REG - Flutter Entertainmnt - Q3 2022 Trading Update

Flutter EntertainmentAnnouncement

09/11/2022 07:01

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RNS Number : 7349F  Flutter Entertainment PLC  09 November 2022

9 November 2022

Q3 2022 Trading Update

Strong Group revenue and AMP growth,

2022 US guidance upgraded and maintained for Group ex-US

Flutter Entertainment plc (the "Group") announces a trading update for three
months ended 30 September 2022.

 Unaudited £m                        Q3 2022  Q3 2021  YoY %  YoY % CC(1)

 Average monthly players(2) ('000s)  9,596    7,811    +23%

 Sports revenue                      1,143    906      +26%   +17%
 Gaming revenue                      748      534      +40%   +30%
 Total revenue                       1,891    1,439    +31%   +22%

All commentary within this trading update refers to constant currency(1)
growth rates. Pro forma references include Tombola and Sisal for a full
3-month period in both 2021 and 2022. Any differences due to rounding.

•     Group: Reported revenue growth benefitting from US growth of 82%
and the Sisal acquisition. Pro forma revenue +11% and AMPs +11%

•     US: Number 1 online sportsbook with 42%(3) market share; strong
start to NFL season and continued momentum underpinning confidence in positive
EBITDA for 2023

•     Group ex-US: Revenue +6% with AMPs +19%. Pro forma revenue 6%
lower with AMPs +6%. Strong growth in "consolidate and invest" International
markets partially offset guided regulatory changes and challenging
calendar/Covid comparatives in UK&I and Australia(4)

•     Sustainability: Continued Positive Impact Plan progress including
a number of Play Well strategy events and the highest level of accreditation
with GamCare in the UK&I for our proactive customer protections

•     Events: US investor day 16 November showcasing FanDuel's success,
register here (https://flutter.connectid.cloud/) to attend

•     Full year guidance:

-     US: Revenue guidance upgraded to $2.95bn - $3.2bn (£2.45bn -
£2.65bn); previous guidance $2.85bn-$3.1bn (£2.3bn - £2.5bn). Adjusted
EBITDA loss still expected to be in line with previous guidance of $300m -
$360m despite earlier launch of Maryland. (£235m - £285m adjusting for
foreign exchange movements)

-       Group ex-US: Adjusted EBITDA for 2022 expected to remain within
the previously guided range and in line with expectations (£1.29bn -
£1.39bn), despite continued Irish Retail weakness and UK fixture
cancellations

-       Guidance reflects current consumer trends with no discernible
sign of slowdown year to date

-       Interest: Expected weighted average cost of debt of 4.1% in Q4
increasing to 5.6% in 2023 and would give rise to c. £280m in net cash
interest cost in 2023

Peter Jackson, Chief Executive, commented:

"Flutter delivered a strong Q3 performance with pro forma growth of 11% in
both revenue and average monthly players. Our US division is now our largest
and generated $700m in revenue, up 82%. Good growth in our 'consolidate and
invest' International markets and the acquisition of Sisal in August helped
drive ex-US revenues.

We are really pleased with our performance in our US division since the start
of the NFL in September where we are now averaging over 1m players on a
regular NFL Sunday. In addition, we are seeing an increase in customer
retention rates as our parlay products continue to grow in popularity, boosted
by the start of the NBA season. The ongoing momentum in our US division has
led to an upgrade to our outlook for the year, underpinning our confidence
that we will be profitable for 2023.

Outside of the US, we welcomed Sisal, Italy's leading gaming operator, to our
International division during the quarter and look forward to working with the
team to grow the business in Italy and in other International markets.

We were delighted with the successful outcome of our arbitration process with
FOX regarding the price of their option to acquire 18.6% of FanDuel. This
vindicates our position on the matter, with FanDuel valued at $20bn based on
its fair market value at 3 December 2020 and provides important clarity on the
significant cost required to buy into the number one US gaming business.

As we look ahead our product and geographic diversification, as well as our
recreational customer base, position us well for future growth."

Divisional analysis

 Unaudited revenue          Total                           Sports(5)  Gaming      Average monthly players(2)

 £m
                            Q3 2022  Q3 2021  YoY %  YoY %  YoY %      YoY %       Q3 2022 (000s)  YoY%

                                                     CC     CC         CC
 US                         598      280      +114%  +82%   +106%      +36%        1,860           +42%

 UK & Ireland               509      491      +4%    +3%    -10%       +25%        3,459           +13%
 - UK & Ireland Online      443      423      +5%    +4%    -11%       +29%        3,459           +13%
 - UK & Ireland Retail      66       68       -2%    -3%    -3%        -2%
 Australia                  319      370      -14%   -21%   -21%                   1,100           +1%
 International              466      299      +56%   +43%   +99%       +32%        3,176           +35%
 Group ex-US                1,293    1,160    +11%   +6%    -8%        +29%        7,735           +19%

 Group                      1,891    1,439    +31%   +22%   +17%       +30%        9,596           +23%

Tombola, acquired in January 2022 and Sisal, acquired in August 2022 have been
included on a reported basis within UK & Ireland Online and International
respectively. The pro forma references within the commentary below include
Tombola and Sisal for a full 3-month period in both 2021 and 2022.

US

FanDuel remains the Number 1 sportsbook operator with 42% share of the online
market in Q3 and we maintained our podium position in iGaming with a 19%(3)
market share.

Revenue grew by 82% to £598m ($700m) during the quarter. Sports revenue was
106% ahead and sportsbook revenue grew 150% driven by strong customer
acquisition across existing states as the NFL season began, as well as the
addition of six new sportsbook states since the start of Q3 2021. Customer
economics remained compelling, despite the anticipated step up in competition
at the start of the NFL season. We continued to apply a disciplined approach
to investment with expected payback periods in September remaining within 18
months. Stakes were 82% higher at £4.5bn ($5.3bn) with record net revenue
margin of 8.5% reflecting a material increase versus the prior year. This was
primarily driven by structural improvements due to the growing popularity of
our market leading sports betting products such as SGP Live which launched in
September, and bookmaker friendly sports results which we reinvested in
promotional generosity for our customers.

iGaming growth of 36% was driven by a 40% increase in iGaming AMPs. We
continued to progress against our product roadmap, launching new content
including the roll out of the FanDuel Casino daily reward machine.

UK & Ireland

Online

UK&I online AMPs grew by 13% with revenue 4% higher. Pro forma AMPs were
in line, with revenue 4% lower.

Sports revenue was 11% lower but in line with the prior year excluding the
benefit of the European Championships in 2021. Aided by the launch of our 'Bet
Builder' products, which are driving structural margin improvements,
sportsbook net revenue margin increased 50 basis points to 10.3%. The start of
the new football season has been impacted by a slower mid-summer start and
fixture cancellations around the period of national mourning, with momentum
improving as the season has progressed.

Gaming revenue increased by 29%. Pro forma revenue was 5% higher driven by
continued strong player momentum with gaming AMPs 9% higher.

Retail

Retail revenue was 3% lower with reduced footfall due to the hot summer
weather. In the UK, revenue declined 4% but was 5% ahead of the pre-Covid
level of 2019. In Ireland, revenue was in line with the prior year but
remained 27% lower than 2019 due to continued low footfall from changes in
working patterns.

Australia

Sportsbet delivered good player retention levels despite challenging Covid
comparatives with AMPs growing 1% year-on-year. Revenue declined by 21%
reflecting lower levels of player engagement compared to the prior year when
more than 60% of the country was in lockdown, combined with high levels of
weather-related racing disruption. Net revenue margin of 11.1% was flat when
compared with the prior year, as the benefit of bookmaker friendly sports
results and structural margin improvements were offset by increased investment
in promotional generosity to drive customer retention and engagement ahead of
the spring carnival.

International

 Unaudited revenue        Total                           Sports(5)  Gaming      Average monthly players(2)

 £m
                          Q3 2022  Q3 2021  YoY %  YoY %  YoY %      YoY %       Q3 2022 (000s)  YoY%

                                                   CC     CC         CC
 International reported   466      299      +56%   +43%   +99%       +32%        3,176           +35%
 International pro forma  529      489      +8%    +5%    +18%       +1%         3,416           +14%

Two months of Sisal revenue have been included in reported growth of 43%. On a
pro forma basis revenue was 5% higher or 11% higher excluding the impact of
guided headwinds in the quarter(4).

Pro forma revenue in our 'consolidate and invest' markets(4), which accounted
for 78% of International revenue in the quarter, was 15% higher. Sisal
continued its strong momentum from H1 with pro forma revenue and player growth
of 19% and 27% respectively due to strong online performance, while retail
volumes were maintained. In India, we continued to grow strongly with revenue
78% higher driven by a 75% increase in players.

 

(1) Constant currency ("cc") growth is calculated by retranslating the
non-sterling denominated components of Q3 2021 at Q3 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. Average Monthly Player numbers now
include Junglee players, and Q3 2021 comparative figures have been adjusted to
show a like for like comparison.

(3) Online sportsbook market share is the GGR market share of FanDuel and FOX
Bet for Q3 2022 in the states in which FanDuel was live, based on published
gaming regulator reports in those states. During Q3 2022 FanDuel was live in
16 states; Arizona (AZ), Colorado (CO), Connecticut (CT), Illinois (IL),
Indiana (IN), Iowa (IA), Kansas (KS), Louisiana (LA), Michigan (MI), New
Jersey (NJ), New York (NY), Pennsylvania (PA), Tennessee (TN), Virginia (VA),
West Virginia (WV) and Wyoming (WY). During Q3 FOX Bet was live in 4 states;
CO, NJ, MI and PA. Market share does not include AZ, IL and KS for September
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) Guided headwinds reflect the impact of the temporary market exit from the
Netherlands, and the effects of the ongoing war in Ukraine on our business in
Russia and the Ukraine. Consolidate and invest markets in International are
per our interims results presentation on 12 August, namely Italy, Spain,
Georgia, Armenia, Brazil, Canada, India and Turkey.

(5) Sports revenue includes revenue from sportsbook, exchange, daily fantasy
sports, advance deposit wagering and B2B product verticals.

 Analyst briefing:

 The Group will host a questions and answers call for institutional investors
 and analysts this morning at 9:00am (GMT). To dial into the conference call,
 participants need to register here
 (https://cossprereg.btci.com/prereg/key.process?key=PVPV8M3T8) where they will
 be provided with the dial in details to access the call.

 Contacts:

 Investor Relations:
 Paul Tymms, Group Director of Investor Relations and FP&A      + 44 75 5715 5768
 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 the 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, Sisal, 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 and Canada.

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