The FTSE 100 company also raised guidance for its market leading US business, which trades as FanDuel, yet investors were left unimpressed, leaving the share price ticking nearly 1% lower to £79.62.
CUT US FANDUEL EXPANSION LOSSES
The company experienced stronger than expected growth in the US where revenues jumped by 67% to £91m. That prompted management to slash its guidance for US losses this year to within a £40m to £45m range, on a before interest, tax, depreciation and amortisation basis.
Flutter had previously anticipated running up £55m of red ink in the US.
The US FanDuel business continues to expand at some pace, now launched in Pennsylvania, West Virginia and Indiana, New York and Iowa. In Pennsylvania FanDuel quickly established a market leading position, taking around half the fledgling market, while it remains the clear number one in New Jersey with 18% market share.
In Australia revenues increased 19% to £119m, accompanied by a 2.9% increase in margins to 11.4%. Higher levels of player engagement and a refinement of pricing accounted for around 40% of the improvement with the bulk of the gain coming from favourable sports results.
FLAT IN EUROPE
European online operations showed broadly flat results, impacted by tough comparisons from last year’s World Cup as well as regulatory spending and some market switch-offs. Underlying performance on a like-for-like basis was stronger than reported.
The Retail division which runs over 620 Paddy Power shops across the UK and Ireland saw a 9% fall in revenues to £75m, as a 5% growth in the sportsbook was more than offset by the 37% decline in revenues from fixed odds betting terminals (FOBT’s).
Despite the drag from the FOBT’s, the company continues to see improvement as competitors close shops and now estimates that its previously guided revenue decline of 33% to 43% is likely to be bettered.
On 2 October the company announced the proposed merger with Toronto-listed Stars Group to create one of the largest gaming companies in the world. Commenting on the deal, chief executive Peter Jackson said, ‘we believe that this deal will accelerate delivery of all of our core strategic objectives and we are very excited about the international growth prospects for the combined group’
The two companies have synchronized their earnings releases ahead of the proposed merger.
Gambling specialists Regulus Partners commented, 'we continue to see the Stars-Flutter merger as strategically compelling in terms of reducing relative regulatory risk exposure and maximising the likelihood of strong operational delivery in key markets, especially the US.