REG - Flutter Entertainmnt - Q1 2022 Trading Update

Flutter EntertainmentAnnouncement

04/05/2022 07:00

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RNS Number : 1933K  Flutter Entertainment PLC  04 May 2022

 

4 May 2022

Q1 2022 Trading Update

 

Strong US momentum continues, ex-US performance in line with market
expectations

Flutter Entertainment plc (the "Group") announces a trading update for three
months ended 31 March 2022.

 Unaudited £m                        Q1 2022  Q1 2021  YoY %  YoY % CC(1)

 Average monthly players(2) ('000s)  8,855    7,672    +15%

 Sports revenue                      930      896      +4%    +5%
 Gaming revenue                      636      589      +8%    +9%
 Total revenue                       1,566    1,485    +5%    +6%

  All commentary within this trading update refers to constant currency(1)
growth rates. Any differences due to rounding.

 

•    Group: Revenue growth of 6% driven by continued strong recreational
player momentum with average monthly players ("AMPs") up 15%

•     US: excellent execution delivering revenue growth of 45% to $574m
with continued strong customer economics

•     Group ex-US: 3% decline in revenue or 2% higher excluding known
safer gambling and regulatory headwinds driven by strong performance in
Australia, Canada, Brazil and India

•     Sustainability: Positive Impact Plan progress in Q1 included roll
out of mandatory deposit limits to under 25s in the UK and Ireland, and the
launch of our Play Well advertising campaign with US ambassador Craig Carton

 

Peter Jackson, Chief Executive, commented:

"Flutter delivered a positive Q1 performance with revenue growth of 6%. The
quarter saw us launch our new global sustainability strategy, the Positive
Impact Plan, aligning commercial goals with our commitment to support our
customers, colleagues and the communities in which we operate.

In the US we had another exciting quarter as FanDuel continued to deliver
unparalleled scale, with the US accounting for over half of all stakes for the
Flutter Group in Q1. We launched our FanDuel sportsbook in New York and
Louisiana in January and also expanded into Ontario in April. We beat a number
of FanDuel records in the quarter; Super Bowl Sunday was the single biggest
day ever for new customers and we had over 1.5m active customers on the day.
March Madness this year also proved our most popular season yet attracting 19m
wagers across the tournament.

Outside of the US, our business performed well, adapting to the evolving
regulatory and trading environment and reflecting the benefits of our global
diversification. In the UK and Ireland we launched several new products in the
quarter. I look forward to the imminent release of the UK Government's White
Paper on its review of the Gambling Act. In Australia, Sportsbet delivered
good growth from ongoing customer driven momentum, with excellent retention of
players acquired in 2021. Our International business benefitted from strong
performance in focus markets and we hope to complete the Sisal acquisition in
Q3.

With our enlarged recreational customer base, winning position in the US and
ongoing focus on sustainable growth, our business remains well placed for the
future."

 

Divisional analysis

 Unaudited revenue          Total                    Sports  Gaming      Average monthly players(2)

 £m
                            Q1 2022  Q1 2021  YoY %  YoY %   YoY %       Q1 2022 (000s)  YoY%

                                              CC     CC      CC
 US                         429      288      +45%   +50%    +34%        2,359           +43%
 UK & Ireland               519      568      -8%    -21%    +15%        3,627           +15%
 - UK & Ireland Online      453      568      -20%   -32%    +4%         3,627           +15%
 - UK & Ireland Retail      65       -        +100%  +100%   +100%
 Australia                  291      279      +8%    +8%                 915             +10%
 International              327      351      -5%    -3%     -5%         1,954           -4%
 Group                      1,566    1,485    +6%    +5%     +9%         8,855           +15%

US

In the US, FanDuel delivered another excellent performance with 2.4m customers
and revenue of £429m ($574m). We remained the number 1 US sportsbook with a
37% online sports betting share. We acquired over 1.3m new customers in the
quarter and similar to the trends seen in Q1 2021, some of our key promotional
mechanics led to reduced market share particularly around the SuperBowl. Our
iGaming share was 20% in Q1(3).

Revenue grew by 45% driven by a 43% growth in AMPs, with a number of factors
driving performance:

•     Excellent execution delivered record customer acquisition and
engagement with:

◦      Compelling customer economics as cumulative CPAs remain at
c.$290 and average paybacks within 12-18 month range(4)

◦      Strong SuperBowl/March Madness campaigns with FanDuel the most
downloaded sportsbook app across the events

◦      Successful launches in New York and Louisiana, with New York
exceeding expectations representing the fastest penetration of our daily
fantasy sports player base to date

•     This strong player momentum more than doubled stakes to £5.7bn
($7.7bn). Sportsbook revenue was up 89% with net revenue margin 30 basis
points lower at 4.1%. Customer friendly results cost £98m ($132m)(5) or 175
basis points versus expected margin in Q1, however, structural margin gains
delivered by our leading product proposition drove additional revenue
firepower to offset most of this year-on-year results impact

•     iGaming growth reflects the launch of Connecticut in Q4 and good
cross-sell to SuperBowl and March Madness players. We continued to improve our
customer proposition with FanDuel rated the number 1 casino app in Q1

UK & Ireland

Online

UK&I online AMPs grew 15% while revenue declined 20% (pro forma for
Tombola AMPs +2%, revenue -26%) due to the expected impact of:

•     Safer gambling measures introduced over the last 12 months
(incremental year-on-year impact £30m in Q1)

•     Favourable sports results in the comparable period with sportsbook
net revenue margin 100 basis points lower year-on-year at 9.6%

•     Peak in player engagement during Q1 2021 from Covid-related
restrictions

We continue to sharpen our sports product with the launch of 'Buildabet' and
'Acca Assist' in SkyBet. On the gaming side, Sky Vegas launched 'The Vault'
and we continue to see good recreational player growth with gaming AMPs up 9%
on a pro forma basis. We believe that our increased focus on product and
efficiency will set the division up well for the future.

 

Retail

Our retail estate was fully open during the quarter compared to completely
closed during Q1 2021. Our UK estate has returned to near pre-Covid levels
with revenue just 6% lower than Q1 2019. Our Irish estate was 24% lower than
Q1 2019 reflecting the higher level of societal caution with respect to Covid
and is unlikely to return to pre-Covid levels in the current year.

Australia

At Sportsbet, revenue grew by 8% despite a more challenging market environment
with Covid restrictions easing. Our strong performance was driven by player
volumes as AMP growth accelerated to 10%. Structural improvements in margin
driven by our in-house pricing capabilities and product mix funded an increase
in promotional spend. This led to strong player engagement and good retention
of the 2021 Covid-enlarged customer base. Staking was 7% higher as a result
with net revenue margin broadly flat at 11.5%.

International

Revenue in our International division was 5% lower, reflecting the impact of
guided headwinds(6) in the quarter. Excluding these headwinds revenue grew 6%
with strong growth in focus markets of Canada, Brazil, India, Georgia and
Armenia.

We continue to improve the customer proposition by leveraging expertise within
the Group. The Group's global betting platform has been deployed in Denmark.
Junglee is bringing the concepts of PokerStars 'Spin and Go' poker product to
the Indian rummy market.

 

(1 )Constant currency ("cc") growth is calculated by retranslating the
non-sterling denominated components of Q1 2021 at Q1 2022 exchange rates.
Growth rates in the commentary are in local or constant currency.

(2 )Average Monthly Players represent the average number of players who have
placed and/or wagered a stake and/or contributed to rake or tournament fees
during the month in the reporting period.

(3 )Online sportsbook market share is the GGR market share of FanDuel and FOX
Bet for Q1 2022 in the states in which FanDuel was live, based on published
gaming regulator reports in those states. During Q1 2022 FanDuel was live in
15 states; Arizona (AZ), Colorado (CO), Connecticut (CT), Illinois (IL),
Indiana (IN), Iowa (IA), Louisiana (LA), Michigan (MI), New Jersey (NJ), New
York (NY), Pennsylvania (PA), Tennessee (TN), Virginia (VA), West Virginia
(WV) and Wyoming (WY). During Q1 FOX Bet was live in 4 states; CO, NJ, MI and
PA. Market share does not include AZ for February or AZ, IL, VA, WV and WY for
March as the data has yet to be released. Online gaming market share reflects
the combined CT, MI, NJ, PA and WV market share of our gaming brands.

(4)CPA is cost per acquisition and represents the total media and digital
marketing spend per acquired customer including those cross-sold from daily
fantasy sports. The payback period represents the average number of months it
takes to generate sufficient gross profit to pay back the average CPA to
acquire those customers. It includes all quarterly cohorts of FanDuel
sportsbook acquired between Q3 2018 through Q1 2021.

(5) Represents the revenue impact of sports results in Q1 before adjusting
for recycling.

(6 )Guided headwinds in International reflect the impact of the temporary
market exit from the Netherlands, tax changes in Germany and the effects of
the ongoing war in Ukraine on our business in Russia and the Ukraine.

( )

 Analyst briefing:

 The Group will host a questions and answers call for institutional investors
 and analysts this morning at 9:00am (BST).  To dial into the conference call,
 participants need to register here
 (https://cossprereg.btci.com/prereg/key.process?key=PKJRBNLV3) where they will
 be provided with the dial in details to access the call.

 Contacts:

 Investor Relations:
 Ciara O'Mullane, Investor Relations        + 353 87 947 7862
 Liam Kealy, Investor Relations             + 353 87 665 2014
 Press:
 Kate Delahunty, Corporate Communications   + 44 78 1077 0165
 Lindsay Dunford, Corporate Communications  + 44 79 3197 2959
 Rob Allen, Corporate Communications        + 44 75 5444 1363
 Billy Murphy, Drury Communications         + 353 1 260 5000
 James Murgatroyd, Finsbury                 + 44 20 7251 3801

 

About Flutter Entertainment plc:

Flutter Entertainment plc (the "Group") is a global sports-betting and gaming
company reporting as four divisions:

•       UK & Ireland: includes Sky Betting and Gaming, Paddy
Power, Betfair and Tombola brands offering a diverse range of sportsbook,
exchange and gaming services across the UK and Ireland, along with over 600
Paddy Power betting shops.

•       Australia: the Sportsbet brand offers online sport betting and
is the Australian market leader.

•       International: includes PokerStars, Adjarabet, Betfair and
Junglee operating in multiple jurisdictions around the world offering a
diverse range of sportsbook, exchange and gaming services.

•       US: includes FanDuel, TVG, Stardust, FOX Bet and PokerStars
brands, offering regulated real money and free-to-play sports betting, online
gaming, daily fantasy sports and online racing wagering products to customers
across various states in the US.

 

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