Flutter Entertainment eyes predictions while posting gains in Q1

Flutter Entertainment Reports Impressive Growth in Q1, Fueled by US Market Success

Flutter Entertainment, a dominant player in the global gambling market, announced its impressive first-quarter performance, highlighting a robust expansion in the US. The company reported a group revenue of $3.66 billion, reflecting an 8% year-over-year growth. Notably, adjusted EBITDA surged to $616 million, representing a remarkable 20% increase, while net income skyrocketed by 289% to reach $335 million.

Key operational metrics also showcased continued momentum, with an 8% rise in average monthly players, totaling 14,880. Adjusted earnings per share (EPS) increased significantly, climbing from $1.05 to $1.59, a 51% jump. Despite this positive performance, Flutter’s revenue and EPS fell short of market expectations, which targeted $3.96 billion and $2.05, respectively. Consequently, the company’s stock experienced a slight decline, closing down 1% at $242.36.

The standout performer was Flutter’s US segment, predominantly led by FanDuel, which achieved an 18% year-over-year revenue increase, totaling $1.66 billion. This division also reported an impressive adjusted EBITDA of $161 million, representing a fivefold increase compared to the previous year. Meanwhile, Flutter’s international revenue remained stable at just under $2 billion, reflecting a modest 1% growth alongside a slight dip in adjusted EBITDA to $518 million. Notably, these international figures would have shown a positive trend if assessed on a constant currency basis, increasing by 3% and 2%, respectively.

“I am pleased with our performance during the first quarter, as the scaling of our US business has significantly transformed our earnings profile,” stated Flutter CEO Peter Jackson. He emphasized FanDuel’s successful retention of leading positions in both online sports betting and iGaming, alongside positive developments in international markets, particularly following the acquisition of Snai in Italy, which has fortified Flutter’s competitive edge.

Insights on FanDuel’s Dominance in the US Market

In the US, the growth of sports betting and iGaming was noteworthy, increasing by 15% and 32% year-over-year, as per Flutter’s report. The company registered a market share of 43% in sports betting and 23% in iGaming, demonstrating its formidable position. However, the sports betting revenue growth came amid challenges during March Madness, a period typically characterized by heightened betting activity, where all four No. 1 seeds advanced to the Final Four. Analysts noted that while handle growth aligned with expectations, it indicated lower-than-anticipated basketball betting activity.

CFO Rob Coldrake addressed the evolving nature of revenue sources, emphasizing that “net revenue is our primary focus” rather than just handle figures. Nevertheless, Flutter revised its full-year US revenue guidance downward from the initial $7.43 billion-$7.93 billion range to a new forecast of $7.15 billion-$7.65 billion.

Amidst ongoing economic uncertainties related to US tariffs and recession concerns, Jackson remained optimistic, asserting the resilience of online gaming. “We are confident that online sports betting and iGaming possess strong defensive attributes in the long term,” he remarked, dismissing the impact of sporadic unfavorable results on Flutter’s growth trajectory.

Embracing Innovation: Prediction Markets

Jackson further elaborated on the promising developments in prediction markets, a significant topic within the gaming landscape. He highlighted Flutter’s ownership of the Betfair betting exchange platform and expressed intent to leverage this expertise within FanDuel. “We’re keenly interested in exploring this opportunity,” he said, noting the integration of team members experienced in developing predictive products from Betfair into the FanDuel team.

This strategic move reflects a broader trend, as major US bookmakers are increasingly considering entry into prediction markets. Flutter’s competitor, DraftKings, had also made headlines by attempting to register “DraftKings Predict” with the National Futures Association, though the application has since been withdrawn.

Differentiating Product Offerings

Responding to inquiries about the implications of federally legal prediction markets for the broader sports betting landscape, Jackson suggested potential benefits in accelerating legal sports betting in various states. However, he refrained from disclosing specific plans for launching their own exchange. While Flutter previously operated Betfair’s traditional exchange betting product in New Jersey, it was discontinued in 2020 due to liquidity challenges. A nationwide predictions offering would likely circumvent such issues.

Jackson expressed skepticism regarding the depth of offerings in prediction markets compared to traditional sportsbooks. “Remember, the vast majority of bettors engage in parlays, a dynamic absent in prediction markets,” he noted, reaffirming the necessity of diverse betting options.

Steady Performance Internationally

While Flutter’s international performance received less focus, reports indicated growth in both the UK and Ireland, with revenue increases of 2%, and a substantial 14% growth in southern Europe and Africa. Central and Eastern Europe reported a 15% rise, although challenges persisted in Asian markets, where revenue fell by 13%, and Brazil, witnessing a significant 44% drop.

Flutter’s pursuit of the Italian lottery, filed in March through a partnership with Scientific Games, emerged as a focal point of interest. Competing with incumbent IGT for a nine-year contract in one of Europe’s most lucrative lotteries, this move could significantly enhance Flutter’s market presence in Italy. Coldrake labeled it a “sizeable opportunity” for market share expansion, emphasizing its low-risk, high-reward nature. Jackson clarified that this development is part of a unique situation and does not imply Flutter’s pursuit of other lottery tenders.