Flutter Entertainment Peter Jackson

Flutter faces ‘transformation point’ on positive US EBITDA of $100m

Flutter Entertainment Plc has reached an “inflection point” for its business, as its US FanDuel division ‘achieves profitability’ to transform its group earnings performance and prospects. 

Delivering on a core strategic target, Flutter published its Interim H1 2023 results registering group revenues of £4.8bn, up 42% on 2022 comparatives of £3.38bn.

Period trading marked a strong momentum, with average monthly players (AMPs) increasing by 28%, driven by US growth (+43%) and the successful addition of Sisal (pro forma AMPs +18%).

Headline maker, the FanDuel US division achieved H1 profitability generating an adjusted EBITDA of £79m ($100m) – maintaining its outright leadership in US sportsbook with 47% of market share.

As cited, US profitability has led an earnings transformation as Flutter reported a group-wide Adjusted EBITDA of £823m (pro forma +37%) up 72% on 2022 results of £476m. Overall H1 results saw Flutter register Statutory US losses of £4m, significantly narrowing H1 2022 losses of £162m. 

Group CEO, Peter Jackson, commented: “The first half of 2023 marks a pivotal moment for the Group, with our US business now at a profitability inflection point, helping transform the earnings profile of the Group and significantly enhance our financial flexibility.

“Our recreational player base increased to over 12 million monthly players, and importantly, more players than ever interacting with our safer gambling tools, aided by a £45m investment in our Play Well strategy in H1.”

In the UK & Ireland, Flutter maintained its strong growth momentum, as its home markets portfolio (online and retail) registered a revenue growth of 13% to £1.2bn.

Of significance to group earnings, UK & Ireland brands registered a “cost-of-sales reduction by 60 basis points” helping the unit generate adjusted EBITDA of £396m (+24%).

Elsewhere, Flutter’s enlarged International Unit registered a 74% increase in revenues to £1.16bn as period trading saw the unit double its AMPs to four million active customers, incorporating the new assets of Sisal.

Flutter reported that reported performance “includes a six-month contribution from Sisal (revenue: +£516m, EBITDA +£146m) in H1 2023 only. 

 In Australia, the Sportsbet AUS unit faced the challenges of a 27% decline in adjusted EBITDA to £158m (H12022: £219m), mainly due to POC tax changes and COVID-related impacts.

Australia’s earnings performance was impacted by Flutter registering a 52% increase in guided POC tax changes to £33m, across all Australian states.   

“In the UK, we took market share due to ongoing product enhancements, while in International, Sisal continues its strong trajectory since its acquisition in August 2022,” Jackson commented on International and UK results.

“This combined momentum helped offset the reduction in Australian profitability, due to more challenging COVID-related comparatives and a changing tax environment.”

Providing an H2 outlook, Flutter expects group (ex-US) Adjusted EBITDA of between £1.44bn – £1.6bn, with strong momentum in the UK&I and International, offset by softer than expected market conditions in Australia.

The FanDuel unit is expected to deliver a net revenue result of between £3.6bn – £3.9bn ($4.5bn – $4.9bn) and Adjusted EBITDA of between £90m – £190m ($120m – $240m).

“The US delivered another exceptional performance. We acquired over two million new players in the period, cemented our leadership position in sports and grew our share in iGaming to 23%.”

“The second half of the year has started well and we look forward to adding a US listing for Flutter shares later this year or early next year.”

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