Flutter Entertainment has published its interim results for the first six months of 2022, reporting growth in group revenue and monthly players, and a decline in group EBITDA.
Reflecting on the results, CEO Peter Jackson highlighted the group’s US operations, noting he was “particularly pleased” with the progress being made in Q2 and the market share they’ve managed to obtain with FanDuel.
Flutter reported revenues of $4.12bn in H1, a 9% increase year-over-year compared to H1 2021’s $3.71bn.
The group noted that the uptick in revenue was driven by recreational player growth, as the average monthly players (AMPs) for the measuring period came in at 8.7m, 14% higher YoY (2021: 7.6m) thanks to rapid expansion across the US.
Per vertical, sports revenue came in $2.57bn, a 10% growth YoY (2021: $2.3bn), while gaming revenue stood at $1.54bn, a 8% rise YoY (2021: $1.41bn).
The group’s adjusted EBITDA of $579m, a 19% drop YoY (2021: $726m) which it says is “in line with expectations”, while the adjusted EBITDA margin stood at 14.1% (2021: 19.6%).
Adjusted EBITDA was affected by the increased US investment as the business scales and builds towards full-year profitability in 2023, as well as the implementation of proactive safer gambling initiatives and international regulatory changes which improved the group’s sustainability.
Flutter reported an adjusted profit for the period of $215m, a 42% decline YoY (2021: $373m), and a net debt increase of 12% YoY to $3.65bn (2021: $3.26bn).
“The first half of 2022 was positive for the Group with significant progress made against the strategic objectives we outlined in March,” commented Jackson on Flutter’s H1 results.
“We expanded our recreational customer base by over one million players in the half and increased the proportion of customers using safer gambling tools to over one third.”
Flutter expansion boosts US performance
Flutter’s US division (FanDuel, FOXBet, TVG, PokerStars, and Stardust) saw its total revenue improve by 50% YoY to $1.27bn (2021: $793m) in H1, with an adjusted EBITDA loss of $160m, a 53% uptick YoY (2021: $105m).
The group notes that its H1 performance in the US was driven by “efficient customer acquisition in new and existing states”, and a “superior product driving strong customer economics and good operating efficiencies” which was offset by the cost of its “sportsbook launch in New York where tax rates are higher”. US AMPs grew by 49% YoY to 2.1m (2021: 1.4m).
Within Flutter’s US performance, FanDuel Group represented 97% of revenue and 80% of Adjusted EBITDA loss.
US sports revenue grew by 58% YoY to $937m (2021: $550m) with sportsbook revenue increasing by 91% thanks to staking growth which improved by 108% YoY to $13.2bn (2021: $6.17bn).
Over the past year, Flutter’s sportsbook has expanded further across North America, launching in five new US states (Arizona, Connecticut, New York, Louisiana, and Wyoming) as well as Ontario, Canada, contributing to the H1 performance.
Further benefits towards the H1 figures were provided by a full six-month of revenues from Michigan and Virginia.
Net revenue margin of 6.0% was 40 basis points below expectations “due to a run of adverse sports results in Q1”. Net revenue margin would have been broadly flat YoY if these results were removed.
Flutter adds that its “improving product mix and superior pricing and risk management capabilities funded additional promotional generosity to acquire customers in the period in both new and existing states”. They also offset the impact of “favorable sports results in the prior year”.
US gaming revenue was 31% higher YoY to $341m (2021: $243m) thanks to a 40% increase in AMPs and a full six months of revenue from the three additional gaming states launched in the prior year (Michigan, West Virginia, and Connecticut).
Jackson said: “We are particularly pleased with the momentum in the US where we extended our leadership in online sports betting with FanDuel claiming a 51% share of the market and number one position in 13 of 15 states, helping contribute to positive earnings in Q2.
“We remain firmly on the path to profitability in 2023, driven by our compelling customer economics and disciplined investment.”
Outside the US, Jackson notes that Flutter continues to remain “well positioned” due to its leadership positions in mature markets and high-growth market investment in regions such as India, Canada, and Brazil.
In the UK, the CEO added while the group states it is disappointed in the government’s Gambling Act Review White Paper delay, it is “confident that the safer gambling changes” it has already made have positioned it well for the future.
In Australia, Jackson reports that Flutter has “delivered another excellent performance with revenue and players continuing to grow” and that he is also “delighted” to welcome Sisal to the group following the closure of its £1.6bn acquisition.
Flutter’s 2022 outlook
Looking ahead, Flutter states that H2 has started “in line with expectations” as there are currently no real signs of a consumer slow down, but they’re “closely monitoring key spend indicators given the uncertain macro economic outlook”.
The group expects full-year EBITDA to be in line with market expectations, assuming normalized sports results.
In the US, so long as it launches online in Kansas in Q4, Flutter anticipates net revenue to fall between $2.85bn and $3.1bn, with an adjusted EBITDA loss of between $273m and $334m.
Jackson concluded: “The second half of the year has started well and we look forward to the start of the football seasons in both the US and Europe.
“Being part of the Flutter Group provides unique strategic advantages to our portfolio of brands, giving access to expertise, technology, and resources to drive performance and capitalize on further growth opportunities we see ahead.”
