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Flutter Entertainment has published its Q3 2021 trading update, showing total revenues of £1.44bn for the quarter, up 8.6% year-on-year, driven by growth in Australia and the US while other regions saw revenue figures decline.

The company’s share price fell to £128.23 following the results’ publication this morning, down 8.2% on the £139.75 price at the close of the market yesterday.

Changes to product and tax laws in the German market, in addition to Flutter’s withdrawal from the Dutch market last month and unfavourable sports results throughout October, led the operator to revise its adjusted EBITDA guidance for non-US markets in 2021 to £1.24bn-£1.28bn, down from £1.27bn-£1.37bn.

Net revenue guidance for the US remains unchanged, at £1.285bn-£1.425bn, but the adjusted EBITDA loss for the region is now expected to fall within the upper half of the previously suggested range of £225m-£275m.

The revised negative EBITDA range of £250m-£275m reflects a £15m impact from adverse sports results in October, Flutter said.

Group results

Of the operator’s global Q3 revenue, £906m was brought in from sports betting, up 13.5% or around 17% in constant currency year-on-year, with the remaining £534m brought in by gaming, up 1.3% or around 5% in constant currency.

Globally, the number of average monthly players using the operator stood at 7.3m for the quarter, up 13.4% on the previous year.

US outlook

Revenue in the US, where Flutter operates the FanDuel, TVG, Stardust, FOX Bet and PokerStars brands, stood at £280m, up 73.9% or 85% in constant currency.

This breaks down into £184m from sports revenue, up 85.9% (or 97% in constant currency), from £2.11bn in stakes, up 69.1%, and £95m in gaming revenue, up 53.2% or 65% in constant currency.

US revenues came off the back of 1.3m average monthly players in the region, up from 1.1m in Q3 2020. The operator saw 1.9m players active in September at the start of the NFL season.

Flutter said it held a 42% market share of online sports betting and an 18% share of online gaming in the US.

Sports betting market share is based on the states in which FanDuel was live during the quarter, while online gaming market share reflects the combined Michigan, New Jersey, Pennsylvania and West Virginia market share of Flutter’s gaming brands.

Net revenue guidance for the US remains unchanged, at £1.285bn-£1.425bn, but the adjusted EBITDA loss for the region is now expected to fall within the upper half of the previously suggested range of £225m-£275m as a result of adverse sports results in October.

Speaking on the group’s results in US markets, chief executive Peter Jackson said: “In the US we maintained our leadership position, with the quality of our product offering leading to high levels of customer engagement.”

“As expected, the start of the NFL season saw a step-up in competitive intensity. We remained disciplined however, leveraging the broad set of high quality marketing assets at our disposal. The customer response has been very encouraging with FanDuel now regularly experiencing staking levels on Sundays that match its 2021 SuperBowl performance.”

Australia results

Revenue for Australia, where Flutter operates the Sportsbet brand, came in at £370m, up 15.6% or 20% in constant currency, and consisted entirely of sportsbook revenue generated on £3.32bn in stakes – up 10.7% or 15% in constant currency.

Average monthly players in the jurisdiction increased from 876,000 last year, to 1.1m in Q3 2021.

Flutter attributed the growth to strong customer retention in the region, in addition to the impact of stay-at-home orders and travel restrictions, which applied to some 60% of the Australian population during the period.

This, it said, allowed Sportsbet to capture additional discretionary leisure spend from its customers.

UK & Ireland

Revenues in the UK and Ireland declined 5.4% year-on-year to £491m, consisting of £302m in sports betting revenue, down 9.3% and £189m from gaming, up 1.6%.

The majority of the total revenue, £423m, came from Flutter’s online offerings, down 5.2%, while £68m came from the operator’s retail presence, down 8.1%.

Revenue was reduced in the region despite a significant increase in the number of average monthly players, from 2.6m in Q3 2020 to 3.1m, an increase of 19.2%.

Sportsbook stakes were down, however, from £2.79bn to £2.63bn, suggesting a reduction in the average customer spend on sports betting.

Flutter said the decline in sportsbook stakes was due to the “condensed nature of the Q3 2020 sporting calendar which included a large number of premium sporting fixtures (such as the conclusion of European domestic football leagues and European competitions).”

It also said that the easing of lockdown restrictions in the region contributed to consumers having a wider variety of leisure activity options available, which led to a further decline in stakes, while further enhancements to its safer gambling protections also had a negative impact on turnover.

In retail, total revenue was down 6% in constant currency despite the operator’s properties across the region remaining open for the duration of Q3. UK retail revenues, however, were up 9% compared to Q3 2019 levels, whereas Ireland was down 27% on the same comparison.

Flutter said this reflected the slower relaxation of Covid-related restrictions in Ireland.

Rest of the world

Internationally across other markets, revenues totalled £299m, down 8% or 3% in constant currency, from a total of £325m in Q3 2020.

Of the international total, £50m came from sports betting revenue, up 8.7%, on £349m of stakes, down from £375m.

Gaming revenue made up the majority of the total, at £249m, down from £279m in the previous year.

Various markets had an impact on international revenue, with particular focus on the recently regulated German market, where the impact of product and tax changes caused decreased revenues.

Flutter said that excluding the German market, international revenues were up 6% in constant currency, with 21% growth in casino, 25% growth in sports and a reduction of 16% in poker revenues.

Flutter said its acquisition of Junglee Games earlier this year, which it acquired to enter the Indian market, added 5 percentage points of year-on-year revenue growth.

The operator also said that after suspending its operations in the Netherlands from 1 October, it expects the temporary closure to cost the business £10m in EBITDA in 2021, and approximately £40m in 2022.

These figures are based on the assumption that Flutter recommences trading in the market in Q3 2022, and that the operations break even in H2 2022 as it invests to re-engage customers.

According to Dutch regulations, Flutter may not use the customer databases it has built during previous years operating in the market for any kind of marketing messaging – meaning the re-acquisition of customers in the Netherlands may prove costly for the business.

Given its expectations for the Netherlands and unfavourable sports results in October, which Flutter said has impacted EBITDA by around £60m, the operator revised its adjusted EBITDA guidance for 2021 to £1.24bn-£1.28bn, down from £1.27bn-£1.37bn.

Chief executive Peter Jackson concluded: “While a run of customer-friendly results in October have resulted in win margins being below expected levels in the quarter to date, the underlying strength of our business is clear; we have grown our online recreational player base by 46% in just two years.”

“With more international jurisdictions and US states on the path to regulation, we look forward to sustainably growing our global player base further in 2022.”

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