Flutter Entertainment H1 revenue rises 22% to £2.39bn

Flutter Entertainment today reported a 22% increase year-on-year (YoY) in total group revenue for the first half of 2020. Total revenue for the period reached £2.39bn on a pro forma basis, while adjusted EBITDA jumped by 35% (YoY) during H1 2020 to £684m. Flutter’s reported profits after tax fell by 70% from £81m to £24m with its net debts rocketing from £356m in 2019 to £2.8bn, primarily due to its multi-billion-pound merger with The Stars Group (TSG).

Pro forma revenue from the group’s sports division rose by 8% to £1.2bn during H1, but the big winner in the period was gaming, where revenue rocketed 40% on a constant currency basis to £1.19bn. Paddy Power Betfair (PPB) total revenue fell by 18% in H1 to £540m, due in part to a 38% drop in sportsbook stakes as many sporting events were cancelled due to Covid-19. PPB online total net revenue slid 8% during H1 2020 to £461m, with a 21% reduction in sports revenue countering an 18% uptick in gaming revenue. PPB retail generated an EBITDA loss of £10m in H1, following Covid-19 closures of shops, although these shops reopened in June. Sky Betting & Gaming (SBG) total revenue rose by 32% to £439m, buoyed by double-digit rises in both sports (36%) and gaming (27%) revenue. Flutter attributed the growth in sports revenue to bookmaker-friendly results in H1, particularly in the UK market and a 100 basis point increase it its margin due to customers betting on less mainstream sports, especially on Sky Bet. PokerStars also enjoyed a positive H1 period with total revenue rising by 40% YoY to £697m amid a 43% rise in gaming revenue, reflecting “elevated customer numbers” across both its poker and casino platforms as bettors switched to online gambling during the lockdown period and other products in the absence of sports. Flutter’s Australian business, which operates under the Sportsbet and BetEasy brands, enjoyed a 45% revenue uptick in H1, hitting £435m. Flutter said this rise was due to the increased prominence of Australian horseracing during the lockdown and the transference of retail customers to online. Revenue from Flutter’s US division, which encompasses FanDuel and the remaining TSG operations, rose by 66% to £278m, thanks in part to a 380% rise in gaming revenue and 14% growth in sportsbook revenue during the period. In addition to positive revenue across all key operating areas, Flutter confirmed it received a £10m refund from HMRC over incorrectly levied VAT on gaming machines in its Paddy Power retail shops. Flutter CEO Peter Jackson said performance had exceeded expectations, with the business benefiting from “geographic and product diversification” during the first half. “In the period prior to Covid-19 related disruption, our businesses performed well with strong customer growth and favourable sports results. In the period thereafter, the cancellation of sports and closure of our shops led to reduced sports revenue in the UK and Ireland,” Jackson explained. “However, this was more than offset by an increase in the number of recreational customers playing our poker and gaming products globally, as people sought new forms of home entertainment,” he added. Flutter’s share price increased by 1.7% in early trading.