FanDuel’s parent company Flutter is a proud parent indeed after solid growth in the US for Q3.
“Flutter delivered a strong Q3 performance with pro forma growth of 11% in both revenue and average monthly players. Our US division is now our largest and generated $700m in revenue, up 82%. Good growth in our ‘consolidate and invest’ international markets and the acquisition of Sisal in August helped drive ex-US revenues,” said CEO Peter Jackson in the press release.
In the wake of the positive quarter, the company also updated US revenue guidance by $100 million. That puts its full-year revenue guidance up to roughly $3 billion.
“We are really pleased with our performance in our US division since the start of the NFL in September where we are now averaging over 1 million players on a regular NFL Sunday,” Jackson added. “In addition, we are seeing an increase in customer retention rates as our parlay products continue to grow in popularity, boosted by the start of the NBA season. The ongoing momentum in our US division has led to an upgrade to our outlook for the year, underpinning our confidence that we will be profitable for 2023.”
Top line numbers for Flutter and its US operations
Total Q3 revenue: $1.89 billion (up 22% with cost correction YoY)
Q3 US revenue: $598 million (up 82% with cost correction YoY)
Average monthly users overall: 9.6 million (up 23% YoY)
Average US monthly users: 1.86 million (up 42% YoY)
The vast majority of the US growth came on the sports side, where FanDuel holds 42% of the entire US market share. Online casino and poker also grew, but just a 36% uptick YoY compared with 106% on the sports side with both FanDuel and FOX Bet. While the company’s US online casino position isn’t quite up to the level of sportsbooks, the casino and poker side still holds a 19% market share.
Flutter pleased with valuation in FOX ruling
Jackson used the Q3 earnings call to take a quick victory lap in the court case which ruled the company had a $20B valuation.
“We’re delighted with last week’s ruling in our arbitration with FOX,” he noted. “With FanDuel valued at $20 billion in December 2020, it clearly vindicates the patience we have shown on this matter. Should FOX wish to go through the onerous licensing process for the 16 online states in which FanDuel is live and exercise the option, it will cost them $4.1 billion as we sit here today.”
During the call, Jackson and CFO Jonathan Hill also addressed the extent of efforts the company has put towards making its other US sportsbook brand, FOX Bet, viable. The judgment noted the company went above and beyond the steps necessary to try and make the brand successful. When discussing the future of the brand, Hill was careful to note they would be good partners through the agreement’s expiration next August but did say that, come next August, the future is up in the air.
Looking ahead to Maryland, Ohio, and California
Despite the resounding loss in California yesterday, Jackson still believes the state will legalize sports betting in the coming years.
“As we think about the US market longer-term, we find it hard to see a scenario where a sports-mad state like California won’t have access to what will be legally available in so many other US states.”
Jackson also confirmed that Ohio and Massachusetts will be the next planned markets for the company, both set to launch in Q1 of next year. The delays in Maryland are impacting forecasting to some extent, but Jackson still believes it will launch in 2023.
As for the US horse racing and DFS businesses, Jackson noted revenue was relatively flat across both verticals and conceded that the launch of sports betting in new states inevitably cannibalizes the existing DFS business, but the company is fine with that exchange.
While Jackson answered several questions about the business, he did defer on some topics, stating that next week’s investor presentation will address more aspects of the company, including its higher-than-average hold rate and the success of Same Game Parlays.
