FanDuel reaches profitability as online casino share jumps

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Flutter CEO Peter Jackson has said that FanDuel has reached profitability ahead of schedule and that the US business is beating its targets for its 2030 goals. 

Reporting total group results for H1, Flutter noted that FanDuel made a positive adjusted EBITDA contribution of $100m during the six months ended June 30. Jackson noted that FanDuel is “structurally profitable”, meaning the contribution of current customers will more than offset the investment in customer acquisition. 

FanDuel’s revenue jumped by 63% year-over-year during the period, fueled by the addition of two million new users from both new and current states.

Speaking to investors this morning Jackson explained: “Our US business is now structurally profitable, with FanDuel delivering an H1 adjusted EBITDA of $100m including Q2 EBITDA of $153m. This occurred six months earlier than we forecasted when providing this guidance back in August 2021. 

“As I outlined then, our US customer base is now a sufficient scale to more than offset the cost of future customer acquisition. This effect will continue to compound and drive significant profit growth, which in turn will transform the earnings profile and financial flexibility of the group.”

Asked about the core reasoning for this success during the first half, Jackson explained that the business has focused attention on acquiring more high-value customers to achieve more efficient marketing spend. 

He noted that, particularly around the Super Bowl, FanDuel acquired more high-lifetime value customers which helped to boost the bottom line during Q2. 

“The nature by which we acquired the customers meant that the quality of customers are much better, in general. In the first half we’ve been really pleased with all channels and our lifetime values have proved to be better than we originally anticipated. 

“We think the quality of our product levels of retention, and the structural margin changes we are making particularly to pricing accuracy have all contributed to giving us high LTV. We’ve got real confidence in that.”

The CEO also noted that the FanDuel sportsbook product investment and innovation have resulted in a healthy bottom line. The introduction of micro-betting content during the NBA, Jackson explained, has given them high-margin bettors to boost the operator’s portability for the period.

He praised the work of FanDuel’s tech team and management for an intense focus on innovation. 

“When customers are picking up those newer products we made available, those products available in the NBA, we will have seen some substitution. We’re enamored in our ability to continue to innovate and drop new products into the market. And the fact that we capture 50% more revenue than our competitors from the handle means that we just got a bigger war chest to invest in product marketing, and generosity more generally.”

Analysts were keen to talk to Jackson about the bombshell news yesterday that PENN ditched the Barstool Sports journey in favor of creating ESPN Bet

He noted that Flutter had indeed had similar discussions about a partnership with other companies, but underscored his belief that the FanDuel brand is dominant in the US.

“I’ll point out there are a few people who have stated that they intend to make a bit of a splash this year. We will stay focused on what we’ve always done, which is making sure we deliver bullets experience for our customers by having the best product and using assets fantastic for leading, engaging brand.”

Finally, one area that FanDuel hasn’t traditionally made a splash in is the online casino market. However, as demonstrated during H1, the firm is more intent on making the unit a success and has increased its online casino market share to 23% by the end of Q2. 

Meanwhile, the firm recorded a 38% increase in the number of new casino-first players and enjoyed a 3ppt increase in AMPs which increased 52% YoY.

Jackson expressed his pleasure in the casino unit but indicated that it will continue to leverage its international expertise in online casino to improve the product even more going forward.

He concluded: “We’ve been really pleased with the way in which the business has grown and taken share. We’ve got a bunch of improvements that were made this year which we think will provide further support for business and we’ve got exciting plans for next year as well. 

“We think we’ll get to product leadership and that will enable us to have a significant share, both in the casino direct market as well as the cost of a market. We are the world’s largest regulated online casino players so we know how to do this stuff.”