SBC News Flutter Q1 growth dragged by costly Fox option liability 

Flutter Q1 growth dragged by costly Fox option liability 

Flutter Entertainment Plc maintains its growth momentum and market share upturn across key territories, ahead of relocating its primary shareholding on the NYSE from May onwards.

Publishing its Q1 2024 accounts, Flutter reports group revenues of $3.4bn, up 16% on 2023 comparatives of $2.9bn.

Group results detailed that Flutter’s brand portfolio increased its average monthly players to 13.7m during the Q1 period.

Maintaining headline growth, Flutter declared a group Q1 adjusted EBITDA result of $514m, up 46% on corresponding 2023 results of $352m, as group accounts detail a margin increase of 310 basis points to 15%.

Significant to corporate performance, the FanDuel US unit generated a positive EBITDA contribution of $26m, reversing like-for-like losses of $53m reported in Q1 2023.

Yet, “offsetting improved financial performance”, Q1 accounts saw Flutter book net losses of $177m, deepening group operating losses by $66m (Q1 2023: $111m).

Period losses were driven largely by non-cash charges, including a “substantial change” in the fair value of a Fox Option liability increasing to $184m (Q1 2023: $64m) – a loss on account reflecting the higher valuation of FanDuel.

Withstanding Q1 losses, leadership maintains its 2024 guidance, in which Flutter targets US revenues of between $5.8bn and $6.2bn, marking a 36.3% increase, while US Adjusted EBITDA is expected to range from $635m to $785m, reflecting a 200% increase.

Guidance excluding US performance sees group revenues forecasted between $7.65bn and $8.05bn, up 6.3%, with further adjusted EBITDA of between $1.63bn and $1.83bn, up 5.4% on a full-year basis.

SBC News Flutter Q1 growth dragged by costly Fox option liability 
Peter Jackson, Flutter CEO

Group CEO, Peter Jackson, commented: “We have had an excellent start to the year. In the US, FanDuel’s top line momentum is translating into strong growth in US Adjusted EBITDA and market share gains.

“We are focused on continuing to expand our player base, market share, and embedding future profits within our business through disciplined investment.”

Group accounts excluding US results generated a revenue contribution of $1.98bn, up 8% on 2023 comparatives of $1.84bn. Group Ex-US adjusted EBITDA increased by 20% to $488m from $406m in Q1 2023.

Of distinction, Flutter highlighted the continued strong results of its UK & Ireland brands, generating revenues of $861m (+12%) and an EBITDA contribution of $268m (+24%).

Growth in the UK & Ireland outperformed expectations matched against inflated period comparatives featuring the FIFA 2022 World Cup in Qatar.

Peter Jackson noted: “Outside of the US, our focus on delivering the best products for our players is driving good momentum in key markets such as the UK, where the launch of Super Sub on Paddy Power has been our most successful product launch to date, and in Italy, where we have been taking online sports betting and iGaming market share during Q1 and reached an all-time record in April.”

Elsewhere, Flutter’s International unit increased revenues by 5% to $797m (Q1 2023: $760m), contributing adjusted EBITDA of $173m (Q1 2023: $149m).

As detailed, Flutter International recorded “strong revenue growth in Georgia and Armenia (+20%), Spain (+13%) and Brazil (+8%), as well as good momentum in Turkey (+1%, +66% on a constant currency basis).”

However, international results were impaired by a 25% income decline in India related to point-of-consumption tax changes imposed since Q4 2023.

Flutter International welcomed the introduction of MaxBet Serbia in January, with the Balkans brand contributing $47m in revenue in its first operating quarter.

In Australia, the revenues of SportsBet AUS fell by 6% to $329m with a slight improvement in Adjusted EBITDA margin due to favourable sports results and reduced by higher racing streaming costs.

Closing Q1 accounts, Flutter revealed that corporate debt decreased from $7.056bn to $6.836bn as of March 2024. This reduction reflects a positive move towards decreasing the company’s overall debt burden, improving its NYSE outlook. 

Relocating its primary listing on the NYSE, Flutter has chosen to successfully place over $1bn in secured senior notes maturing in 2029 – helping the firm maintain its debt ratio of 2.8x reported during Q1 trading.

Peter Jackson concluded: “On May 1, shareholders voted to move our primary listing to the US. We believe a US primary listing is the natural home for the Group and we look forward to this becoming effective on May 31. 

“With a greater proportion of the Group’s future profits expected to be generated in the US, we have moved our operational headquarters to New York reflecting the importance of the US sports betting and iGaming market to our business.”

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