Flutter CEO Peter Jackson has reiterated the group’s confidence that FanDuel will achieve a full-year profit, with its US-facing brand recording revenue growth of 92% in constant currency in the last 12 months.
In its Q1 trading update, Flutter revealed that FanDuel made revenue of $1.36bn in the three months ended March 31, up 92% on the $536m generated in Q1 of 2022.
New state launches powers AMP growth
Active monthly players grew by 46% thanks to launches in both Ohio and Massachusetts, which powered a 20% increase in total new players as FanDuel claimed number one spot in both states.
Jackson noted that improved retention and new state launches as well as the strength of its same game parlay offering only fuels confidence that FanDuel will make a profit this year.
He told investors this morning: “There’s a lot of confidence we have in our ability to make a profit this year and the question really isn’t specifically how much we make – it’s what the trajectory of the business over the next subsequent years when we keep adding in layers of new customers, who will of course flip from costing us money to generating very significant contribution.
“I think what we’ve seen over the course of this year, we’ve been really pleased with the shift in our acquisition strategy to acquire customers of higher value. And then the insights the team had around acquiring customers in the run-up to the playoffs in football rather than trying to acquire customers in the second half of the Super Bowl vindicated the good work that the team is doing.”
Confidence was only reiterated as Jackson noted that its acquisition in Massachusetts was outside of the football season as well as only being accounted for in the opening three weeks, which were in Q1.
The CEO outlined that it would see further penetration in The Bay State in Q3 as the NFL season begins and that can help to drive further meaningful growth.
“We’d call out the very strong retention performance that we’re seeing across the business is something that’s helped support the growth and I think down to the quality of the product that we have for customers,” he added. “You’re never going to get the same level of penetration in a market when you’re outside of the football season as you do when you get football for people.
I think inevitably, there’ll be further penetration we’ll see in Massachusetts later on in the year when football restarts.”
Increased retention
Sports betting revenue increased by 116% YoY as FanDuel established itself as the market leader in the US sports betting space during 2022.
Over the last 12 months, FanDuel has improved its market share gains of 14ppts as market share has surpassed 50%.
FanDuel’s handle has improved by 43% compared to Q1 2022, whilst the hold rate stood at 7%, owing to 80 basis points of favorable sports results in Q1 2023 and unfavorable results in comparison.
“We know that when you have the best product in the market, and we clearly have the best products in the market, you can expect to have high levels of retention. Retention rates have continued to be a little bit better than we anticipated in the US market. That’s what’s contributing to some of the higher life-time values that we’ve seen over the years.”
Online casino market share now 23%
On the online casino side of the business, leadership was encouraged by growth which was “more than expected” as AMPs grew 47% and revenue jumped 43% YoY. The FanDuel Casino platform was late to market and Flutter anticipated that clawing market share would be slower than it has been.
The group noted that the online casino division recorded a 200 basis point boost to market share, which now stands at 23%, just 5ppts behind market leader BetMGM.
Jackson explained that he expects FanDuel to become the online casino market leader next year, outlining that product improvements are driving AMP growth.
“A lot of the benefits are coming from the reward machine, we’ve been really pleased with the way in which US consumers are engaged with it and it’s working very well for us. It was particularly pleasing for us that most of the market share gains we’ve been seeing have come from the direct casino acquisition channel.
“We know that there are further product enhancements to come, the team is doing a great job, we always can. This is the year where we get product parity with the market knowing that we’re behind last year, and then we’re going to get ahead next year.”
Total figures show Flutter’s global growth
The US remains Flutter’s most lucrative market from a revenue perspective, as the group recorded total global revenues of £3bn, up 46% YoY primarily boosted by FanDuel’s success.
UK & Irish markets generated $760.9m, up 16% YoY, whilst Australia contributed $361.7m, down 4% YoY, whilst the international unit – primarily comprising the Italian group SISAL – generated $757.2m in revenue.
Such fortune in the US is swaying the group’s mind on its future, as shareholders approved a motion to secure a secondary listing in the US via the NYSE or NASDAQ. Almost unanimously passed, the measure was only briefly addressed in Flutter’s earnings call but it does signal that the US is becoming a priority market for the Irish-based group.
Jackson did reaffirm to investors, however, that Flutter expects its US listing to take place towards the end of 2023, complimenting its current trading on the LSE.
Newly installed CFO Paul Edgecliffe-Johnson, who joined Flutter in March, told investors: “I’m excited to be joining the team and an opportunity to drive growth across the group to continue to build and maintain leadership positions in our market.
“Flutter’s growth algorithm of driving sustainable revenue growth through both more users and higher standards, with resources deployed from a scalable infrastructure platform and with a relatively low capital intensity of the opportunity for both structural margin improvement and significant free cash flow generation.”
