TIDMFLTR
RNS Number : 9838Q
Flutter Entertainment PLC
02 November 2021
2 November 2021
Q3 2021 Trading Update
Strong underlying growth continues; leadership maintained in
US
Flutter Entertainment plc (the "Group") announces a trading
update for three months ended 30 September 2021.
Unaudited GBPm Q3 2021 Q3 2020 YoY % YoY % CC(1)
Average monthly players(2)
('000s) 7,257 6,401 +13%
Sports revenue 906 798 +13% +17%
Gaming revenue 534 527 +1% +5%
------- ------- ----- -----------
Total revenue 1,439 1,325 +9% +12%
All commentary within this trading update refers to constant
currency (1) growth rates. Any differences due to rounding.
-- Group Online revenue +13% driven by AMP(2) growth of 13%
- UK & Ireland ; -5% reflecting busier, high profile
sporting calendar in prior year; recreational growth continues with
an increase in AMPs of +19%
- Australia +20% ; excellent customer retention bolstered by
benefit from stay-at-home restrictions
- International -3% ; growth of 6% excluding German regulatory impact
- US +85% ; online sports-betting share of 42%(3) in Q3, with 1.9m AMPs in September
Current trading and full year guidance
-- Group ex-US: Unfavourable sports results in first 24 days of
October have impacted EBITDA by circa GBP60m. Combined with
expected GBP10m EBITDA impact in Q4 from temporary Netherlands
exit, Adjusted EBITDA expectations for 2021 now expected to be
GBP1.24bn - GBP1.28bn (previous guidance: GBP1.27bn -
GBP1.37bn).
-- US: Net revenue guidance unchanged at GBP1.285bn - GBP1.425bn
($1.8bn - $2.0bn) with Adjusted EBITDA loss expected to be between
GBP250m and GBP275m (previous loss guidance: GBP225m to GBP275m).
This includes a GBP15m impact from adverse sports results in
October.
Peter Jackson, Chief Executive, 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 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. The customer response has been very encouraging with
FanDuel now regularly experiencing staking levels on Sundays that
match its 2021 SuperBowl performance. Early engagement on NBA since
the recent start of season has also been strong.
Across our business we continue to lead on customer protection
and we recently announced measures to enhance the protection of
younger customers in the UK & Ireland as part of our risk based
"Triple Step" approach to affordability.
While a run of customer-friendly results in October have
resulted in win margins being below expected levels in the quarter
to date, the underlying strength of our business is clear; we have
grown our online recreational player base by 46% in just two
years(2) . With more international jurisdictions and US states on
the path to regulation, we look forward to sustainably growing our
global player base further in 2022."
Divisional analysis
Unaudited revenue Total Sports Gaming Average monthly
GBPm players(2)
Q3 2021 Q3 2020 YoY % YoY % YoY % Q3 2021 YoY%
CC CC CC (000s)
------ ------ ----------
UK & Ireland 491 519 -5% -9% +2% 3,060 +19%
- UK & Ireland
Online 423 446 -5% -8% +2% 3,060 +19%
- UK & Ireland
Retail 68 74 -6% -11% +6%
Australia 370 320 +20% +20% 1,086 +24%
International 299 325 -3% +14% -6% 1,799 -2%
US 280 161 +85% +97% +65% 1,312 +17%
------- ------- ----- ------ ------ ----------
Group 1,439 1,325 +12% +17% +5% 7,257 +13%
------------------ ------- ------- ----- ------ ------ ----------
UK & Ireland
Online
We have delivered strong recreational customer growth across our
UK & Ireland brands with a 19% increase in AMPs. Revenue
declined by 5% in Q3 with sports down 8% and gaming 2% higher.
Sports revenue was primarily driven by a staking decline of 5%
year-on-year as well as a 10 basis point reduction in net revenue
margin to 9.8%. The staking decline reflected (i) the condensed
nature of the Q3 2020 sporting calendar which included a large
number of premium sporting fixtures (such as the conclusion of
European domestic football leagues and European competitions), (ii)
the easing of lockdown restrictions this year, with consumers
having a wider variety of leisure activity options available to
them and (iii) further enhancements to our Safer Gambling approach.
The 10 basis point margin reduction year-on-year reflected less
favourable sports results than in the prior year (-90 basis
points), mostly offset by structural improvements in expected
margin as customers increasingly engaged with higher margin "Bet
Builder" products.
Gaming revenue grew 2%, an improvement on the run-rate during
Q2. AMPs were up 22% despite challenging prior year comparatives as
well as increased competition for discretionary customer spend and
the continuous improvements we are making to our Safer Gambling
protections.
Retail
Our retail estates across the UK and Ireland were fully open for
the period with a total revenue decline of 6% year-on-year. Sports
revenue declined 11% with half of this due to reduced margin while
gaming was up 6%. As we continue to monitor the impact that Covid
has had on our shops, it is worth noting that our Q3 UK retail
revenues were 9% above Q3 2019 levels whereas revenue in Ireland
was down 27%. We believe this primarily reflects the slower
relaxation of Covid restrictions in Ireland. As a result, overall
retail revenues were around 90% of 2019 levels.
Australia
Sportsbet's excellent momentum continued in Q3 with revenue up
20% as strong customer retention resulted in AMP growth of 24% to
1.1m. Travel restrictions applied to over 60% of the Australian
population during the period, resulting in Sportsbet capturing
additional discretionary leisure spend. Sportsbook stakes were 15%
higher year-on-year. Sportsbook net revenue margin increased by 40
basis points to 11.1%, which reflected favourable sports results
against both our expectations and year-on-year. The improvement in
expected margin during the quarter was offset by increased
generosity investment.
International
Revenue in our International division was 3% lower year-on-year,
with gaming down 6% and sports up 14%. Performance reflected three
key factors:
-- The regulatory impact of German product and tax changes.
Excluding Germany, revenue grew 6%, with casino +21%, poker -16%
and sports +25%.
-- The addition of Junglee which added 5 percentage points of growth year-on-year.
-- The easing of Covid related social restrictions across our
main markets, leading to a reduction in player engagement versus
prior year, particularly for poker.
We continue to invest to improve the PokerStars customer
proposition with enhanced generosity and we recently rolled out our
new reward scheme to all customers. We are also continuing to make
good progress in driving direct casino acquisition. Sports growth
was driven by good performance across our sportsbooks.
US
Our US business continued to lead the market in Q3 with a 42%
share of online sports betting and an 18% share of online gaming(3)
. Revenue grew by 85% to GBP280m ($386m) with FanDuel accounting
for 94% of the total.
In Q3, our sportsbook and casino player numbers doubled
year-on-year. Tougher Q3 comparatives for daily fantasy sports (166
NBA games in 2020 versus just 9 in 2021) and TVG (Kentucky Derby in
September 2020 versus May 2021) impacted player volumes for both.
As a result, overall AMPs increased by 17% to 1.3m in Q3, with 1.9m
players active in September at the start of the NFL season.
Sports revenue increased by 97% to GBP184m ($254m), including
sportsbook growth of 422%.
Sportsbook stakes grew 80% in the quarter with volumes on NFL
Sundays now consistently reaching levels generated during the 2021
Super Bowl. These high volumes have been handled comfortably on the
Group's Global Betting Platform following FanDuel's full migration
on to that platform. Sportsbook net revenue margin increased by 410
basis points year-on-year to 6.2% reflecting (i) the significant
investment we made during Q3 2020 following the return of sports,
(ii) favourable sports results in 2021 and (iii) our beneficial
product mix. We continued our significant investment in customer
acquisition and retention during the quarter, including leveraging
our official sports betting partnership with the NFL. FanDuel
sportsbook is now live online in 12 states with 2 recent launches
in Arizona (Sep) and Connecticut (Oct). Revenue from our other
sports businesses (TVG and DFS) declined by 22% reflecting the
tough calendar comparatives referenced above.
Gaming revenue increased by 65% to GBP95m ($132m) with our
gaming products now available in 5 states following our Connecticut
launch in October. Our new gaming promotions platform is now live,
providing greater flexibility to reward multi-product players and
improving the user experience on casino.
Outlook and guidance
-- Netherlands update: Following the recent announcement from
the Netherlands Gambling Authority, we suspended our Dutch
operations on 1 October. We estimate that this temporary closure
will cost the Group GBP10m in EBITDA in 2021 and approximately
GBP40m in 2022. This assumes we recommence trading in Q3 2022 and
that our Dutch operations break even in H2 next year as we invest
to re-engage customers.
-- Group ex-US: Unfavourable sports results in the first 24 days
of October have impacted EBITDA by around GBP60m. Combined with the
expected GBP10m EBITDA impact from the Netherlands, we are revising
our Adjusted EBITDA expectations for 2021 to GBP1.24bn - GBP1.28bn
(previous guidance: GBP1.27bn - GBP1.37bn).
-- US: Net revenue guidance remains unchanged at GBP1.285bn -
GBP1.425bn ($1.8bn - $2.0bn) with an Adjusted EBITDA loss now
expected to be GBP250m - GBP275m (previous guidance: GBP225m -
GBP275m). This revised EBITDA range includes a GBP15m impact from
adverse sports results in October.
(1) Constant currency ("cc") growth is calculated by
retranslating the non-sterling denominated component of Q3 2020 at
Q3 2021 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. The AMP numbers do not include Junglee players in 2020 or
2021 to allow for better comparability of underlying player growth
for International and Group. Two year AMP growth refers to Q3 2021
compared with Q3 2019.
(3) Online sportsbook market share is the GGR market share of
FanDuel and FOX Bet for Q3 in the states in which FanDuel was live
based on published gaming regulator reports in those states. Market
share calculations do not include September data for Arizona,
Colorado, Illinois, Tennessee and Virginia as the data has yet to
be released. During Q3 FanDuel was live in 11 states; Arizona (AZ),
Colorado (CO), Illinois (IL), Indiana (IN), Iowa (IA), Michigan
(MI), New Jersey (NJ), Pennsylvania (PA), Tennessee (TN), Virginia
(VA) and West Virginia (WV). During Q3 FOX Bet was live in 4
states; CO, NJ, MI and PA. Online gaming market share reflects
combined MI, NJ, PA and WV market share of our gaming brands.
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 where they will
be provided with the dial in details to access the call.
Contacts:
Investor Relations:
David Jennings, Group Director of Investor
Relations & FP&A + 353 87 951 3560
Ciara O'Mullane, Investor Relations + 353 87 947 7862
Liam Kealy, Investor Relations + 353 87 665 2014
Press:
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 Sky Betting and Gaming, Paddy
Power and Betfair brands offering a diverse range of sportsbook,
exchange and gaming services across the UK and Ireland, along with
over 600 Paddy Power betting shops in the UK and Ireland.
-- Australia: the Sportsbet brand offers online sport betting
and is the Australian market leader.
-- International: includes PokerStars, 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.
Divisional Key Performance Indicators - Q3 2021
Unaudited
UK & Ireland Australia International US Group
----------- --------------------- --------------------- --------------------- --------------------- ---------------------
Q3 Q3 CC(1) Q3 Q3 CC(1) Q3 Q3 CC(1) Q3 Q3 CC(1) Q3 Q3 CC(1)
2021 2020 % 2021 2020 % 2021 2020 % 2021 2020 % 2021 2020 %
GBPm GBPm Change GBPm GBPm Change GBPm GBPm Change GBPm GBPm Change GBPm GBPm Change
----------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Average
monthly
players(2)
(000's) 3,060 2,567 +19% 1,086 876 +24% 1,799 1,835 -2% 1,312 1,122 +17% 7,257 6,401 +13%
Sportsbook
stakes 2,627 2,790 -5% 3,323 3,003 +15% 349 375 -2% 2,109 1,247 +80% 8,409 7,415 +17%
Sportsbook
net
revenue
margin 10.1% 10.4% -30bps 11.1% 10.7% +40bps 8.6% 7.2% +140bps 6.2% 2.1% +410bps 9.5% 9.0% +50bps
Sports
revenue 302 333 -9% 370 320 +20% 50 46 +14% 184 99 +97% 906 798 +17%
Gaming
revenue 189 186 +2% 0 0 0% 249 279 -6% 95 62 +65% 534 527 +5%
----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
Total
revenue 491 519 -5% 370 320 +20% 299 325 -3% 280 161 +85% 1,439 1,325 +12%
----------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- ------- ----- ----- -------
UK & Ireland Online UK & Ireland Retail
----------- --------------------- ---------------------
Q3 Q3 CC(1) Q3 Q3 CC(1)
2021 2020 % 2021 2020 %
GBPm GBPm Change GBPm GBPm Change
----------- ----- ----- ------- ----- ----- -------
Average
monthly
players(2)
(000's) 3,060 2,567 +19%
Sportsbook
stakes 2,262 2,396 -5% 365 394 -5%
Sportsbook
net
revenue
margin 9.8% 9.9% -10bps 12.5% 13.4% -90bps
Sports
revenue 256 281 -8% 45 53 -11%
Gaming
revenue 167 165 +2% 22 21 +6%
----- ----- ------- ----- ----- -------
Total
revenue 423 446 -5% 68 74 -6%
----------- ----- ----- ------- ----- ----- -------
(1) Constant currency ("cc") growth is calculated by
retranslating the non-sterling denominated component of Q3 2020 at
Q3 2021 exchange rates.
(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. The AMP numbers do not include Junglee players in 2020 or
2021 to allow for better comparability of underlying player growth
for International and Group.
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END
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