Flutter Reports on Q3 Revenue
Flutter Entertainment has published its third quarterly trading update, reporting hits to revenue in the UK and Europe. Results in Australia were more positive, and the operator continues to benefit from the growing US sports betting market.
In the US Flutter’s revenue grew 85% on last year, largely thanks to its subsidiary Fan Duel. ©Pixabay/Pexels
Unfavorable Sporting Results
Flutter Entertainment’s latest trading update shows a mixed picture in the world of international betting and gaming. Despite the trials of the pandemic, the FTSE 100 listed operator reported steady continual growth. The update tracks results for the three months leading up to September 2021.
The leading operator announced a 13% increase in average monthly players, compared to the year before. Average monthly players for Q3 2020 numbered around 6.4 million, rising to 7.2 million in Q3 2021. Revenue amongst sports bettors saw a greater year on year rise of 17%, whilst YOY revenue amongst gamers rose by just 5%.
Online revenue for the group rose by 13%, driven by an average monthly player growth of 13%. That figure marked modest growth for the company, as gains in the US and Australia offset losses in the UK and Europe. Announcing the new trading update, CEO of Flutter Entertainment Peter Jackson commented:
“Flutter delivered a strong third quarter performance, with double-digit growth in our global player base. This resulted in the Group delivering revenue growth of 12% despite challenging comparatives including a concentration of key sporting events in the prior year.”
In the UK and Ireland, online group revenue fell by 5%, due to a busy sporting calendar with unfavorable results. The operator put its staking decline down to a condensed sporting calendar that featured a large number of premium fixtures, including the final matches of some European domestic football leagues and competitions.
It also cited the easing of lockdown restrictions as a contributing factor, as consumers had a wider range of leisure activities available to them. Enhancements to Flutter’s Safer Gambling, while good news for players, did have an impact on the company’s revenue. CEO Peter Jackson described new measures to protect younger customers as part of its risk based “Triple Step” approach to affordability.
Impact of Pandemic
YOY growth in the UK and Ireland fell by 9%, but was offset by a 2% YOY gaming gain. Recreational growth amongst average monthly players grew by 19%, despite increased player protections and increased competition for discretionary customer spend.
Flutter saw some return to normality, after the disruption of the coronavirus pandemic, as its retail outlets stayed open for the full third quarter. However, retail YOY revenue declined by 6%. Sports revenue dropped 11%, with half of this figure estimated to be due to reduced margins. Meanwhile, retail gaming revenue rose by 6%.
The operator is starting to see some recovery to its retail business from the pandemic. Results in the UK and Ireland differed, due to the different rates at which restrictions were eased. In the UK, Q3 retail revenues this year were 9% higher than those in 2019. In Ireland that picture is different, as YOY retail revenues were down 27%.
Overall retail revenues stand at about 90% of their 2019 levels. Flutter currently runs more than 600 Paddy Power high street betting shops across the UK and Ireland. Behind the scenes, last month it launched a £15 million tech hub, offering a modernized workspace for employees and a skills academy.
Outside of the UK, Flutter reported mixed international results, excluding Australia and the US. YOY revenue fell by 3%, marked by a 14% rise in sports revenue and a 6% drop in gaming. The operator has noted three main factors that influenced this performance. One of these factors was the addition of Junglee, which added 5 percentage points of YOY growth.
In Germany, regulatory changes to products and tax had a considerable impact on revenues. Excluding Germany, international revenue grew 6%, with casinos up 21%, sports up 25% and poker down by 16%. Player engagement fell compared to the previous year as pandemic restrictions were relaxed, hitting poker the hardest.
US and Australia Growth
Flutter also took the opportunity to offer an update on its operations in the Netherlands. As a result of the Netherlands Gambling Authority’s recent announcement, the operator suspended its Dutch operations on October 1st. It forecasts that the temporary closure will cost the group £10 million in EBITDA in 2021, rising to around £40 million in 2022.
Troubles in the UK and European markets were offset by more encouraging results in Australia. Stay-at-home restrictions applied to more than 60% of the population in Australia, granting Flutter brand Sportsbet additional leisure spend. The bookmaker continued its upward momentum with an increase of 20% on its Q3 revenue.
Sportsbook stakes grew 15% on the previous year, while sportsbook net revenue margin gained 40 basis points to 11.1%. This was largely due to favorable sporting results. AMPs also rose by 24% on the previous year.
Flutter saw its best Q3 results by far in the US, where the online sports betting market boom is driving opportunities for growth. YOY revenue rocketed 85%, from 161 million in Q3 2020 to 280 million year later. FanDuel accounted for 94% of that total. Flutter’s US operations make up a 42% share of the online sports betting market, with a further 18% share in online gaming. CEO Peter Jackson elaborated on those results, stating:
“In the US we maintained our leadership position, with the quality of our product offering leading to high levels of customer engagement. As expected, the start of the NFL season saw a step-up in competitive intensity. We remained disciplined however, leveraging the broad set of high-quality marketing assets at our disposal.”
Jackson went on to add that FanDuel’s growth in popularity now sees it regularly experience staking levels on Sundays matching its 2021 SuperBowl performance. Engagement on NBA since the start of the season has also been strong. Flutter projects that its growth in the US will continue to rise, as more states are on the path to regulation.
