising from known regulatory changes and the imposition of safer gambling initiatives across the business.

The FTSE 100 giant also reported a loss after tax of £305m, citing impacts of a £608m charge for the amortisation of “acquired intangibles” by the business.

As in previous quarters, Flutter’s US division, namely the FanDuel brand, continued to lead the charge in respect of revenue, with 2022 revenue increasing by 67% YoY to £2.6bn on a cc basis.

US divisional growth was mainly driven by an 81% YoY rise in sports betting revenue to £1.9bn and a 34% YoY increase in gaming revenue to £619m over the 2022 period. Average monthly player numbers also shot up during the year to 2.3 million, a rise of 49% YoY.

Flutter has said FanDuel’s US market share amounted to 50%, with Maryland and Ohio launches proving the most successful to date for the group. The firm also cited an improved igaming proposition as improving its market share in igaming by 21% over the period.

Flutter’s UK and Ireland division reported 4% YoY total revenue growth during 2022 to £2.1bn, buoyed in part by a 56% spike in retail revenue to £272m offset by a 1% drop in UK online revenue which amounted to £1.8bn over the same period.

Three factors were cited by the firm in its discussion of the UK and Ireland results; the acquisition of Tombola, its retail business being open for a full year post-Covid-19 and an improved product offering during the second half of 2022.

This followed the launch of Bet Builder and enhancements to the existing Sky Bet BuildaBet product as well as the launch of the Paddy Power Wonder Wheel offering. Inversely, the normalisation of the Covid-19 environment was cited as a factor in the slight decline in online.

Buoyed by the inclusion of Sisal and Tombola, Flutter’s international division saw its revenue increase by 24% YoY during 2022 to £1.6bn as well as increased revenue in what the firm called “consolidate and invest” markets.

International sports betting revenue grew 56% YoY to £358m during 2022, while gaming revenue increased by 18% to £1.3bn over the same period. Strong performances across Italy, India and Turkey were referenced by the group as highlights during 2022.

In contrast with Flutter’s other divisions, Australian divisional revenue fell 6% YoY during 2022 to £1.2bn, with reductions in staking, and an enlarged player base during 2021 when compared to 2022 as factors for the decline.

This, Flutter suggested, was hit also by a reduction in player engagement during the period, a £30m hit from sporting event cancellations due to adverse weather and an increase in competition during H2 2022 and Q4 leading to lower customer spend.

Flutter Entertainment CEO Peter Jackson

Flutter Entertainment CEO Peter Jackson welcomed the “strong performance” of the Flutter brand over the year, lauding the continued execution of its strategic priorities first outlined in March 2022.

“Growth in our recreational customer base delivered 2022 revenue growth of 27% and we ended the year with a record 12.1 million average monthly players in Q4,” Jackson explained.

“We have an unparalleled number one position in the US where we continue to go from strength to strength. The combined power of the ‘FanDuel Advantage’ and the ‘Flutter Edge’ delivered our most successful launches to date in Maryland and Ohio.

“Outside of the US we have been pleased with the performance of the business as we faced into regulatory changes and challenging comparatives.

He continued: “We are well placed to build on gold medal positions in our mature markets while we are delivering very strong growth in a range of attractive high growth markets.

“During the year, we invested £60m in safer gambling initiatives across the Flutter Group and have been really encouraged by the eight-percentage point increase achieved in safer gambling tool usage to over 40% of our player base,” he added.

Addressing 2023, Jackson said the year was off to a “pleasing start” driven by positive momentum from 2022.

“With our combined US business on track to deliver a positive EBITDA for the full-year 2023 for the first time, the group is currently at an earnings’ transformation point and we look forward to delivering future growth and progressing further against Flutter’s strategic priorities in the coming year,” the Flutter CEO concluded.

Flutter’s stock price fell by almost 5% (4.34%) in early trading (2 March) on the London Stock Exchange to a price of 1,296p.

Delivering his assessment on Flutter’s results, Regulus Partners analyst Paul Leyland suggested there were “reasons to be positive” for each of the firm’s operational divisions.

“Perhaps most crucially, Flutter is clearly showing that a strong central investment in product and technology can drive revenue synergies as well as cost synergies,” he explained.

“If Flutter’s capex is anything to go by, it is hard to see how disruptors dent Flutter’s market share in key markets without a radical shakeup of the customer proposition (which in fairness the online gambling sector is due for).” Leyland added.