Paddy Power Betfair cites “weakness in gaming” as online revenues dip

Paddy Power Betfair (PPB) this morning reported a 3% year-on-year drop in Q4 online revenues, on the back of “weakness in gaming” and adverse sports results.

Based on PPB’s 2015 pro-forma figures, online revenues for the quarter totalled approximately £191m, with customer-friendly football results in November and December costing around £40m.

The US election also set the firm back nearly £5m after the company’s Paddy Power brand paid out early on the defeated Hillary Clinton.

Gaming revenues for the full group were up 4% to £89m in Q4 but online figures were not broken out and no reason was given for its ‘weak’ performance.

However the firm pointed to strong underlying numbers for the quarter, with online sportsbook stakes up 15% and “lower than expected marketing and staff costs”.

Meanwhile, the Australia-facing business continued to perform well, with Q4 revenues up 18% and stakes up 25%, highlighting “the benefits of the Group’s geographical diversification” according to the trading update.

Group revenue, which includes 600 Paddy Power retail shops, in FY2016 was up 18% year on year to £1.6bn – the same figure generated by bet365 in the year to March 2016.

“We expect full-year Group underlying EBITDA to be around the mid-point of the previously guided range of £390m to £405m, notwithstanding worse than expected gross win margins in November and December,” the firm added.

PPB shares were down 2% at the time of writing to 8,495p on the London Stock Exchange.