REG - Flutter Entertainmnt - Flutter Announces Fiscal Year 2023 Earnings
26/03/2024 07:15
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RNS Number : 2397I Flutter Entertainment PLC 26 March 2024
Announces Fiscal Year 2023 earnings:
March 26, 2024: Flutter Entertainment (LSE:FLTR; NYSE:FLUT), the world's
leading online sports betting and iGaming operator, today announced results
for fiscal year ended December 31, 2023. Guidance for fiscal year ending 31
December 2024 introduced, with Group revenue growth of 17.5% at the midpoint.
Key financial highlights:
In $ millions except percentages and AMPs Fiscal year ended December, 31
2023 2022 YOY
Average monthly players ('000s)(1) 12,325 10,245 +20.3%
Revenue 11,790 9,463 +24.6%
Net loss (1,211) (370) (227.3%)
Further Adjusted EBITDA(2) 1,874 1,289 +45.4%
Further Adjusted EBITDA Margin(2) 15.9% 13.6% +230bps
Net loss per share $(6.89) $(2.44) (182.4%)
Adjusted Earnings per share ($)(2) $3.51 $2.79 +25.8%
Net cash provided by operating activities 937 1,163 (19.4%)
Adjusted Free Cash Flow(2) 938 576 +62.8%
Leverage ratio(2,3) 3.1x 4.4x (1.3x)
· Excellent delivery against Group strategy drove AMPs +20.3% and
revenue +24.6% year on year
· US business rapidly scaling with revenue +40.7% and first year of
positive Adjusted EBITDA:
‒ Product innovation helped add 3.7m new customers at attractive
projected payback periods(4)
‒ Continued #1 sportsbook position with sports net gaming revenue
(NGR) share 53.4%; (Gross gaming revenue (GGR) share 43.2%) in Q4 2023(5)
‒ FanDuel #1 iGaming brand as of January 2024; US GGR share 25.7%
in Q4 2023(5)
· Outside of the US, diversified portfolio delivered AMPs +15.0% and
revenue +16.4% year on year:
‒ Strong UKI performance added 2 percentage points of GGR market
share(6) to 30%
‒ "Local hero" strategy drove growth in International "Consolidate
and Invest"(7) markets, while division also benefited from full year
consolidation of Sisal acquisition
‒ This strong growth more than offset a softer Australian racing
market in 2023, and the unwind of the prior year benefit from increased player
engagement following Covid related restrictions
2023 financial overview
· Net loss of $1,211m reflected strong performance described above, but
after non-cash charges of $1,681m due to (i) $725m PokerStars trademark
impairment reflecting greater emphasis on revised "local hero" strategy; (ii)
$791m acquired intangibles amortization; and (iii) $165m fair value change on
Fox Option liability, (IFRS net loss $981m)
· Group Further Adjusted EBITDA(2) (excl. share based payments) of
$1,874m, +45.4% year on year:
‒ US Adjusted EBITDA of $65m, Further Adjusted EBITDA of $167m
despite significant Q4 2023 customer friendly sports results
‒ Group Ex-US Adjusted EBITDA(2) of $1,613m, which on an IFRS
basis was £1,444m in line with previous IFRS guidance(8), Group Ex-US Further
Adjusted EBITDA of $1,707m +10.0% year on year
· Group Further Adjusted EBITDA Margin(2) accretion +230bps to 15.9%,
despite ongoing US investment
· Net cash provided by operating activities -19.4% to $937m primarily
from Sisal's record lottery jackpot which accrued in 2022 and resulted in a
payment when won in February 2023
· Strong cash conversion and balance sheet position with Adjusted Free
Cash Flow(2) +62.8% year on year and leverage ratio(2,3) at December 31, 2023
of 3.1x compared with 4.4x at December 31, 2022
2024 trading to date
· Strong trading year to date with Group revenue growth of 23.4% from
January 1, 2024 to March 17, 2024 versus prior comparable period
· US revenue growth of 55.6%, with sportsbook +63.7% driven by staking
growth and a 230bps improvement in sportsbook net revenue margin driven by
structural margin improvements and higher promotional spend in the prior year
on new state launches; iGaming +50.3% carrying product driven momentum into
2024
· Group Ex-US revenue growth of 6.3% benefited from diversified
geographic portfolio with UKI +17.3%, International +3.0% impacted by
unfavorable sports results and Australia -8.8%
2024 Outlook
· Guidance for the full year 2024 introduced with implied Group revenue
growth of 17.5% and Further Adjusted EBITDA growth of 30.2% at midpoint:
‒ US revenue $5.8bn to $6.2bn, +36.3% year on year at midpoint
‒ US Further Adjusted EBITDA $635m to $785m, +206.1% year on year
at midpoint
‒ Group ex US revenue $7.65bn to $8.05bn, +6.3% year on year at
midpoint
‒ Group ex US Further Adjusted EBITDA $1.63bn to $1.83bn, +5.4%
year on year at midpoint
· Medium-term leverage ratio target updated to 2-2.5x (from previous
target of 1-2x)(2,3) to reflect Group earnings and cashflow potential
Peter Jackson CEO commented:
"Flutter delivered a strong 2023 performance as we continued to deliver on our
strategy. This was underpinned by a localized approach to technology and
product coupled with the unique scale advantages of the Flutter Edge. As
anticipated, our number one position in the US has transformed the Group's
earnings profile during 2023 as FanDuel delivered a positive US full year
Adjusted EBITDA for the first time. Outside of the US we made excellent
progress integrating Sisal into our International business, a business which
is a great example of our "local hero" strategy at work, and took market share
in UKI. We also made further progress on our sustainability strategy with an
increase in Play Well safer gambling tool usage, investment of over $100m in
our global safer gambling initiatives including key marketing campaigns in the
US with our FanDuel ambassadors to promote responsible play during the year.
I was proud to see Flutter shares trading for the first time on the NYSE on
January 29, 2024 and we have been encouraged by the increased focus from new
US investors as a result of our US listing. We are working towards a
shareholder vote on May 1, 2024 to approve our primary listing move to NYSE.
The year has started well with very good momentum continuing into Q1. Record
Super Bowl engagement contributed to US revenue growth of 55.6% for the period
from January 1, 2024 to March 17, 2024. We also launched in North Carolina
where we have been really pleased with performance to date. Outside of the US,
revenue grew 6.3% as the market driven decline in Australia was more than
offset by the growth of our UKI and other International businesses. We believe
that our strategy and competitive advantages position us well to continue to
grow the business through both organic and inorganic opportunities."
FY 23 Operating Review:
US:
FanDuel had another excellent year as we consolidated our position as
America's number one online sportsbook, with NGR market share of 53.4% (GGR
share 43.2%) for Q4 2023(5), while our iGaming strategy is delivering
substantial market share gains, achieving 25.7% share in Q4 2023. As of the
end of January 2024, FanDuel is the number one iGaming brand based on GGR(5).
FanDuel acquired over 3.7m new sports betting and iGaming players in 2023, 19%
more than the prior year. The average projected payback period on investment
to acquire customers remains in line with recent years at less than 18
months(4) giving us the confidence to continue investing in further customer
acquisition. When combined with the strong contribution from our existing
player base, this will drive the long-term profitability of the business.
FanDuel launched compelling new product features during the recent NFL season
which increased player engagement. The Parlay Hub drove over 1.5m pre-packaged
Same Game Parlays ('SGP) on Super Bowl 2024 alone. The Pulse improved our live
betting experience, and contributed to a near three-fold year on year increase
in the proportion of live SGP bets during Super Bowl 2024.
In iGaming, we launched 82% more gaming titles than the prior year, and also
secured periods of exclusive access to some of the sector's most famous games.
We also expanded our iGaming team, agreed new partnerships and added new
features to our product proposition. Our iGaming strategy is delivering
strongly, and we believe we have now achieved product parity with our closest
competitors. With a strong pipeline of further new products, including greater
jackpot and multi-player functionality expected to be provided by the
acquisition of Beyond Play we signed in February 2024, we are well-placed for
further market share gains.
Group Ex-US:
Performance in UKI was strong during 2023, taking share across both retail and
online channels, with our estimated 2023 online UK market share growing by 2
percentage points to 30%(6). Our continuous focus on our product proposition
saw us further enhance our higher-margin Bet Builder and Build-A-Bet parlay
products. We added exclusive new betting markets, and launched well-received
new products like 'Acca Freeze' on Sky Bet which drove increased penetration
of these high-margin products and benefitted our net revenue margin. We also
rolled out new iGaming features with improved cross-sell journeys for
sportsbook customers to iGaming products and expanded content, particularly
for Live casino. These changes drove iGaming AMP growth of 11.8% and record
multi-product player rates with Paddy Power reaching 53% of sports customers
playing iGaming in Q4.
In Australia, Sportsbet grew AMPs by 1.9% to 1.1 million, driven by high
levels of retention. Average spend per player has however reduced back to
pre-Covid levels. We have also seen a softness in the racing market across the
second half of 2023, which we expect to persist through 2024. We expect the
challenging market, along with increased regulatory and compliance costs, to
reduce Australian profitability further in 2024. However, we believe
Sportsbet's scale, 45% market share(9), and leadership in brand and product,
position us well for the future.
The effectiveness of our International strategy to buy and build podium
positions was evident from our strong 2023 performance with growth across both
revenue and AMPs. We continued to focus on targeted investment and a "local
hero" strategy in key "Consolidate and Invest" markets while optimizing the
PokerStars business which has a greater presence in our "Optimize and
Maintain" geographies. In Italy, Sisal is the #1 online brand across the
combined sports, iGaming and lottery market(9) and helped deliver 10.3% pro
forma revenue growth(10). We grew market share in Georgia and Armenia,
continued to leverage key local partnerships in Brazil where we also improved
our customer registration journey, delivered good growth in Spain with a
refreshed product proposition, and drove strong online adoption in Turkey. We
believe we are well-placed for continued expansion in India having
successfully maintained our high levels of customer engagement following the
change in tax regime in Q4. The acquisition of Maxbet was completed in January
2024 and the plans to integrate the business are progressing well.
FY 2023 financial highlights: Group
In $ millions Revenue Adjusted EBITDA Further Adjusted EBITDA
2023 2022 YOY YOY CC 2023 2022 YOY YOY CC 2023 2022 YOY YOY CC
US 4,484 3,187 40.7% 40.6% 65 (347) 167 (263)
UKI 3,047 2,664 14.4% 13.7% 888 757 17.2% 16.0% 911 777 17.3% 16.0%
Australia 1,447 1,558 (7.1%) (2.8%) 348 477 (27.0%) (23.1%) 356 485 (26.7%) (22.8%)
International 2,812 2,055 36.8% 34.2% 592 395 49.8% 41.5% 627 417 50.4% 42.7%
Unallocated corporate overhead(11) (215) (141) 52.7% 48.3% (187) (127) 47.2% 42.7%
Group Ex-US 7,306 6,277 16.4% 16.6% 1,613 1,489 8.4% 8.2% 1,707 1,552 10.0% 9.8%
Group 11,790 9,463 24.6% 24.7% 1,678 1,142 46.9% 46.6% 1,874 1,289 45.4% 45.1%
The Group delivered strong revenue growth for 2023 up 24.6% year on year to
$11,790m. We continued to expand our recreational customer base across all
segments, with AMPs up 20.3% year on year to 12.3m. FanDuel was a key driver
of this growth, with revenue in our US business up 40.7% despite customer
friendly sports results. The impact of sports results is calculated as the
difference between our expected net revenue margin and actual net revenue
margin and had an approximately 7.8 percentage point negative impact on US
revenue growth.
Group Ex-US revenue growth of 16.4% was driven by a strong performance in UKI
and in our "Consolidate and Invest"(7) International markets. We also
benefited from the full year consolidation of the Sisal business acquired
during 2022, which generated $1,218m in revenue compared with $465m in 2022.
This was partly offset by the impact of softer racing market conditions in
Australia combined with a reduced level of Australian player engagement
compared with the prior year, following easing of COVID-19 restrictions. On a
pro forma basis, revenue growth for the Group-Ex US was 6.3%(10).
The Group reported a net loss for 2023 of $1,211m after recording a number of
non-cash expenses including (i) a loss of $725m relating to an impairment of
trademarks associated with the PokerStars business reflecting "local hero"
strategy and PokerStars' presence in predominantly lower growth "Optimize and
Maintain" markets; (ii) a loss of $165 million relating to a change in the
fair value of the Fox Option liability (2022: $83m gain); and (iii)
amortization of acquired intangibles charge of $791 million (2022: $655m). The
increases in the net loss, the net loss margin and the net loss per share
during 2023 compared with 2022, were all primarily due to the PokerStars
impairment loss and the change in the fair value of the Fox Option liability.
The Group delivered Further Adjusted EBITDA(2) growth of 45.4% to $1,874m.
This growth reflects the strong performance described above and an expansion
in Further Adjusted EBITDA Margin(2) of 230 basis points. This margin growth
was primarily driven by the inflection of our US division to positive Adjusted
EBITDA, partially offset by (i) the impact of the annualization of 2022 point
of consumption tax rate increases in Australia; and (ii) an increase in
unallocated corporate overhead (excl. Share compensation expense) of 47.2% to
$187m. This reflected greater investment in Group resource and Flutter Edge
capabilities, due to the rapid growth of the business in recent years, as well
as new compliance requirements as a U.S. listed company(11).
Loss per share increased to $(6.89) per share due to the increase in net loss
discussed above. Adjusted Earnings Per Share(4) grew 25.8% to $3.51 year on
year reflecting the Further Adjusted EBITDA(2) growth as detailed above which
was partially offset by (i) an increase in Interest expense, net, when
compared with 2022 as a result of the full year impact from the increased
borrowings to fund the Sisal acquisition, as well as a higher cost of debt
during 2023, (ii) the change in the Fox Option liability from a gain of $83m
in 2022 to a loss in 2023 of $165m; and (iii) an increase in Adjusted Income
tax expense primarily due to geographic profit mix changes.
The Group net cashflow provided by operating activities in 2023 decreased
19.4% compared with 2022 reflecting a decrease in player liabilities following
the record lottery jackpot win in Sisal in February 2023. Adjusted Free Cash
Flow(2) growth of 62.8% was primarily driven by the inflection of our US
business.
Total debt increased from $6,750m to $7,056m while net debt(2) increased from
$5,674m at December 31, 2022 to $5,795m at December 31, 2023. Further Adjusted
EBITDA(2) growth reduced the Group's leverage ratio(2) to 3.1x from 4.4x at
the end of December, 31 2022 bringing the Group closer to the now updated
medium term target of 2.0-2.5x.
FY 2023 financial highlights: Segments
US revenue increased 40.7% year on year with strong growth in sportsbook and
iGaming of 45.9% and 47.2% respectively. Sportsbook revenue benefitted from
expansion into three additional sportsbook states, a full year's contribution
from 2022 new state openings and 24.8% growth in pre-2022 states. iGaming
revenue growth was driven by strong player volumes with iGaming AMPs 41.8%
higher than 2022. Adjusted EBITDA(2) and Further Adjusted EBITDA(2) grew $412m
and $430m respectively due to the top line growth, combined with operating
leverage efficiencies in sales and marketing and general and administrative
expenses.
UKI strong revenue growth of 14.4% (13.7% on a constant currency basis) was
driven by a continued expansion of our recreational customer base as we grew
our AMPs by 5.4%, while delivering more efficient generosity to our customers.
This resulted in sportsbook revenue growth of 10.5% and iGaming revenue up
18.1%. Adjusted EBITDA(2) and Further Adjusted EBITDA(2) growth of 17.2% and
17.3% respectively, reflected the revenue performance coupled with continued
focus on driving marketing efficiencies which delivered an increase in both
Adjusted EBITDA Margin(2) and Further Adjusted EBITDA(2) Margin of 70 basis
points.
Australia revenue was 7.1% lower year on year or 2.8% lower on a constant
currency basis(2). This was due to a softer racing market environment during
2023 when compared to 2022, which also benefited from higher levels of
customer engagement following Covid related restrictions. The reduction year
on year in Adjusted EBITDA(2) and Further Adjusted EBITDA(2) of 27.0% and
26.7% respectively, reflected this, as well as the annualization of 2022 point
of consumption tax rate increases which drove a decline in Adjusted EBITDA
Margin(2) and Further Adjusted EBITDA Margin(2) of 650 and 660 basis points,
respectively.
International grew AMPs by 31.0% and revenue by 36.8%, or 34.2% on a constant
currency(2) basis while Sisal generated $1,218m in revenue during 2023
compared with $465m in 2022 post acquisition. On a pro forma basis,
International revenue grew 6.0% with "Consolidate and Invest" markets up 13.7%
year on year(10). This included Italy +10.0%, Georgia & Armenia +17.0%,
Turkey +36.2% (despite a material foreign currency headwind), India +24.0%,
Spain +15.5% and Brazil +6.5%. Adjusted EBITDA(2) and Further Adjusted
EBITDA(2) were 49.8% and 50.4% higher year on year, respectively (41.5% and
42.7% on a constant currency basis, respectively), reflecting the top line
growth above. In addition, optimization of sales and marketing expenses led to
a year on year reduction of 570 basis points as a percentage of revenue. This
contributed to an expansion in Adjusted and Further Adjusted EBITDA Margin of
180 and 200 basis points, respectively.
Q1 2024 to date trading update
January 1 to March 17, 2024 compared with January 1 to March 17, 2023(12)
Period on period growth rates
Sportsbook net revenue margin Sportsbook net revenue margin Sportsbook revenue iGaming revenue Other revenue Total revenue
US 8.5% +230bps 63.7% 50.3% (6.5%) 55.6%
UKI 11.9% +30bps 9.6% 27.7% 4.9% 17.3%
Australia 12.8% +160bps (8.8%) (8.8%)
International 9.8% (420bps) (13.0%) 7.5% 20.9% 3.0%
Group ex-US 11.8% (20bps) (2.2%) 14.8% 11.3% 6.3%
Group 9.7% +110bps 26.0% 22.2% 2.3% 23.4%
The Q1 trading update is based on how segments will be reported in 2024.
PokerStars US will be reported in the International segment, having been
included in the US segment for 2023, in line with how the business is now
managed. In the above table, 2023 comparative numbers are on a 2024 comparable
basis.
US: trading has been strong with total revenue growth of 55.6%:
· Strong sportsbook revenue growth of 63.7% driven by sportsbook
staking +19.6%, combined with a 230bps sportsbook net revenue margin
improvement. The higher sportsbook net revenue margin is driven by ongoing
structural margin improvements and significant prior year promotional spend on
customer acquisition on launches in Ohio (January 1, 2023) and Massachusetts
(March, 10 2023). This was partly offset by an unfavorable year on year sports
results impact. The current year period includes seven days of North Carolina
trading following launch on March 10, 2024.
· iGaming revenue growth of 50.3%, benefitting from our larger
player base and continued product improvements.
· Excluding revenue from new state launches in both periods, total
revenue increased by 34.1%.
UKI: revenue +17.3% with improved product proposition driving momentum into
2024, most notably in gaming +27.7%.
Australia: revenue reduced by 8.8% due to racing market softness continuing
into 2024, partly offset by favorable sports results
International: revenue increased by 3.0%. The addition of MaxBet was more
than offset by customer friendly sports results in Italy reducing sportsbook
net revenue margin by 420bps. Sportsbook stakes were 24.4% higher year on
year, somewhat benefitting from the recycling of players' winnings
FY 2024 outlook
FY 2023 2024 guidance(13)
Low High
US revenue $4.4bn $5.8bn $6.2bn
US Further Adjusted EBITDA $232m $635m $785m
Group Ex-US revenue $7.39bn $7.65bn $8.05bn
Group Ex-US Further Adjusted EBITDA $1.64bn $1.63bn $1.83bn
Australia Further Adjusted EBITDA $356m Approximately $250m
Depreciation and amortization excl. acquired intangibles $464m Approximately $510m
Interest expense, net $385m Approximately $370m
Capital expenditure(14) $602m Approximately $670m
Cash transaction, restructuring and integration costs $220m(15) Approximately $150m
The outlook above is based on how segments will be reported in 2024.
PokerStars US will be reported in the International segment, having been
included in the US segment for 2023, in line with how the business is now
managed. In the above table, 2023 numbers are shown on a 2024 comparable
basis. (16)
We are introducing 2024 guidance with the following expectations:
· US: Revenue and Further Adjusted EBITDA mid-points of $6.0bn and
$710m, representing year on year growth of 36.3% and 206.1% respectively. The
phasing of revenue is expected to be broadly in line with the prior year,
allowing for the prior year impact of sports results being favorable in Q2 and
unfavorable in Q4. We expect cost of sales as a percentage of net revenue to
be approximately 56.5% in 2024 and approximately 30.0% of Further Adjusted
EBITDA to be generated in H1, with Q2 being higher than Q1 due to the timing
of new state openings.
· Group ex-US: Revenue and Further Adjusted EBITDA mid-points of
$7.85bn and $1.73bn, representing year on year growth of 6.3% and 5.4%
respectively. This includes a Further Adjusted EBITDA expectation of
approximately $250m in Australia, reflective of the current market softness
and increased taxes.
Guidance is provided (i) on the basis that sports results are in line with our
expected margin for the remainder of the year, (ii) at current foreign
exchange rates, and (iii) on the basis of a consistent regulatory and tax
framework.
A reconciliation of our forward-looking non-GAAP financial measures to the
most directly comparable GAAP financial measure cannot be provided without
unreasonable effort. This is due to the inherent difficulty of accurately
forecasting the occurrence and financial impact of the adjusting items
necessary for such a reconciliation to be prepared of items that have not yet
occurred, are out of our control, or cannot be reasonably predicted.
Capital structure update
In August 2023, we outlined that we would consider the appropriate level of
leverage for the Group given our plans to become US listed, as well as the
positive cash flows and future profitability profile expected for the Group.
Following extensive discussions with shareholders, the Board has confirmed
that our medium-term target leverage ratio will increase to 2.0-2.5x (from
previously disclosed 1.0x-2.0x(3)). In line with our approach in the past and
given the expected improvement in Adjusted EBITDA profile of the Group, the
Board will also allow flexibility for the leverage ratio to be higher than
this range in support of value-creating acquisition opportunities.
Listing update
We were pleased to announce on January 29, 2024 that Flutter shares commenced
trading on the NYSE under the ticker symbol: "FLUT" (CUSIP No.: G3643J 108).
Flutter shares continue to trade on the London Stock Exchange ("LSE") under
the existing ticker symbol: "FLTR". We announced our proposal to move our
primary listing to the NYSE to the market here
(https://ir.design-portfolio.co.uk/viewer/99/61443) . We believe that this
will unlock long-term strategic and capital market benefits. Plans are on
track for this proposal to be put to shareholders as a Special Resolution at
the 2024 AGM on May 1, 2024. Subject to shareholder approval, the transition
is expected to become effective on May 31, 2024.
Conference call:
Flutter management will host a conference call today at 10:30 a.m. GMT (6:30
a.m. ET) to review the results and be available for questions, with access via
webcast and telephone.
A public audio webcast of management's call and the related Q&A can be
accessed by registering here (https://events.q4inc.com/attendee/901412836) or
via www.flutter.com/investors (http://www.flutter.com/investors) . For those
unable to listen to the live broadcast, a replay will be available
approximately one hour after conclusion of the call. This earnings release and
supplementary materials will also be made available via
www.flutter.com/investors.
Analysts and investors who wish to participate in the live conference call
must do so by dialing any of the numbers below and using conference ID 53722.
Please dial in 10 minutes before the conference call begins.
+1 646 307 1963 (United States)
+44 20 3481 4247 (United Kingdom)
+353 1 582 2023 (Ireland)
+61 2 8088 0946 (Australia)
Forward-Looking Statements
This press release contains information that is forward-looking, including
within the meaning of Section 27A of the Securities Act of 1933, as amended
and Section 21E of the Securities Exchange Act of 1934, as amended, and which
reflects the Company's current views with respect to, among other things, its
operations, its financial performance and its industry. Forward-looking
statements include all statements that are not historical facts. 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, risks
related to Flutter's business, operations and financial performance, including
its ability to effectively compete in the global entertainment and gaming
industries, its ability to retain existing customers and to successfully
acquire new customers, its ability to develop new product offerings, its
ability to successfully acquire and integrate new businesses, its ability to
maintain relationships with third-parties, its ability to maintain its
reputation, and public sentiment towards online betting and iGaming generally;
market and global conditions and economic factors beyond Flutter's control,
such as the potential impact of general economic conditions, including
inflation, rising interest rates and instability in the banking system, on
Flutter's liquidity, operations and personnel; risks related to licensing and
regulation, including Flutter's ability to obtain and maintain licenses with
gaming authorities, adverse changes to the regulation of online betting and
iGaming, the failure of additional jurisdictions to legalize and regulate
online betting and iGaming, and 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 under the
section entitled "Risk Factors" of the Company's Amendment No. 1 to the
Registration Statement on Form 20-F as filed with the Securities and Exchange
Commission ("SEC"), on January 18, 2024, as such factors may be updated in
the Company's Annual Report on Form 10-K for the year ended December 31, 2023
and other periodic filings with the SEC, which are accessible on the SEC's
website at www.sec.gov
(https://protect-de.mimecast.com/s/YcVJCgpRvXH8jPD7C283wq?domain=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 leading positions in markets across the world, including the US. 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. We are the industry leader with $11,790 million of revenue globally
for fiscal 2023, up 25% YoY, and $3,312 million of revenue globally for the
quarter ended December 31, 2023.
Contacts:
Investor Relations: Media Relations:
Paul Tymms, Investor Relations Kate Delahunty, Corporate Communications
Ciara O'Mullane, Investor Relations Rob Allen, Corporate Communications
Liam Kealy, Investor Relations Rupert Gowrley, Corporate Communications
Email: investorrelations@flutter.com (mailto:investorrelations@flutter.com) Email: corporatecomms@flutter.com
Links:
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(https://www.flutter.com/investors/email-alerts/)
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(https://twitter.com/flutterplc)
Notes
1. Average Monthly Players ("AMPs") is defined as the average over the
applicable reporting period of the total number of players who have placed
and/or wagered a stake and/or contributed to rake or tournament fees during
the month. This measure does not include individuals who have only used new
player or player retention incentives, and this measure is for online players
only and excludes retail player activity. In circumstances where a player uses
multiple product categories within one brand, we are generally able to
identify that it is the same player who is using multiple product categories
and therefore count this player as only one AMP at the Group level while also
counting this player as one AMP for each separate product category that the
player is using. As a result, the sum of the AMPs presented at the product
category level is greater than the total AMPs presented at the Group level.
See "-"Item 5. Operating and Financial Review and Prospects-Key Operational
Metrics" of the Company's Amendment No. 1 to the Registration Statement on
Form 20-F as filed with the Securities and Exchange Commission ("SEC"), on
January 18, 2024 for additional information regarding how we calculate AMPs
data, including a discussion regarding duplication of players that exists in
such data.
2. Adjusted EBITDA, Further Adjusted EBITDA, Adjusted EBITDA Margin,
Further Adjusted EBITDA Margin, Group Ex-US Adjusted EBITDA, Group Ex-US
Further Adjusted EBITDA, Segment Further Adjusted EBITDA, Segment Further
Adjusted EBITDA margin, Adjusted Free Cash Flows, Net Debt, Leverage Ratio,
Constant Currency, Adjusted Net Profit Attributable to Flutter Shareholders
and Adjusted Earnings Per Share are non-GAAP financial measures. See
"Definitions of non-GAAP financial measures" and "Reconciliations of Non-GAAP
Financial Measures" sections of this document for definitions of these
measures and reconciliations to the most directly comparable financial
measures calculated in accordance with GAAP. Due to rounding, these numbers
may not add up precisely to the totals provided.
3. Leverage ratio target as previously disclosed of 1-2x was
calculated as IFRS Net Debt divided by IFRS Adjusted EBITDA.
4. Payback is calculated as the projected average length of time it
takes players to generate sufficient Adjusted gross profit to repay the
original average cost of acquiring those players. Customer acquisition costs
include the marketing and associated promotional spend incurred to acquire a
customer. The projected Adjusted gross profit is based on predictive models
considering inputs such as staking behavior, interaction with promotional
offers and gross revenue margin. Projected Adjusted gross profit includes
associated variable costs of revenue as well as retention generosity costs.
5. Online sportsbook market share is the gross gaming revenue (GGR)
and net gaming revenue (NGR) market share of our FanDuel brand for the three
months to December 31, 2023 in the states in which FanDuel was live (excluding
Tennessee as they no longer report this data), based on published gaming
regulator reports in those states. iGaming market share is the GGR, market
share of FanDuel and PokerStars US for the three months to December 31, 2023
in the states in which those brands were live, based on published gaming
regulator reports in those states. Number one iGaming brand is based on GGR
for January 2024 in published gaming regulator reports and external estimates
by Eilers and Krejcik for competitor market share.
6. Estimated UKI GGR market share of UK and Ireland for 2023.
7. Consolidate and Invest markets within our International segment are
Italy, Spain, Georgia, Armenia, Brazil, India, Turkey and Virtual Reality.
8. IFRS Adjusted EBITDA Guidance of approximately £1,440m was issued
November 9, 2023 for the Group Ex-US. See Reconciliations of non-GAAP
financial measures for a breakdown of Adjusted EBITDA performance on an IFRS
basis by segment.
9. Estimated Australia market share GGR sportsbook share of Australian
market for 2023.
10. References to pro forma, refer to performance as if Sisal had been
acquired as of January 1, 2022. The proforma financial information is for
informative purpose only and is not indicative of the results of operations
that would have been achieved if the Sisal acquisition has taken place as of
January 1, 2022.
11. Unallocated corporate overhead includes shared technology, research
and development, sales and marketing, and general and administrative expenses
that are not allocated to specific segments.
12. The net revenue margin and revenue information presented for the
period from January 1 to March 17, 2024 as compared to the period from January
1 to March 17, 2023 should not be taken as an indication of expected results
for the three months ended March 31, 2024, which may differ materially.
13. Foreign exchange rates at March 20, 2024 assumed in our 2024 guidance
were USD:GBP of 0.790, USD:EUR of 0.920 and USD:AUD of 1.530.
14. Capital expenditure is defined payments for the purchase of property
and equipment, the purchase of intangible assets and capitalized software.
15. The cash impact of transaction fees and restructuring and integration
costs, represents costs associated with (i) transaction fees related to the
listing of Flutter's ordinary shares in the U.S. and proposed primary listing
move, (ii) advisory fees in connection with acquisitions, and (iii) costs
arising from strategic initiatives to integrate acquisitions within the Group.
16. See "PokerStars US 2024 Reporting reconciliation" section below for a
reconciliation of US revenue, US Further Adjusted EBITDA, Group Ex-US revenue
and Group Ex-US Further Adjusted EBITDA as reported in 2023 with PokerStars US
within the US segment to the 2024 reporting basis with PokerStars US within
the International segment which will be reflected in Q1 reporting.
Definitions of non-GAAP financial measures
This press release includes Adjusted EBITDA, Further Adjusted EBITDA, Adjusted
EBITDA Margin, Further Adjusted EBITDA Margin, Group Ex-US Adjusted EBITDA,
Group Ex-US Further Adjusted EBITDA, Adjusted Net Profit Attributable to
Flutter Shareholders, Adjusted Earnings Per Share ("Adjusted EPS"), Segment
Further Adjusted EBITDA, leverage ratio, Net Debt, Adjusted Free Cash Flow,
constant currency and IFRS Adjusted EBITDA which are non-GAAP financial
measures that we use to supplement our results presented in accordance with
U.S. generally accepted accounting principles ("GAAP"). These non-GAAP
measures are presented solely as supplemental disclosures to reported GAAP
measures because we believe that these non-GAAP measures are useful in
evaluating our operating performance, similar to measures reported by its
publicly-listed U.S. competitors, and regularly used by analysts, lenders,
financial institutional and investors as measures of performance. Adjusted
EBITDA, Further Adjusted EBITDA, Adjusted EBITDA Margin, Further Adjusted
EBITDA Margin, Adjusted Net Profit Attributable to Flutter Shareholders,
Adjusted EPS, Segment Further Adjusted EBITDA, leverage ratio, Net Debt and
Adjusted Free Cash Flow, are not intended to be substitutes for any GAAP
financial measures, and, as calculated, may not be comparable to other
similarly titled measures of performance of other companies in other
industries or within the same industry.
Constant currency reflects certain operating results on a constant-currency
basis in order to facilitate period-to-period comparisons of our results
without regard to the impact of fluctuating foreign currency exchange rates.
The term foreign currency exchange rates refer to the exchange rates used to
translate our operating results for all countries where the functional
currency is not the U.S. Dollar, into U.S. Dollars. Because we are a global
company, foreign currency exchange rates used for translation may have a
significant effect on our reported results. In general, our financial results
are affected positively by a weaker U.S. Dollar and are affected negatively by
a stronger U.S. Dollar. References to operating results on a constant-currency
basis mean operating results without the impact of foreign currency exchange
rate fluctuations. We believe the disclosure of constant-currency results is
helpful to investors because it facilitates period-to-period comparisons of
our results by increasing the transparency of our underlying performance by
excluding the impact of fluctuating foreign currency exchange rates. We
calculate constant currency revenue, Further Adjusted EBITDA and Segment
Further Adjusted EBITDA by translating prior-period revenue, Further Adjusted
EBITDA and Segment Further Adjusted EBITDA, as applicable, using the average
exchange rates from the current period rather than the actual average exchange
rates in effect in the prior period.
Adjusted EBITDA is defined on a Group basis as net profit/(loss) before income
taxes; other (expense)/income, net; interest expense, net; depreciation and
amortization; transaction fees and associated costs; restructuring and
integration costs; legal settlements (loss contingencies), and impairment of
PPE and intangible assets.
Further Adjusted EBITDA is defined as Adjusted EBITDA excluding share-based
compensation.
Adjusted EBITDA Margin and Further Adjusted EBITDA Margin is Adjusted EBITDA
and Further Adjusted EBITDA as a percentage of revenue, respectively.
Segment Further Adjusted EBITDA is defined as segment Adjusted EBITDA which is
our segment measure of profit or loss excluding share-based compensation.
Segment Further Adjusted EBITDA Margin is segment Adjusted Further Adjusted
EBITDA as a percentage of revenue. From January 1, 2024, Adjusted EBITDA will
exclude the cost of share-based compensation. We believe that this
presentation is common practice in our industry and improves comparability of
our results with those of our peers.
Group Ex-US Adjusted EBITDA is defined as Group Adjusted EBITDA excluding our
US Segment Adjusted EBITDA.
Group Ex-US Further Adjusted EBITDA is defined as Group Ex-US Adjusted EBITDA
excluding share-based compensation.
Adjusted Net Profit Attributable to Flutter Shareholders is defined as net
profit/(loss) as adjusted for after-tax effects of transaction fees and
associated costs; restructuring and integration costs; legal settlements (loss
contingencies), gaming taxes dispute, amortization of acquired intangibles,
accelerated amortization, loss/(gain) on settlement of long-term debt,
impairment of PPE and intangible assets, financing related fees not eligible
for capitalization, gain from disposal of businesses and share-based
compensation.
Adjusted EPS is calculated by dividing adjusted net income attributable to
Flutter shareholders by the number of diluted weighted-average ordinary shares
outstanding in the period.
Adjusted EBITDA, Further Adjusted EBITDA, Adjusted EBITDA Margin, Further
Adjusted EBITDA Margin, Segment Further Adjusted EBITDA, Group Ex-US Adjusted
EBITDA, Group Ex-US Further Adjusted EBITDA, Adjusted net profit attributable
to Flutter shareholders and Adjusted EPS are non-GAAP measures and should not
be viewed as measures of overall operating performance, indicators of our
performance, considered in isolation, or construed as alternatives to
operating profit/(loss), net profit/(loss) measures or earnings per share, or
as alternatives to cash flows from operating activities, as measures of
liquidity, or as alternatives to any other measure determined in accordance
with GAAP.
IFRS Adjusted EBITDA is defined on a Group basis as net profit/(loss) before
income taxes; financial income; financial expense; depreciation and
amortization; transaction fees and associated costs; restructuring and
integration costs and impairment of PPE and intangible assets.
Management has historically used these measures when evaluating operating
performance because we believe that they provide additional perspective on the
financial performance of our core business.
Adjusted EBITDA and Further Adjusted EBITDA has further limitations as an
analytical tool. Some of these limitations are:
· they do not reflect the Group's cash expenditures or future
requirements for capital expenditure or contractual commitments;
· they do not reflect changes in, or cash requirements for, the
Group's working capital needs;
· they do not reflect interest expense, or the cash requirements
necessary to service interest or principal payments, on the Group's debt;
· although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be replaced in
the future, and Adjusted EBITDA and Further Adjusted EBITDA do not reflect any
cash requirements for such replacements;
· they are not adjusted for all non-cash income or expense items
that are reflected in the Group's statements of cash flows; and
· the further adjustments made in calculating Adjusted EBITDA and
Further Adjusted EBITDA are those that management consider not to be
representative of the underlying operations of the Group and therefore are
subjective in nature.
Net debt is defined as total debt, excluding premiums, discounts, and deferred
financing expense, and the effect of foreign exchange that is economically
hedged as a result of our cross-currency interest rate swaps reflecting the
net cash outflow on maturity less cash and cash equivalents.
Leverage ratio is defined as net debt divided by Further Adjusted EBITDA. We
use this non-GAAP financial measure to evaluate our financial leverage. We
present net debt to Further Adjusted EBITDA because we believe it is more
representative of our financial position as it is reflective of our ability to
cover our net debt obligations with results from our core operations, and is
an indicator of our ability to obtain additional capital resources for our
future cash needs. We believe net debt is a meaningful financial measure that
may assist investors in understanding our financial condition and recognizing
underlying trends in our capital structure. The Leverage Ratio is not
substitute for, and should be used in conjunction with, GAAP financial ratios.
Other companies may calculate leverage ratios differently.
Adjusted Free Cash Flow is defined as net cash provided by operating
activities excluding changes in operating assets and liabilities related to
player deposits, investment and player deposit liabilities, cash paid for
transaction fees and associated cost, restructuring fees and integration cost
less payments for property and equipment, intangible assets and capitalized
software. We believe that excluding these items from adjusted free cash flow
better portrays our ability to generate cash, as such items are not indicative
of our operating performance for the period. This non-GAAP measure may be
useful to investors and other users of our financial statements as a
supplemental measure of our cash performance, but should not be considered in
isolation, as a measure of residual cash flow available for discretionary
purposes, or as an alternative to operating cash flows presented in accordance
with GAAP. Adjusted Free Cash Flow does not necessarily represent funds
available for discretionary use and is not necessarily a measure of our
ability to fund our cash needs. Our calculation of Adjusted Free Cash Flow may
differ from similarly titled measures used by other companies, limiting their
usefulness as a comparative measure.
Consolidated Balance Sheets:
($ in millions except share and per share amounts)
As of December 31,
2023 2022
Assets
Current assets:
Cash and cash equivalents $1,497 $966
Cash and cash equivalents - restricted 22 16
Player deposits - cash and cash equivalents 1,752 2,008
Player deposits - investments 172 167
Accounts receivable, net 90 116
Prepaid expenses and other current assets 443 703
Total current assets 3,976 3,976
Investments 9 11
Property and equipment, net 471 430
Operating lease right-of-use assets 429 452
Intangible assets, net 5,881 7,036
Goodwill 13,745 13,244
Deferred tax assets 24 47
Other non-current assets 100 62
Total assets $24,635 $25,258
Liabilities, redeemable non-controlling interests and shareholders' equity
Current liabilities:
Accounts payable $ 240 $ 248
Player deposit liability 1,786 2,110
Operating lease liabilities 123 110
Long-term debt due within one year 51 43
Other current liabilities 2,326 2,115
Total current liabilities: 4,526 4,626
Operating lease liabilities - non-current 354 384
Long-term debt 7,005 6,707
Deferred tax liabilities 802 919
Other non-current liabilities 580 502
Total liabilities 13,267 13,138
Redeemable non-controlling interests 1,152 929
Shareholders' equity
Common share (Authorized 300,000,000 shares of €0.09 ($0.10) par value each; 36 36
issued 2023: 177,008,649 shares; 2022: 176,091,902 shares)
Shares held by employee benefit trust, at cost 2023: nil, 2022: 1,396 shares - (1)
Additional paid-in capital 1,385 1,192
Accumulated other comprehensive loss (1,483) (1,782)
Retained earnings 10,106 11,590
Total Flutter shareholders' equity 10,044 11,035
Non-controlling interests 172 156
Total shareholders' equity 10,216 11,191
Total liabilities, redeemable non-controlling interests and shareholders' $24,635 $25,258
equity
Consolidated Statement of Comprehensive Income/(Loss):
($ in millions except per share and per share amounts)
Year ended December 31
2023 2022 2021
Revenue $11,790 $9,463 $8,308
Cost of Sales (6,202) (4,813) (3,881)
Gross profit 5,588 4,650 4,427
Technology, research and development expenses (765) (552) (634)
Sales and marketing expenses (3,776) (3,014) (2,819)
General and administrative expenses (1,596) (1,172) (1,423)
Operating loss (549) (88) (449)
Other (expense) income, net (157) 5 101
Interest expense, net (385) (212) (215)
Loss before income taxes (1,091) (295) (563)
Income tax expense (120) (75) (194)
Net loss (1,211) (370) (757)
Net gain/(loss) attributable to non-controlling interests and redeemable 13 (1) (13)
non-controlling interests
Adjustment of redeemable non-controlling interest to redemption value (2) 63 179
Net loss attributable to Flutter shareholders (1,222) (432) (923)
Net loss per share
Basic (6.89) (2.44) (5.24)
Diluted (6.89) (2.44) (5.24)
Other comprehensive income / (loss), before tax:
Effective portion of changes in fair value of cash flow hedges (121) 80 26
Fair value of cash flow hedges transferred to the income statement 93 (72) (11)
Foreign exchange (loss) / gain on net investment hedges 30 (145) 30
Foreign exchange gain / (loss) on translation of the net assets of foreign 357 (896) (673)
currency denominated entities
Fair value movements on available for sale debt instruments 5 (4) (1)
Other comprehensive income / (loss) 364 (1,037) (629)
Other comprehensive income / (loss) attributable to Flutter shareholders 299 (926) (627)
Other comprehensive income / (loss) attributable to non-controlling interest 65 (2)
and redeemable non-controlling interest
(111)
Total comprehensive income / (loss) for the year $(847) $(1,407) $(1,386)
Consolidated Statement of Cash Flows
($ in millions)
Year ended December 31,
Cash flows from operating activities 2023 2022 2021
Net loss $(1,211) $(370) $(757)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization 1,285 1,075 1,010
Impairment Loss 725 - -
Change in fair value of derivatives (7) (152) (141)
Non-cash interest (income) / expense, net (12) 7 17
Non-cash operating lease expense 117 96 70
Unrealized foreign currency exchange (gain) / loss, net (225) 196 101
Loss / (gain) on disposal 5 - (16)
Share-based compensation - equity classified 180 132 63
Share-based compensation - liability classified 10 49 425
Other (expense) / income, net 163 (89) 69
Deferred taxes (132) (145) (12)
Loss / (gain) on extinguishment of long-term debt 6 65 (130)
Change in contingent consideration (2) (6) 7
Change in operating assets and liabilities:
Player deposits (1) (72) -
Accounts receivable 23 (12) (17)
Prepaid expenses and other current assets 146 (97) (41)
Accounts payable (4) (24) (1)
Other current liabilities 366 207 (117)
Player deposit liability (382) 376 80
Operating leases liabilities (113) (73) (57)
Net cash provided by operating activities 937 1,163 553
Cash flows from investing activities
Purchases of property and equipment (159) (122) (122)
Purchases of intangible assets. (175) (100) (85)
Capitalized software (268) (207) (152)
Acquisitions, net of cash acquired - (2,095) (70)
Proceeds from disposal of property and equipment - 7 175
Net cash used in investing activities (602) (2,517) (254)
Cash flows from financing activities
Proceeds from issue of common share upon exercise of options 13 9 18
Proceeds from issuance of long-term debt (net of transaction costs) 2,018 4,692 1,661
Repayment of long-term debt (1,837) (2,646) (1,033)
Acquisition of non-controlling interests (95) (251) -
Distributions to non-controlling interests - (7) (23)
Payment of contingent consideration - (11) (10)
Repurchase of common share (212) (3) (252)
Net cash (used in)/provided by financing activities (113) 1,783 361
Net increase in cash, cash equivalents and restricted cash 222 429 660
Cash, cash equivalents and restricted cash - beginning of year 2,990 2,681 2,151
Effect of foreign exchange on cash, cash equivalents and restricted cash 59 (120) (130)
Cash, cash equivalents and restricted cash - end of year $3,271 $2,990 $2,681
Consolidated Statement of Cash Flows (continued)
($ in millions)
Year ended December 31,
Cash, cash equivalents and restricted cash comprise of: 2023 2022 2021
Cash and cash equivalents $ 1,497 $ 966 $1,286
Cash and cash equivalents - restricted 22 16 10
Player deposits - cash and cash equivalents 1,752 2,008 1,385
Cash, cash equivalents and restricted cash - end of year $3,271 $ 2,990 $ 2,681
Supplemental disclosures of cash flow information:
Interest paid 408 222 214
Income taxes paid 255 199 191
Non-cash investing and financing activities:
Purchase of intangible assets with accrued expense - 21 -
Operating lease right-of-use assets obtained in exchange of operating lease 73 148 135
liabilities
Adjustments to lease balances as a result of remeasurement 22 18 20
Business acquisitions (including contingent consideration) - - 24
Cancellation of Treasury Shares - - 60
Reduction in capital - - 13,631
Proceeds from issuance as part of debt restructuring 5,267 - -
Principal amount of extinguishment as part of debt restructuring 4,622 - -
Reconciliations of non-GAAP financial measures
Adjusted EBITDA reconciliation:
See below a reconciliation of Adjusted EBITDA, Adjusted EBITDA Margin, Further
Adjusted EBITDA and Further Adjusted EBITDA Margin to net loss, to the most
comparable GAAP measure.
($ in millions) Year Ended December 31,
2023 2022
Net loss $(1,211) $(370)
Add back:
Income taxes 120 75
Other (expense)/income, net 157 (5)
Interest expense, net 385 212
Depreciation and amortization 1,285 1,076
Transaction fees and associated costs((1)) 92 43
Restructuring and integration costs((2)) 126 155
Legal settlements/(loss contingencies)((3)) - (44)
Impairment of PPE and Intangible Assets((4)) 725 -
Group Adjusted EBITDA 1,678 1,142
Less: US Adjusted EBITDA 65 (347)
Group ex-US Adjusted EBITDA 1,613 1,489
Group Revenue 11,790 9,463
Group Adjusted EBITDA Margin 14.2% 12.1%
Group Adjusted EBITDA 1,678 1,142
Add back:
Group share-based compensation expense 196 147
Group Further Adjusted EBITDA $1,874 $1,289
Further Adjusted EBITDA Margin 15.9% 13.6%
1. Fees primarily associated with (i) transaction fees related
to the proposed listing of Flutter's ordinary shares in the U.S. of $86
million for the year ended December 31, 2023 and (ii) Fox Option arbitration
proceedings of $30 million and acquisition-related costs in connection with
tombola and Sisal of $11 million for the year ended December 31, 2022.
2. During the year ended December 31, 2023 costs of $126 million
(year ended December 31, 2022: $155 million) primarily relate to various
restructuring and other strategic initiatives to drive increased synergies
arising primarily from the acquisitions of TSG and Sisal. These actions
include efforts to consolidate and integrate our technology infrastructure,
back-office functions and relocate certain operations to lower cost locations.
The costs primarily include severance expenses, advisory fees and temporary
staffing cost. Costs also include implementation costs of an enterprise
resource planning system that could not be capitalized.
3. During the year ended December 31, 2022, the settlement of
two separate legacy The Stars Group ("TSG") litigation matters resulted in the
release of various legal provisions and an Income Statement credit of $44
million.
4. In the fourth quarter of 2023, the Group recognized an
intangible asset impairment loss of $725 million in sales and marketing
expenses related to PokerStars trademark within the International segment. The
impairment was primarily driven by an assessment of strategy and operational
model aimed at maximizing the value of PokerStars' proprietary poker assets
consistent with our International segment strategy to combine global scale
with local presence.
Further Adjusted EBITDA reconciliation, Segment and Group Ex-US:
See below a reconciliation of Group Ex-US and segment Adjusted EBITDA,
Adjusted EBITDA Margin, Further Adjusted EBITDA and Further Adjusted EBITDA
Margin to net loss, the most comparable GAAP measure.
Group Ex-US
($ in millions) Year Ended December 31,
2023 2022
Group Ex-US Adjusted EBITDA $1,613 $1,489
Add back:
Share-based compensation expense 94 63
Group Ex-US Further Adjusted EBITDA $1,707 $1,552
Revenue 7,306 6,277
Adjusted EBITDA Margin 22.1% 23.7%
Further Adjusted EBITDA Margin 23.4% 24.7%
US
($ in millions) Year Ended December 31,
2023 2022
US Adjusted EBITDA $65 $ (347)
Add back:
Share-based compensation expense 102 84
US Further Adjusted EBITDA $167 $ (263)
Revenue 4,484 3,187
Adjusted EBITDA Margin 1.4% (10.9%)
Further Adjusted EBITDA Margin 3.7% (8.2%)
UKI
($ in millions) Year Ended December 31,
2023 2022
UKI Adjusted EBITDA $888 $757
Add back:
Share-based compensation expense 23 19
UKI Further Adjusted EBITDA $911 $777
Revenue 3,047 2,664
Adjusted EBITDA Margin 29.1% 28.4%
Further Adjusted EBITDA Margin 29.9% 29.1%
Australia
($ in millions) Year Ended December 31,
2023 2022
Australia Adjusted EBITDA $348 $477
Add back:
Share-based compensation expense 8 8
Australia Further Adjusted EBITDA $356 $485
Revenue 1,447 1,558
Adjusted EBITDA Margin 24.1% 30.6%
Further Adjusted EBITDA Margin 24.6% 31.1%
International
($ in millions) Year Ended December 31,
2023 2022
International Adjusted EBITDA $592 $395
Add back:
Share-based compensation expense 35 22
International Further Adjusted EBITDA $627 $417
Revenue 2,812 2,055
Adjusted EBITDA Margin 21.1% 19.2%
Further Adjusted EBITDA Margin 22.3% 20.3%
Unallocated corporate overhead
($ in millions) Year Ended December 31,
2023 2022
Unallocated corporate overhead $ (215) $ (141)
Less:
Share-based compensation expense 28 14
Unallocated corporate overhead $ (187) $ (127)
PokerStars US 2024 reporting reconciliation
($ in millions) FY 2023 as reported PokerStars US FY 2024 reporting basis
US revenue 4,484 (80) 4,404
US Further Adjusted EBITDA 167 65 232
Group Ex-Us 7,306 80 7,386
Group Ex-US Further Adjusted EBITDA 1,707 (65) 1,642
Adjusted Free Cash Flow reconciliation:
See below a reconciliation of Adjusted Free Cash Flow to net cash generated in
operating activities, the most comparable GAAP measure.
($ in millions) As of December 31,
2023 2022
Net cash provided by operating activities $937 $1,163
Less:
Change in player deposits 1 72
Change in player deposit liability 382 (376)
Add cash impact of:
Transaction fees and associated costs 83 32
Restructuring and integration costs 137 114
Less cash impact of:
Purchase of property and equipment (159) (122)
Purchases of intangible assets (175) (100)
Capitalized software (268) (207)
Adjusted Free Cash Flow $938 $576
Net debt reconciliation:
See below a reconciliation of net debt to long-term debt, the most comparable
GAAP measure.
($ in millions) As of December 31,
2023 2022
Long-term debt $7,005 $6,707
Long-term debt due within one year 51 43
Total Debt 7,056 6,750
Add:
Transactions costs, premiums or discount included in the carrying value of 54 41
debt
Less:
Unrealized foreign exchange on translation of foreign currency debt(1) 182 (151)
Cash and cash equivalents (1,497) (966)
Net debt $5,795 $5,674
1. Representing the adjustment for foreign exchange that is economically
hedged as a result of our cross-currency interest rate swaps to reflect the
net cash outflow on maturity.
Adjusted net profit attributable to Flutter shareholders:
See below a reconciliation of Adjusted net profit attributable to Flutter
shareholders to net loss, the most comparable GAAP measure.
($ in millions) As of December 31,
2023 2022
Net loss $(1,211) $(370)
Add (Less):
Transaction fees and associated costs 92 43
Restructuring and integration costs 126 155
Legal settlements/loss contingencies - (44)
Impairment of PPE and Intangible Assets 725 -
Amortization of acquired intangibles 791 749
Accelerated amortization 30 -
Loss on settlement of long-term debt 6 65
Financing related fees not eligible for capitalization 29 9
Share-based compensation 196 147
Tax impact of above adjustments(1) (150) (199)
Adjusted net profit $634 $556
Less:
Net loss attributable to non-controlling interests and 13 (1)
redeemable non-controlling interests(2)
Adjustment of redeemable non-controlling interest (2) 63
Adjusted net profit attributable to Flutter shareholders $623 $494
Weighted average number of shares 177 177
1. Tax rates used in calculated adjusted net profit attributable to
Flutter shareholders is the statutory tax rate applicable to the geographies
in which the adjustments were incurred.
2. Represents net loss attributed to the non-controlling interest in Sisal
and the redeemable non-controlling interest in FanDuel, Junglee and Adjarabet
(2022).
3. Represents the adjustment made to the carrying value of the redeemable
non-controlling interests in Junglee and Adjarabet (2022) to account for the
higher of (i) the initial carrying amount adjusted for cumulative earnings
allocations, or (ii) redemption value at each reporting date through retained
earnings.
Adjusted Earnings Per Share reconciliation:
See below a reconciliation of Adjusted Earnings Per Share to net loss per
share, the most comparable GAAP measure.
($ in millions) As of December 31,
2023 2022
Net loss per Flutter shareholders $(6.89) $(2.44)
Add (Less):
Transaction fees and associated costs 0.52 0.24
Restructuring and integration costs 0.71 0.88
Legal settlements/loss contingencies - (0.25)
Impairment of PPE and Intangible Assets 4.09 -
Amortization of acquired intangibles 4.46 4.24
Accelerated amortization 0.17 -
Loss on settlement of long-term debt 0.03 0.37
Financing related fees not eligible for capitalization 0.16 0.05
Share-based compensation 1.11 0.83
Tax impact of above adjustments(1) (0.85) (1.12)
Adjusted earnings per share $3.51 $2.79
IFRS Adjusted EBITDA reconciliation:
See below a reconciliation of Adjusted EBITDA, Adjusted EBITDA Margin, Further
Adjusted EBITDA and Further Adjusted EBITDA Margin to net loss, to the most
comparable GAAP measure.
(in millions) Year Ended December 31,
2023
Net loss $(981)
Add back:
Income taxes (125)
Financial income (45)
Financial expense 676
Depreciation and amortization 1,448
Transaction fees and associated costs(1) 92
Restructuring and integration costs(2) 126
Impairment of PPE and Intangible Assets(3) 708
IFRS Group Adjusted EBITDA $1,899
IFRS Group Adjusted EBITDA £1,525
IFRS US Adjusted EBITDA £81
IFRS Group Adjusted EBITDA ex-US £1,444
IFRS UKI Adjusted EBITDA £758
IFRS Australia Adjusted EBITDA £288
IFRS International Adjusted EBITDA £555
IFRS Unallocated corporate overhead £(157)
1. Fees primarily associated with transaction fees related to the proposed
listing of Flutter's ordinary shares in the U.S.
2. Primarily relate to various restructuring and other strategic
initiatives to drive increased synergies arising primarily from the
acquisition of Sisal. These actions include efforts to consolidate and
integrate our technology infrastructure, back-office functions and relocate
certain operations to lower cost locations. The costs primarily include
severance expenses, advisory fees and temporary staffing cost. Costs also
include implementation costs of an enterprise resource planning system that
could not be capitalized.
3. In the fourth quarter of 2023, the Group recognized an intangible asset
impairment loss related to PokerStars trademark within the International
segment. The impairment was primarily driven by an assessment of strategy and
operational model aimed at maximizing the value of PokerStars' proprietary
poker assets consistent with our International segment strategy to combine
global scale with local presence.
Constant currency ('CC') growth rate reconciliation:
See below a reconciliation of constant currency growth rates to nominal
currency growth rates, the most comparable GAAP measure.
($ in millions) As of December 31,
unaudited 2023 2022 YOY 2022 2022 YOY
Revenue FX impact CC CC
US 4,484 3,187 40.7% 3 3,190 40.6%
UKI 3,047 2,664 14.4% 16 2,680 13.7%
Australia 1,447 1,558 (7.1%) (68) 1,490 (2.8%)
International 2,812 2,055 36.8% 40 2,095 34.2%
Group 11,790 9,463 24.6% (8) 9,456 24.7%
Group Ex-US 7,306 6,277 16.4% (11) 6,266 16.6%
Adjusted EBITDA
US 65 (347) - (347)
UKI 888 757 17.2% 8 765 16.0%
Australia 348 477 (27.0%) (24) 453 (23.1%)
International 592 395 49.8% 23 418 41.5%
Unallocated corporate overhead (215) (141) 52.7% (4) (145) 48.3%
Group 1,678 1,142 46.9% 3 1,144 46.6%
Group Ex-US 1,613 1,489 8.4% 3 1,492 8.2%
Further Adjusted EBITDA
US 167 (263) 1 (262)
UKI 911 777 17.3% 8 785 16.0%
Australia 356 485 (26.7%) (24) 461 (22.8%)
International 627 417 50.4% 23 440 42.7%
Unallocated corporate overhead (187) (127) 47.2% (4) (131) 42.7%
Group 1,874 1,289 45.4% 3 1,292 45.1%
Group Ex-US 1,707 1,552 10.0% 2 1,554 9.8%
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