Flutter Entertainment stated that strong US momentum continues, while ex-US performance is in line with market expectations, resulting in revenue growth of 6%, led by ongoing recreational player momentum, with average monthly players up 15%, in its Q1 2022 trading update on Wednesday.
Flutter Entertainment reported group revenue growth of 6% from £1.49bn to £1.57bn in the first quarter of 2022. The revenue growth came from ‘continued strong recreational player momentum’ as average monthly players grew by 15% from 7.67m to 8.85m.
The group’s sports segment generated revenue of £930m, up 5% from 2021, and the gaming segment generated 9% higher revenue from £589m to £636m.
Flutter Entertainments Performance
US
Flutter Entertainment reported a 45% rise in revenue from £288m to £429m under its US division in its first-quarter results. The group noted a 43% rise to 2.36m in average monthly players.
Stakes more than doubled to £5.7bn as a result of the high player momentum.
It added over 1.3m new subscribers in the quarter, and some of its key promotional strategies resulted in decreased market share, particularly during the SuperBowl, similar to the trends seen in Q1 2021.
Sportsbook revenue increased by 89%, with a net revenue margin of 4.1%, down 30 basis points. With a 37% online sports betting market share, Flutter remained the top US sportsbook.
Customer-friendly results cost £98m, or 175 basis points, less than the planned margin in Q1, but structural margin gains produced by the group’s ‘superior’ product proposition drove greater revenue strength to offset the majority of this year-over-year impact.
Customer economics were compelling said Flutter, with cumulative CPAs at $290 and average paybacks in the 12-18 month range.
New York and Louisiana were both successful launches, with New York outperforming expectations and representing the quickest penetration of its daily fantasy sports player base to date allowing Flutter to deliver record customer acquisition figures.
The debut of Connecticut in Q4 and strong cross-sell to SuperBowl and March Madness fans are driving iGaming growth. In Q1, it had a 20% share of the iGaming market.
FanDuel was the most downloaded sportsbook app across all events during the Super Bowl and March Madness which helped consumer engagement.
With FanDuel named the number one casino app in Q1, Flutter Entertainment worked to improve its consumer proposition.
UK & Ireland
Online
Flutter Entertainment reported a 15% growth to 3.63m in average monthly players in its UK & Ireland online division in the first quarter.
The group noted a 20% decline in revenue from £568m to £453m as a result of a 32% decrease in revenue generated from the sports division and a 4% decrease in revenue generated in the gaming division.
The decline in revenue was expected as safer gambling measures have been implemented over the last 12 months, with a £30m YoY impact in Q1.
However, sports performance compared to 2021 noted a sportsbook net revenue margin of 9.6%, down 100 basis points year over year and due to Covid-related constraints, player engagement peaked in Q1 2021 also did not help the decline in revenue.
With the launch of ‘Buildabet’ and ‘Acca Assist’ in SkyBet, Flutter Entertainment continues to polish its sports product.
Sky Vegas debuted ‘The Vault,’ and the group continues to observe strong recreational player growth, with gaming average monthly players up 9% on a pro forma basis its improved focus on product and efficiency will position the division well for the future said the group.
Retail
During the quarter, Flutter’s retail estate was up and running, as opposed to being entirely closed in Q1 2021.
In 2021, the group generated nothing in revenue, therefore, in Q1 2022, revenue has seen a 100% growth to £65m.
With revenue only 6% lower than Q1 2019, the group’s UK estate has reverted to pre-Covid levels.
Flutter’s Irish estate was 24% lower in Q1 2019 than in Q1 2018, suggesting social apprehension about Covid, and is unlikely to return to pre-Covid levels this year.
Australia
Flutter Entertainment recorded an 8% increase in revenue from £279m to £291m in the first quarter.
Despite a more challenging market climate, Sportsbet’s income increased by 8%, thanks to the relaxation of Covid limitations.
As average monthly player growth accelerated to 10%, its success was driven by player volumes.
An increase in promotional spend was funded by structural gains in margin generated by the in-house pricing capabilities and product mix said Flutter Entertainment which resulted in high player engagement and high customer retention for Covid’s expanded customer base in 2021.
As a result, staking increased by 7%, while net sales margin remained stable at 11.5%.
Flutter Entertainment International
The impact of guided headwinds in the quarter was reflected in a 5% decrease in revenue in the International segment from £351m to £327m.
Without these obstacles, revenue increased by 6%, thanks to solid growth in key areas such as Canada, Brazil, India, Georgia, and Armenia. Flutter continues to improve the customer experience by leveraging the group’s expertise.
Denmark has been given access to the group’s worldwide betting platform and Junglee is bringing the ‘Spin and Go’ poker concept from PokerStars to the Indian rummy market.
Peter Jackson, CEO, Flutter Entertainment 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.”
“With our enlarged recreational customer base, winning position in the US and ongoing focus on sustainable growth, our business remains well placed for the future.”
Flutter Entertainment shares rose 3% to 8,520p after the company suggested in its trading update that operations are returning to pre-covid levels.
“Flutter’s trading update has shown how its bet on the US market is now paying off with the region leading the charge in revenue growth for the company,” commented Susannah Streeter, Senior Investment and Markets Analyst, Hargreaves Lansdown.
“Revenues soared by 45% in the first quarter for the US market helping offset declines elsewhere as Flutter was buffeted by regulatory headwinds affecting the sector.”
“The ease of gambling given the shift to online has rightly shone a spotlight onto financially vulnerable customers.”