REG - FlutterEntertainment - Update on short-term US sports results impact

Flutter EntertainmentAnnouncement

08/01/2025 07:00

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RNS Number : 4848S  Flutter Entertainment PLC  08 January 2025

 

 

FOR IMMEDIATE RELEASE

 

Flutter announces update on short-term US sports results impact

New York, January 7, 2025: Flutter Entertainment (NYSE:FLUT; LSE:FLTR)
("Flutter"), the world's leading online sports betting and iGaming operator
today announces a brief update on the impact of US sports results on Q4 2024
trading.

 

Following our Q3 earnings report on November 12, continued strong US player
momentum has been offset by a period of very unfavorable US sports results
across the remainder of November and in December, primarily on NFL Parlay and
Same Game Parlay outcomes. The 2024/2025 NFL season to date has been the most
customer friendly since the launch of online sports betting with the highest
rate of favorites winning in nearly 20 years.

 

The transitory nature of these results has no impact on the underlying
assumptions and guidance expectations communicated at our Investor Day in
September(1), and we remain confident in the growth drivers and long-term
growth trajectory set out at the Investor Day.

 

These customer friendly results generated an estimated adverse gross gaming
revenue (GGR) impact of $438m, and estimated reductions in revenue of
approximately $390m(2) and Adjusted EBITDA(3) of approximately $260m(4), for
the period November 12 to December 31.

 

US revenue for 2024 is therefore now estimated to be c. $370m lower than our
previous guidance midpoint at approximately $5.78bn (previous guidance $6.05bn
- $6.25bn). After incremental one-off cost mitigation(5), 2024 US Adjusted
EBITDA is estimated to be approximately $205m lower than the previous guidance
midpoint at approximately $505m (previous guidance $670m - $750m).

 

Our revised expectations include Q4 sportsbook net revenue margin of 6.6%
reflecting:

·    Structural revenue margin of 14.5%, broadly in line with expectations
and reflecting an increase of 100 basis points year-over-year. This was driven
by FanDuel's strong parlay product offering combined with the seasonally
higher-margin sports mix

·    Unfavorable sports results of 390bps (Q4 2023: 240bps unfavorable)

·    Promotional spend of 4.0%, a reduction of 20 bps year-over-year as
mitigation against adverse sports outcomes more than offset the previously
communicated increased investment in new player acquisition volumes

Q4 US revenue is therefore now expected to be approximately $1.59bn and Q4 US
Adjusted EBITDA is estimated to be approximately $161m, reflecting an overall
estimated adverse Q4 sports results impact totaling $643m in GGR, $550m in
revenue and $360m in Adjusted EBITDA.

 

In the Group Ex-US, continued good momentum in UKI in particular with
favorable sports results in the English Premier League, means we now estimate
2024 revenue and Adjusted EBITDA will be approximately 1% and 2% higher than
the mid-points of our previous guidance provided at Q3.

 

A more detailed update will be provided with our scheduled Q4 earnings on
March 4, 2025, alongside formal guidance for 2025.

This announcement contains inside information as defined under assimilated
Regulation (EU) No. 596/2014, which is part of the laws of the United Kingdom
by virtue of the European Unition (Withdrawal) Act 2018 (as amended). The
person responsible for arranging release of this information on behalf of
Flutter is Edward Traynor, Company Secretary of Flutter.

 

Notes

 1.        2027 Revenue and Adjusted EBITDA guidance was provided at our
 Investor Day on September 25 for Flutter Group, along with forward-looking
 commentary on potential US 2025 revenue and Adjusted EBITDA margin accretion.
 Our 2025 comments, to which there are no changes, are based on our 2024
 revenue and Adjusted EBITDA guidance per our Q2 earnings on August 13, 2024
 (midpoints of $6.2bn and $740m respectively).

 2.        The lower-than-normal level of customer generosity mitigation
 (where customer generosity reflects variable promotional spend accounted for
 as a deduction from gross gaming revenue) reflects both the distribution of
 winnings to a narrow range of customers, and the timing of adverse sports
 results within the quarter, with significant adverse results occurring on
 December 30.
 3.        Beginning January 1, 2024, the Group revised its definition
 of Adjusted EBITDA, which is the segment measure used to evaluate performance
 and allocate resources. The definition of Adjusted EBITDA now excludes
 share-based compensation as management believes inclusion of share-based
 compensation can obscure underlying business trends as share-based
 compensation could vary widely among companies due to different plans in place
 resulting in companies using share-based compensation awards differently, both
 in type and quantity of awards granted.

 4.        The estimated adverse Adjusted EBITDA impact reflects the
 estimated gross profit impact and is before any sales and marketing, or
 operating cost mitigation

 5.        Primarily reflecting estimated sales and marketing cost
 reduction and phasing benefits, and an estimated reduction in variable
 employee salary accruals.

 

Clarification on basis of preliminary financial information

 

As at the date of this release we have not completed our financial closing
procedures for the period ended December 31, 2024. The preliminary financial
information included in this release may therefore be subject to change as we
complete our financial reporting processes and controls.

Additionally, our independent registered public accounting firm has not
audited, reviewed, compiled or performed any procedures with respect to
the preliminary financial information and does not express an opinion or
provide any other form of assurance with respect to this preliminary
financial information. During the course of the preparation of our
consolidated financial statements and related notes as of and for the period
ended December 31, 2024, we may identify items that would require us to make
adjustments to the preliminary financial information presented above. As a
result, investors should exercise caution in relying on this information.
The preliminary financial information should not be viewed as a substitute
for full financial statements prepared in accordance with U.S. GAAP.

 

 

Forward-Looking Statements

The preliminary financial information included in this press release is
preliminary, unaudited and subject to completion and may change as we complete
the operating of our financial reporting processes and controls. See
"Clarification on basis of preliminary financial information" above. This
press release contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements reflect our
current expectations as to future events based on certain assumptions and
include any statement that does not directly relate to any historical or
current fact. These statements include, but are not limited, to statements
related to our expectations regarding the performance of our business, our
financial results, our operations, our liquidity and capital resources, the
conditions in our industry and our growth strategy. In some cases, you can
identify these forward-looking statements by the use of words such as
"outlook", "believe(s)", "expect(s)", "potential", "continue(s)", "may",
"will", "should", "could", "would", "seek(s)", "predict(s)", "intend(s)",
"trends", "plan(s)", "estimate(s)", "anticipates", "projection", "goal",
"target", "aspire", "will likely result", and or the negative version of these
words or other comparable words of a future or forward-looking nature. Such
forward-looking statements are subject to various risks and uncertainties.
Accordingly, there are or will be important factors that could cause actual
outcomes or results to differ materially from those indicated in these
statements. Such factors include, among others: the preliminary nature of the
financial information include in this press release as discussed in
"Clarification on basis of preliminary financial information" above, Flutter's
ability to effectively compete in the global entertainment and gaming
industries; Flutter's ability to retain existing customers and to successfully
acquire new customers; Flutter's ability to develop new product offerings;
Flutter's ability to successfully acquire and integrate new businesses;
Flutter's ability to maintain relationships with third-parties; Flutter's
ability to maintain its reputation; public sentiment towards online betting
and iGaming generally; the potential impact of general economic conditions,
including inflation, fluctuating interest rates and instability in the banking
system, on Flutter's liquidity, operations and personnel; Flutter's ability to
obtain and maintain licenses with gaming authorities, adverse changes to the
regulation (including taxation) of online betting and iGaming; the failure of
additional jurisdictions to legalize and regulate online betting and iGaming;
Flutter's ability to comply with complex, varied and evolving U.S. and
international laws and regulations relating to its business; Flutter's ability
to raise financing in the future; Flutter's success in retaining or recruiting
officers, key employees or directors; litigation and the ability to adequately
protect Flutter's intellectual property rights; the impact of data security
breaches or cyber-attacks on Flutter's systems; and Flutter's ability to
remediate material weaknesses in its internal control over financial
reporting.

Additional factors that could cause the Company's results to differ materially
from those described in the forward-looking statements can be found in Part I,
"Item 1A. Risk Factors" of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2023 as filed with the SEC on March 26, 2024
and other periodic filings with the SEC, which are accessible on the SEC's
website at www.sec.gov. Accordingly, there are or will be important factors
that could cause actual outcomes or results to differ materially from those
indicated in these statements. These factors should not be construed as
exhaustive and should be read in conjunction with the other cautionary
statements that are included in the Company's filings with the SEC. The
Company undertakes no obligation to publicly update or review any
forward-looking statement, whether as a result of new information, future
developments or otherwise, except as required by law.

 

About Flutter Entertainment plc

Flutter is the world's leading online sports betting and iGaming operator,
with a market leading position in the US and across the world. Our ambition is
to leverage our significant scale and our challenger mindset to change our
industry for the better. By Changing the Game, we believe we can deliver
long-term growth while promoting a positive, sustainable future for all our
stakeholders. We are well-placed to do so through the distinctive, global
competitive advantages of the Flutter Edge, which gives our brands access to
group-wide benefits to stay ahead of the competition, as well as our clear
vision for sustainability through our Positive Impact Plan.

Flutter operates a diverse portfolio of leading online sports betting and
iGaming brands including FanDuel, Sky Betting & Gaming, Sportsbet,
PokerStars, Paddy Power, Sisal, tombola, Betfair, MaxBet, Junglee Games and
Adjarabet.

Contacts:

 Investor Relations:                    Media Relations:
 Email: investor.relations@flutter.com  Email: corporatecomms@flutter.com

 

Non-GAAP financial measures

This press release includes non-GAAP financial measures that we use to
supplement our results presented in accordance with U.S. generally accepted
accounting principles ("GAAP"). We believe these measures provide visibility
to the performance of our business by excluding the impact of certain income
or gains and expenses or losses. Additionally, we believe these metrics are
widely used by investors, securities analysts, ratings agencies and others in
our industry in evaluating performance. Our non-GAAP financial measures may
not be comparable to similarly-titled measures used by other companies, have
limitations as analytical tools and should not be considered in isolation.
Additionally, we do not consider our non-GAAP financial measures as superior
to, or a substitute for, the equivalent measures calculated and presented in
accordance with U.S. GAAP. Additional information regarding these measures can
be found in our periodic filings with the SEC, which are accessible on the
SEC's website at www.sec.gov.

 

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