Flutter touts global success and future growth at annual investor conference
The company held its annual investor day presentation in New York on Wednesday. Several executives presented details in an extensive breakdown about Flutter’s tentacles around the globe. Investors heard from group CEO Peter Jackson, FanDuel CEO Amy Howe, Flutter’s UK & Ireland and international CEOs Ian Brown and Dan Taylor and more.
Overall, the executives heralded the “Flutter Edge”. This, they said, is the formula that has vaulted the company into “gold-medal positions” in several large markets, such as the US, UK, Italy and Australia. It consists of four main tenets: product, technology, expertise and scale.
This quartet was referenced ubiquitously as the key driver for the company’s success. Throughout the presentation, the company’s widespread dominance of odds pricing and parlay products was a core theme.
From 2019 to 2023, Flutter executives said, the share of bets that are parlays has grown by 65%. The average number of legs per parlay has also increased by 38% over that span.
Overall, the company estimates its current market cap to be $41bn (£30.7bn/ €36.8bn), with 32 million active users. Its FY24 revenue and adjusted EBITDA estimates are $14bn and $2.5bn, respectively.
Howe: US growth has “clearly surpassed” previous targets
In her US sports betting and igaming overview, Howe touted that FanDuel has grown significantly from its 2022 positions. Since that time, it has gone from the third-biggest igaming brand by gross gaming revenue (GGR) to the biggest; its structural GGR margin has gone from 10% to 13%; and its adjusted EBITDA margin has gone from negative to positive. Its current GGR market share for sports betting and igaming combined is 38%, which Howe said is tops in the US.
Moving forward, FanDuel estimates $9.7bn in US revenue by 2027, with adjusted EBITDA of $2.4bn. With the help of the “Flutter Edge”, FanDuel’s GGR margin for H1 24 was 12%, compared to 9% for “Competitor A” and 7% for the rest of the market. The addition of the Canadian market means that the company expects the total addressable market for North America to reach $70bn by 2030.
Howe said that lobbying and education will be critical to unlock new US opportunities. This is mainly aimed at the “big three” of California, Texas and Florida. FanDuel and others lost tens of millions in an unsuccessful California lobbying campaign in 2022. Texas has long been circled as a gargantuan market but is still not close to legalisation. And Florida currently operates under a monopoly with the Seminole tribe’s Hard Rock Bet as the sole platform.
Successful legislative efforts, Howe said, will include “compelling messaging” surrounding economic impacts, community benefits and responsible gaming. She also asserted that “demythologising the industry” will be key.
Taylor: Global market has “long runway” of expansion ahead
The second half of the presentation focused on the rest of the global market. Taylor, the international CEO, asserted that the company has myriad growth possibilities around the world.
Overall, its strategy is to invest in “local heroes”, or brands that resonate with a particular market. It then supplements the brands with its overarching resources, technology and purchasing power. Brands in mature markets include Paddy Power and Sky Bet in the UK & Ireland (UK&I), Sportsbet in Australia and Sisal in Italy. Flutter is currently first in market share for the UK&I and Australia and its recent €2.3bn acquisition of Snaitech will make it first in Italy as well.
For developing markets, Taylor asserted that M&A “will strengthen our portfolio of local hero leaders”. He pointed to the company’s track record of delivering value from recent acquisitions.
Examples include Adjarabet, Sisal and Tombola Arcade – revenue and adjusted EBITDA for all three increased by at least 1.2x in the first 2.5 years post acquisition.
There were four regions that Taylor highlighted for future expansion – Latin America, India, Turkey and North Africa and Central and Eastern Europe. He reiterated that local brands are positioned for Flutter to capture that growth. The most timely example was Latin America, as the company entered the Brazilian market on 13 September through its $350m investment in NSX Group, operators of the Betnacional brand.
Coldrake: Flutter outperforming other key companies
Group CFO Rob Coldrake wrapped the presentation with a financial overview. The company is projecting $21bn in group revenue by the end of 2027, with $2.5bn in free cash flow. Notably, Coldrake said its board has approved up to $5bn in share buybacks over the next three to four years. He didn’t rule out the possibility of a future dividend but pointed to the buybacks instead.
At one point, Coldrake compared Flutter’s performance to that of other notable US companies. Its projected revenue compound annual growth rate (CAGR) through 2027 is 16%, which is similar to Doordash, Pinterest, Tesla and others. But its adjusted EBITDA CAGR of 48% over that span is nearly double that of the other examples.
For the rest of the world, cost efficiencies will be key. Coldrake said the group’s efficiency programme projects to save $300m through 2027. This is mainly attributable to a number of platform integrations from previous acquisitions. He asserted there is a “renewed cultural focus on efficiency across all cost categories”.
The company is projecting adjusted EBITDA of $5.2bn in 2027, while maintaining its target leverage ratio of 2-2.5 times.
Howe, Jackson dominate Q&A
Given that the conference was held in New York, the biggest US online betting market, it was no surprise that the Q&A was dominated by US topics, fielded mostly by Howe with input from Jackson.
When asked about the big three, Howe said the company needs at least two to legalise in order to hit estimates. She also said that her team has “completely regrouped” for another run at California. The company has hired several former tribal gaming executives over the last year to help mend fences. But she acknowledged that any legalisation efforts will be done “with and through” state tribes, the same phrase she used in the spring on a tribal-gaming panel.
One attendee asked about the company’s desire to expand into other US verticals. This was likely a reference to rival DraftKings’ $750m acquisition of ilottery provider Jackpocket. In response, Jackson pointed to FanDuel’s dominance: “We don’t need to go into adjacent spaces,” he said. Taylor also added that Flutter’s lottery business in Italy is a unique situation for that market.
Howe was asked whether FanDuel might consider acquiring or launching a second US igaming brand. That is unlikely given the existing success, she said, and anything else “would have to be additive to what we’re already doing”. Jackson agreed and said that when US consumers open the FanDuel app, “we want them to see FanDuel Casino first.”
With regard to the biggest potential roadblocks to achieving its US goals, Jackson said his company is competing with itself.
“I think we have to be really careful not to let complacency get in the way,” he said.