FanDuel's owner earnings drop 12% in H1, expects first US profit by 2023

Flutter Entertainment announced on Tuesday its earnings for the first half of the year, which fell by 12% on a pro-forma basis. The EBITDA for the period fell to 597 million pounds on a pro-forma basis and, excluding an operating loss in the United States, earnings were 2% lower year-on-year.

The online betting group said the first half exceeded expectations against its objectives, as the company maintained a leadership position in the U.S. online market: it now has a 45% share of the country’s sports betting market.

The owner of Paddy Power, Betfair and Poker Stars continues to invest heavily in its fast-growing U.S. business, and expects to turn a profit by 2023 due to the heavy investments being carried out since the sports betting ban in the country was lifted in 2018. By that year, it is expected that sales from existing customers will cover the cost of attracting new ones.

One of Flutter’s U.S. businesses that saw positive results during the first half of the year is FanDuel, which grew by 159% to $902.89 million, contributing to 30% revenue growth across the group. In comparison, it was the smallest division by sales a year ago.

“The customer economics we are seeing in the US bode very well for the future, with early FanDuel customers generating positive payback within the first 12 months of acquisition. In gaming we see an opportunity to grow our market share and look forward to further enhancing our product offering in the coming months," said Chief Executive Peter Jackson.

Another highlight of the report includes a three-fold increase in customers over the last 12 months in the United States online market. Average monthly players across all segments and countries increased 40%. On Tuesday, shares in the company were up about 8% in morning trading.

Besides predicting profit in the U.S. for the first time, the Dublin-based group also expects to further increase its presence in the country. The company aims at doubling the number of states in which it operates in to 19 over the next 18 months, including New York.

“We think the next 18 months are going to remain very big for customer acquisitions,” further added Jackson.

In the Europe market, the group benefited from over 500 million pound staked on the Euro 2020 soccer competition. In the UK and Ireland, Flutter’s 3 brands benefited from shared learnings across product and operations.

In Australia, Sportsbet delivered a “phenomenal” H1 performance with high customer retention rates during a period of reduced Covid disruption; and in the international segment, revenue declines were less pronounced than anticipated as the company invests in the business “for long-term sustainable growth.”

Assuming an uninterrupted sporting calendar for the remainder of the year and normalized sports results, the group expects a full-year adjusted EBITDA of between 1.27 billion pounds and 1.37 billion pounds, including a U.S. loss of between 225 million and 275 million pounds.