Flutter stands by global recreational focus ahead of H2 turnaround

Flutter Entertainment has reported difficult first-half trading, as the FTSE100 betting group widened its year-on-year operating losses to £112m (H12021: £86m).

Publishing its H1 2022 interim results, Flutter stated that earnings and profit reflected a period of known regulatory and macroeconomic challenges, highlighted by leadership at the start of the year.

Period trading saw the group continue to register headline growth, as revenues amounted to £3.38bn, up 11% on corresponding H1 2021 results of £3.05bn.

Continued revenue growth reflected the successful execution of a ‘recreational player focus’ across all markets by the group’s brands, helping it increase its active monthly player base to 8.7 million customers (H12021:7.6 million).

“The first half of 2022 was positive for the Group with significant progress made against the strategic objectives we outlined in March,” read Group CEO Peter Jackson’s statement to markets.   

“We expanded our recreational customer base by over one million players in the half and increased the proportion of customers using safer gambling tools to over one third.”

In the UK and Ireland, Flutter’s home brand portfolio saw revenue fall 4% to £1.09bn, as the unit’s adjusted EBITDA was £38m lower at £321m (H12021: £359m).

The home market slowdown reflected a tougher comparative period for the Sky Bet, Paddy Power and Betfair sports brands that registered a 15% revenue decline to £630m matched against 2021 peak results of £740m.

Further UK&IRE drags reflected Flutter’s continued adherence to its ‘proactive safer gambling measures’ carried on from 2021, which reduced revenue by £48m. However, the firm will continue its stricter protocol, irrespective of the UK government’s White Paper delay.

Flutter remains confident of overcoming home challenges, with the newly acquired asset of Tombola registering 8% points of growth.

In Australia, the group lauded the ‘outstanding performance’ of Sportsbet AU, which continues to bolster its ‘market leader podium position’, generating revenues of £612m and an EBITDA contribution of £219m (H12021: £201m).

Sportsbet AU’s continued growth reflected “AMPs 10% higher with strong customer retention driving revenue growth”.

Elsewhere, Flutter’s international igaming unit of PokerStars continues to drag, registering a 7% decline in revenues to £633m.

Tough period adjustments saw PokerStars report combined market exit costs in the Netherlands (£20m) and Russia/Ukraine (£20m), along with a gaming tax change in Germany (£20m).

Matched against COVID-influenced comparatives, PokerStars registered a 32% decline in adjusted EBITDA to £122m (H12021: £179m).

Flutter maintains confidence that PokerStars can offset European challenges, as the unit reports “strong revenue growth in our ‘consolidate and invest’ markets which include India, Brazil, Georgia, Armenia and Canada.”

H2 trading will see Flutter refresh its International portfolio (non-US/ non-UK) with the newly acquired Sisal SPA the operating company of Italy’s SuperEnalotto lottery. 

The statement continued: “The business remains well positioned thanks to its leadership positions in its mature markets and the investment we are making in attractive, high-growth markets such as India, Canada and Brazil.

“In Australia, we delivered another excellent performance with revenue and players continuing to grow. We were also delighted to welcome Sisal to the Group earlier this month, a business that performed strongly during H1.”

Providing a stand-alone update for its US performance, Flutter underlined the market dominance of its FanDuel unit across North American markets..

US market revenues grew 50% to £1.1bn (H12021: £652m), reflecting FanDuel’s superior product, efficient customer acquisition operating across established and newly regulated US states.

FanDuel’s adjusted EBITDA widened H1 losses to £132m, results that reflected period costs of sales totalling £544m, which Flutter attributed to the launch of “the FanDuel sportsbook in New York, where the gaming tax rate is 51%, materially higher than in other states”.

Jackson remarked on US performance: “We are particularly pleased with momentum in the US where we extended our leadership in online sports betting with FanDuel claiming a 51% share of the market and number one position in 13 of 15 states, helping contribute to positive earnings in Q2.

“We remain firmly on the path to profitability in 2023, driven by our compelling customer economics and disciplined investment.”

Flutter enters H2 with confidence, as despite headwinds impacting performance, H1 EBITDA results of £476m remain in line with corporate expectations.

The FTSE group’s corporate debt increased by £322m to £3bn as of 30 June, accounting for its cash acquisition of Tombola – as the leverage ratio stands at 2.6x excluding ongoing US losses.

Jackson concluded: “The second half of the year has started well, and we look forward to the start of the football seasons in both the US and Europe. Being part of the Flutter Group provides unique strategic advantages to our portfolio of brands, giving access to expertise, technology and resources to drive performance and capitalise on further growth opportunities we see ahead.”


SBC News Flutter stands by global recreational focus ahead of H2 turnaround

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