Interactive Investor

ii view: Paddy Power owner Flutter's US arm sparkles

23rd May 2022 15:23

Keith Bowman from interactive investor

This FTSE 100 gaming giant offers both product and geographic diversity. We assess prospects. 

First-quarter results to 31 March

  • Total revenue up 6% to £1.56 billion
  • Sport revenue up 5% to £930 million
  • Gaming revenue up 9% to £636 million 

Chief executive Peter Jackson said:

"Flutter delivered a positive Q1 performance with revenue growth of 6%. The quarter saw us launch our new global sustainability strategy, the Positive Impact Plan, aligning commercial goals with our commitment to support our customers, colleagues and the communities in which we operate.”

ii round-up:

Flutter Entertainment (LSE:FLTR) is a UK and overseas 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, Tombola, FanDuel and PokerStars. 

For a round-up of this latest update, please click here.

ii view:

Formed from the merger of Paddy Power and Betfair back in 2016, Flutter Entertainment is today a global sports-betting and gaming company. Over its last full financial year, sports betting generated around three-fifths of overall revenues and gaming products the balance.

Geographically, the UK accounted for around one-third of sales, with the balance split relatively evenly across Australia, the US and its other international markets including Ireland. Its current strategic priorities 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 an issue which critics of the industry are keen to promote and address. A flat revenue performance for its businesses away from the US in this latest quarter is not to be overlooked, while the company reported an overall loss of £288 million for the financial year 2021. 

More favourably, sales in the US have proved impressive, with management previously cutting its time estimate for the business to reach profitability. Diversity of both product and geographical region is enjoyed, while acquisitions over recent years have helped enhance growth. On balance, and while some caution looks sensible given potential UK regulatory changes, diversity and growth in the US continue to leave Flutter as one to watch in the gaming sector. 

Positives: 

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

Negatives:

  • Competition across the sector is intense
  • No dividend payment

The average rating of stock market analysts:

Strong buy

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