ii view: Paddy Power firm Flutter cheers record Super Bowl

Full-year results to 31 December

• Revenue up 24.6% to $11.8 billion
• Net loss including impairments of $1.2 billion, up from a loss of $370 million in 2022
• Adjust profit (EBITDA) up 45% to $1.87 billion
• Net debt of $5.8 billion, up from $5.7 billion
• No dividend payment

Guidance:

• Expects revenues to grow by 17% for the year ahead
• Expects adjusted earnings to grow around 30% for the year ahead

Chief executive Peter Jackson said:

“Flutter delivered a strong 2023 performance as we continued to deliver on our strategy. This was underpinned by a localised approach to technology and product. 

"I was proud to see Flutter shares trading for the first time on the NYSE on January 29, 2024 and we have been encouraged by the increased focus from new US investors as a result of our US listing. We are working towards a shareholder vote on May 1, 2024 to approve our primary listing move to NYSE. 

"The year has started well with very good momentum continuing into Q1. Record Super Bowl engagement contributed to US revenue growth of 55.6% for the period from January 1, 2024 to March 17, 2024.”

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ii round-up:

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

It operates via four divisions. Its US business generates its biggest slug of sales at 38%, with brands including FanDuel, FOX Bet and PokerStars. 

Its UK & Irish business follows, accounting for 26% of sales. Brands for its websites and betting shops include Sky Betting & Gaming, Paddy Power, Betfair and tombola.

The Australian division generates around 12% of sales mostly online via its Sportsbet brand. 

Finally, its remaining International division accounts for the balance of 24% of sales. Its largely website brands include PokerStars, Betfair International, Adjarabet, and Junglee Games in India, along with betting outlets in Italy under the Sisal banner.  

For a round-up of these latest results released on 26 March, please click here.

ii view:

Flutter was formed from the merger of Paddy Power, Betfair and The Stars Group between 2016 and 2020. Today, a UK stock market value of around £27 billion sits comfortably above UK listed rivals Entain (LSE:ENT) and William Hill owner 888 Holdings (LSE:888). Average monthly players rose by a fifth year-over-year to 12.3 million. 

For investors, problem gaming and the potential for increased regulation across all or any of its territories cannot be forgotten. Its Australian business is suffering from tough pandemic comparisons and increased regulatory and compliance costs, group net debt is up although remaining within management’s comfort levels following previous acquisitions, while the lack of dividend payments contrasts with Ladbrokes owner Entain. 

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On the upside, a pending switch to a primary US stock market listing, subject to a shareholder vote on 1 May, could further shine a light on Flutter and its US growth prospects, with the US operation moving to adjusted profits during 2023. Additional bolt-on acquisitions remain possible, while potential growth for markets such as India and Brazil also warrant consideration. 

A number of impairments this time made results look worse, while issues at the Aussie business and threat of regulation could put off some investors. For others thinking about buying following the post-results sell-off, the consensus analyst estimate of fair value is above £185 per share, suggesting many City analysts remain optimistic about the long term.

Positives: 

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

Negatives:

• Possible ethical concerns
• No dividend payment

The average rating of stock market analysts:

Buy