Flutter Entertainment reported revenue growth of 38%

Flutter Entertainment plc (LON:FLTR) has announced interim results for six months ended 30 June 2023.

Pro forma references include Sisal for a full 6-month period in both 2022 and 2023. See appendix 2 for a reconciliation of adjusted pro forma to statutory numbers. Any differences due to rounding.

Operational Highlights:

•     Group: Delivery of strategic goals drove Flutter’s growth engine; strong H1 player momentum with average monthly players (“AMPs”) +28%, driven by US growth (+43%) and the addition of Sisal, which has performed strongly since joining the Group (Group pro forma AMPs +18%)

•     US: Reached profitability inflection point, FanDuel generated $100m (£79m) Adjusted EBITDA in H1 (US division $63m (£49m)). Scale advantage compounding with revenue +63%

–     Consolidating clear #1 position in sportsbook, with 47% market share in Q2⁷

–     Margin benefit over the market expanded to 410bps; new NBA markets further evidence of sustainable product leadership

–     Improved iGaming proposition drove market share gains to 23% in Q2

•     Group ex-US: Growth through regulatory headwinds with pro forma revenue +8% and EBITDA +4%

–     UK & Ireland (revenue +13%): Product enhancements and efficient generosity underpinning recreational customer growth and driving market share gains in both sports and gaming

–     Australia (revenue -1%): Effective retention of enlarged customer base (AMPs +7%), offset by Covid spend reversion and point of consumption tax changes

–     International (revenue +8%): Division at a growth inflection point, ‘Consolidate and Invest’⁸ markets driving performance, now comprise 77% of divisional revenue and growing at +19%

•     Sustainability: Positive Impact Plan progressing well; Play Well⁹ tool usage, +7 percentage points to 42% with 34% female representation in leadership as we move closer to 2026 goal of 40%

•     US listing: Working towards a listing in late Q4 2023 or early Q1 2024

Financial Highlights:

•     Reported revenue growth of 38% for Group, benefiting from an exceptionally strong US performance and strong momentum in UK&I and International, along with the addition of Sisal in August 2022 (pro forma revenue +24%)

•     Group at earnings transformation point with Adjusted EBITDA +72% to £823m (pro forma +37%)

–     US Adjusted EBITDA of £49m ($63m) versus a £132m loss in H1 2022

–     Group ex-US Adjusted EBITDA +24% (pro forma +4%), strong top line momentum and the addition of Sisal, which has performed strongly in H1, partly offset by Australian tax changes

•     Reported profit after tax of £128m (H1 2022: Loss of £112m) after £314m charge for amortisation of acquired intangibles

•     Adjusted basic earnings per share (“EPS”) of 237.5p, 144% higher than H1 2022; Reported EPS of 73.8p from loss of 64.7p in H1 2022 reflected swing to profitability in current period

•     Net debt of £4.6bn at 30 June 2023 (31 December 2022 £4.6bn) and pro forma leverage ratio of 3.3 times (31 December 2022 3.9 times)⁶

Outlook:

•     H2 has started in line with expectations. Assuming normalised sports results for H2, we anticipate full year Adjusted EBITDA to be broadly in line with market expectations:

–     US: Net revenue of between £3.6bn – £3.9bn ($4.5bn – $4.9bn) and Adjusted EBITDA of between £90m – £190m ($120m – $240m)

–     Group ex-US Adjusted EBITDA of between £1.44bn – £1.6bn, with strong momentum in the UK&I and International, offset by softer than expected market conditions in Australia

Peter Jackson, Flutter Entertainment Chief Executive, commented:

“The first half of 2023 marks a pivotal moment for the Group, with our US business now at a profitability inflection point, helping transform the earnings profile of the Group and significantly enhance our financial flexibility.

With our divisions and their brands benefitting from the competitive advantages provided by the Flutter Edge, Group performance in the period was very strong, with delivery of our strategic objectives resulting in pro forma EBITDA growth of 37%. Our recreational player base increased to over 12 million monthly players, and importantly, more players than ever interacting with our safer gambling tools, aided by a £45m investment in our Play Well strategy in H1.

The US delivered another exceptional performance. We acquired over two million new players in the period, cemented our leadership position in sports and grew our share in iGaming to 23%. The US business was profitable in the first half with FanDuel generating over $100m in EBITDA. This profit profile provides us with a clear platform to invest materially in the second half, as we strive to continuously improve our customer offering. Our player acquisition strategy has consistently delivered, generating excellent returns on investment, embedding even greater value into our customer base, and increasing our future profitability.

In the UK, we took market share due to ongoing product enhancements, while in International, Sisal continues its strong trajectory since its acquisition in August 2022. This combined momentum helped offset the reduction in Australian profitability, due to more challenging COVID-related comparatives and a changing tax environment.

The second half of the year has started well and we look forward to adding a US listing for Flutter shares later this year or early next year.”