Paddy Power Betfair full-year revenues rise 14%

Paddy Power Betfair’s digital business this morning posted a 14% rise in full-year proforma revenues after the firm enjoyed double-digit growth across its core divisions.

Total revenues for the 12-month period ended 31 December 2016 were £853m, an increase on the combined £748m the two legacy businesses recorded the year prior.

Its sportsbook and gaming divisions posted the same 14% rate of growth across the year with sports up to £609m and gaming having climbed to £245m.

Sportsbook growth was driven by an 11% uptick in active customers helped by Euro 2016, while gaming growth continuing to be driven by cross-sell from sports and mobile.

PPB said gaming growth slowed in the fourth quarter, thanks to lower direct gaming activations on the Paddy Power brand, a reduction in Betfair sports customers cross-sold to gaming and reduced year-on-year VIP activity across both brands.

In response, the firm increased TV advertising from mid-December.

Underlying EBITDA was up by 27% to £289m with underlying operating profit up 34% to £255m, thanks to “efficiencies arising from the integration of the businesses and continued operating leverage”.

However, the firm said Group operating profit totalled just £12m compared to £219m in 2015 due to costs “related entirely to the merger”.

“2016 was a transformational year for Paddy Power Betfair with much of the integration of the businesses completed sooner and more efficiently than expected,” Breon Corcoran, Paddy Power Betfair chief executive, said.

“The integration of our technology platforms is on track and customers are already seeing some benefits, including more markets and better odds.

“In keeping with our dual brand strategy, we are serving different parts of the market with distinct value propositions. For instance, at Cheltenham next week Paddy Power has a generous money back offer for second place and Betfair will reward winners with a free bet offer and exceptional odds.

“We have created a business with considerable scale that is stronger and better able to compete than either of the individual legacy companies. The Group is well positioned to deliver sustainable, profitable growth.”

The group continued its focus on regulated markets, with regulated revenues up 16% and unregulated revenues down 2% thanks primarily to the year-on-year impact on the first half from exiting from Portugal in July 2015.

The Australia business, under the Sportsbet brand continued to grow, with revenue up 34% (18% in constant currency) to £312m. PPB said the underlying growth was even better than that, with 25% growth in active customers an revenues hit by adverse horseracing results in H1.

Australian underlying EBITDA increased by 18% to £94m.

The US business, including racing network TVG, the Betfair Casino in New Jersey and the Betfair New Jersey Exchange, grew 28% (13% cc) to £91m.