Interactive Investor

ii view: Flutter’s stars and stripes ops shine

11th March 2022 15:33

Keith Bowman from interactive investor

Group brands include Paddy Power, Betfair, SkyBet, and FanDuel in the US. We assess prospects. 

Full-year results to 31 December 2021

  • Revenue up 37% to £6.04 billion
  • Adjusted earnings (EBITDA) down 18% to £1 billion
  • Loss before tax of £288 million
  • Net debt down 6% to £2.65 billion

Chief executive Peter Jackson said:

"2021 was another strong year for the Group as we made good progress against our strategic objectives and grew our recreational customer base to over 7.6 million customers. 

"Overall, I am pleased with the progress we have made during 2021 and believe Flutter is exceptionally well positioned for future growth."

ii round-up:

Flutter Entertainment (LSE:FLTR) is a global sports-betting and gaming company. 

It has operations in more than 20 regulated markets globally, including the US, the UK and Australia. 

Group brands include Paddy Power, Betfair, SkyBet, Fox Bet, PokerStars and FanDuel. 

For a round-up of these latest results, please click here.

ii view:

Formed from the merger of Paddy Power and Betfair in 2016, Flutter Entertainment is now a global sports-betting and gaming company. Its late 2019 acquisition of The Stars Group added further brands to its stable such as Sky Bet, PokerStars and FanDuel. In December 2021, it moved to buy Italy’s Sisal gaming company for €1.913 billion (£1.62 billion). Italy is the second-largest regulated gambling market in Europe after the UK. The purchase is expected to complete in the second quarter of this year. 

Over this latest financial year, sports betting generated around three-fifths of overall revenues, and gaming products the balance. Geographically, the UK & Ireland accounted for around one-third of sales, with the balance split relatively evenly across Australia, the US and its other international markets. Its latest strategic priorities now include growing its positions in core markets such as Australia, investing in its US business and potentially buying businesses with podium positions in attractive markets. 

For investors, potential for increased UK regulation continues to overhang. Problem gambling is also an issue which critics of the industry are keen to promote and address. An overall loss has been generated for this latest financial year, while acquisitions do bring some risk given potential clashes of management style and estimates required regarding the correct purchase price.  

More favourably, management upped its guidance for US state level profitability to 12-24 months from a previous 18-30 months, suggesting it continues to attract more customers faster than prior expectations. Acquisitions are still being made and consumer moves in high street betting to online made under the pandemic in Australia may well stick. In all, and while some caution remains sensible given potential UK regulatory changes, increasing global scale and sizeable market share in the US leave Flutter firmly on the radar for investors in the gaming sector.  

Positives: 

  • Diversity of both business type and geographical location
  • Growing in the USA

Negatives:

  • Overall group loss for 2021
  • No dividend payment

The average rating of stock market analysts:

Strong buy

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