Home > Finance > Quarterly results > Flutter hails FanDuel’s contribution as revenue rises 7.6% in Q3

Flutter hails FanDuel’s contribution as revenue rises 7.6% in Q3

| By Robert Fletcher
FanDuel helped push Flutter Entertainment revenue up 7.6% to £2.04bn (€2.33bn/$2.50bn) in Q3, although Sportsbet in Australia continues to struggle.
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Revenue in the three months to 30 September was higher year-on-year across all segments, with the exception of Australia. Flutter said this success is down to its growth strategy and also highlighted the ongoing impact of the Sisal acquisition.

While growth was apparent in almost all businesses, Flutter again focused on the US with FanDuel. 

Acquired in May 2018 when a daily fantasy sports operator, FanDuel has grown to become a leading provider of sports betting and online casino in the US.

US profit margins will continue to expand for Flutter

This success is clear to see, with the US business now the main source of revenue for Flutter. Revenue in Q3 in the US reached £668m. This was up 11.7% and over £100m more than the next highest contributor – Flutter’s UK and Ireland business.

CEO Peter Jackson remains very much of the mindset that the US business can, and must, continue to grow. He notes how Flutter is the first US online operator to reach structural profitability, with this landmark reached in H1.

“We are particularly pleased by the great progress we are making in the US,” Jackson said. “We are the first online operator to achieve structural profitability and the strong ramp in EBITDA during 2023 will continue into 2024 and beyond, as our profit margins expand materially.

“The NFL season is off to an excellent start with our product leadership driving average monthly player growth of 38% to 2.6 million in the quarter. I am excited about our plans heading into the sports rich months of November and December as we execute on our winning strategy which, combined with the FanDuel Advantage, keep us leading the industry.”

Revenue growth in seasonally quieter Q3

Widespread growth comes in what Jackson describes as a seasonally quieter period for the group. Sports betting revenue was 1.9% lower at £1.12bn but this was more than offset by a 22.2% rise in gaming revenue to £914m.

Focusing on the US, operations in the country accounted for 32.8% of all revenue in Q3. The group said growth was driven by investment in customer acquisition marketing campaigns, product innovation and strong retention of customers. 

US sports betting revenue was 10.0% higher on a constant currency basis. Stakes were up 40.0% but were offset by a 170-basis point decline in net revenue margin. This left net revenue growth of 12.0%.

As for igaming, revenue was up 52.0% on a constant currency basis. Market share for FanDuel’s igaming brand in Q3 increased to 23.0%, helped by a 42.0% rise in average monthly players (AMP). 

FanDuel’s combined online sportsbook and igaming revenue from states launched pre-2022 increased 12.0%. Flutter said strong growth in igaming was partly offset by lower sportsbook revenue.

UK and Ireland revenue rises to £556.0m in Q3

Elsewhere, Flutter also posted growth within its UK and Ireland business. Revenue climbed 11.2% to £566m, with online revenue up 11.5% to £494m and retail 9.1% to £72m.

Flutter reported “excellent” momentum in online operations, with AMP rising 5.0% year-on-year. Online sports betting revenue climbed 6.0% following increased Betbuilder adoption, while it also felt the impact of new betting features such as Acca Freeze on Sky Bet.

As for igaming, revenue climbed 18.0% and AMPs were 13.0% higher. Flutter put this down to start-of-season gaming campaigns, which drove high conversion from its sports player base. It also noted the impact of an expanded range of content and promotional mechanics across its brands.

As for retail in the UK and Ireland, Flutter said it had benefitted from a good start to the English Premier League football season. The operator also highlighted stronger product proposition across its UK and Irish estates.

Sisal continues to drive international growth for Flutter

Turning to international activities, revenue was 15.7% higher at £539m, the largest divisional rise in Q3. Again, Flutter said the Sisal acquisition played a major role in this increase, while it also noted good organic growth within the business.

Sports betting revenue climbed 10.0% on a constant currency basis and gaming 22.0%. The latter was driven by strong execution in both India and Turkey.

As for operations in Italy, revenue was down due to a higher mix of sportsbook revenue than in Flutter’s other markets and therefore had a greater impact from customer friendly results. It also pointed to tougher comparatives due to the Superenalotto jackpot reaching record levels last year.

Not so good down under

Amid this widespread growth was news of further declines in Australia in Q3. Revenue in the country fell 17.9% to £262m. Flutter only operates sports betting in Australia, with this falling 7.0% year-on-year.

The operator put this down to a challenging racing market, which continued from Q2 into Q3. This softer racing market is now expected to persist into 2024, with Flutter estimating mid-single digit decline in Australia in 2024.

Flutter also highlighted increased regulatory oversight in Australia, including a ban on credit card deposits. 

“The combination of these items will now limit our ability in the near-term to offset the impact of the previously announced Victoria point of consumption tax increase from July 2024,” Flutter said.

Flutter on track with full-year guidance

Flutter did not publish further financial details for Q3, but it did provide an update on its full-year guidance.

Looking at group expectations without the US, adjusted EBITDA is now expected to reach approximately £1.44bn. This is within the previously stated range of £1.44bn to £1.60bn. Notable impacts include customer friendly sports results in Q3 and adverse movements in foreign exchange rates.

“Increased investment in the Flutter Edge to drive group-wide growth and Australian racing market weakness is offset by underlying strength in UK and Ireland and International,” the operator said.

As for the US business, revenue is forecast at £3.75bn, which is at the mid-range of earlier guidance of $3.60bn to £3.90bn. Adjusted EBITDA is expected to amount to £140.0m, which, again, hits the midpoint of the previously stated £90.0m to £190.0m. 

This, Flutter said, is despite ongoing investment in new customer acquisition to drive long-term growth in the US.

“Overall, the significant potential for US growth and ability to leverage scale benefits across our diversified portfolio outside of the US, underpins our confidence in our significant and sustainable long-term earnings growth potential,” Jackson said.

What’s happening with the US listing?

Staying in the US, Flutter also provided an update on progress with its additional listing in the country. Such a move was approved by Flutter shareholders back in April and the operator expects the listing to become effective in Q1 of 2024.

In addition, following a competitive tender process, Flutter has selected the New York Stock Exchange as the future trading venue for its ordinary shares in the US.

With this dual listing all but confirmed, Flutter has taken the decision to cancel its listing on Euronext Dublin. This comes as its board believes it is appropriate to maintain just two listings to minimise regulatory complexities.

The Euronext delisting is expected to take effect simultaneously with, or shortly prior to, the additional US listing. The exact date of the cancellation will be the subject of a separate announcement in due course. 

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