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  • Q3 2023: Flutter shares plunge as results challenge full-year guidance
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Flutter Entertainment shares took a steep dive, shedding almost 12% in the initial hours of trading following the release of its Q3 results.

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The operator delivered a 8% year-on-year revenue boost to £2.04bn in Q3 2023. 

However, at the same time, Flutter said it was now looking at the lower end of its full-year 2023 guidance. 

This announcement caused the company’s stock to plummet by nearly 12%, leaving investors less than impressed.

Gaming offsets sports betting decline

Flutter revealed that sports betting revenue decreased by 2% year-on-year to £1.12bn in Q3 2023. However, this decline was offset by a 22% year-on-year rise in gaming revenue to £914m.

CEO Peter Jackson hailed the group’s “strong quarter”, in what he described as a “seasonally quieter period”.  

“We remain the number one choice for sports betting and gaming customers globally, and our 16% growth in average monthly players augurs well for our continued growth and market leadership,” he said. 

He added that Flutter’s diversified portfolio of brands is “well positioned to adapt to challenges and opportunities” in various markets.

US & UK growth

In the US, Flutter saw a 12% revenue growth to £668m, thanks to the strong FanDuel brand and significant investment in customer acquisition marketing campaigns. 

This led to a 37% increase in new sports betting and iGaming players in Q3 compared to the previous year.

“We are particularly pleased by the great progress we are making in the US,” Jackson said. 

“We are the first online operator to achieve structural profitability, and the strong ramp in EBITDA during 2023 will continue into 2024 and beyond, as our profit margins expand materially.”

In the UK & Ireland, Flutter generated an 11% increase in revenue, reaching £566m, with a 6% growth in sports revenue driven by increased Betbuilder adoption.

Revenue decline in Australia 

However, in Australia, revenue declined by 18% year-on-year to £262m. 

Flutter noted that the competitive racing market challenges that were prevalent in Q2 extended into Q3, leading to a 7% sequential decline in sportsbook revenue.

Furthermore, the subdued racing market is projected to continue into 2024, potentially causing an estimated mid-single-digit decline in the Australian market overall during that year.

Additionally, the market is witnessing increased regulatory scrutiny, including a prohibition on credit card deposits.

As a result of these developments, Flutter expressed concerns about its capacity to mitigate the effects of the previously announced Victoria point of consumption tax hike, set to take effect in July 2024, in the near term.

Nonetheless, Jackson stated: “While market conditions in Australian racing remain challenging, as the clear market leader with a player base 1.8 times that in 2019, we are confident that Sportsbet is the best positioned brand in the market.” 

Mixed results for the international division

In its International division, revenue grew by 16% to £539m, mainly due to Flutter’s acquisition of Sisal and strong organic growth in the business. 

However, on a pro forma basis, sports revenue was 7% lower due to customer-friendly sports results. 

Gaming growth of 9% was primarily driven by strong performance in India (+52%) and Turkey (+192%). 

In Italy, revenue was 4% lower due to a higher mix of sportsbook revenue and tougher comparatives from heightened player engagement in the prior year.

2023 full-year guidance

For full-year 2023, Flutter anticipates that adjusted EBITDA, excluding the US, will reach approximately £1.44bn, falling at the lower end of its previously stated range of £1.44bn to £1.6bn.

Flutter said this projection takes into account factors such as customer-friendly sports results in Q3 and adverse movements in foreign exchange rates.

For the US business, revenue is forecasted to be £3.75bn, aligning with the mid-range of the earlier guidance, which was set at $3.6bn to £3.bn. 

Adjusted EBITDA is expected to amount to £140m, once again falling within the midpoint of the previously stated £90m to £190m range.

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