Flutter Entertainment ends 2023 with a $1.2bn net loss

Flutter Entertainment
Image: rblfmr/Shutterstock

Flutter Entertainment has declared an almost 25 per cent year-over-year increase in revenue in 2023 as the operator reports its financials for the first time since making its debut on the New York Stock Exchange.

Although improvements in revenue were achieved across 2023, the FTSE 100 group’s net loss continued to grow to over $1.2bn following its business transformation throughout the year.

The operator performed well in its US and UK & Ireland segments, including achieving a 53 per cent sports betting to igaming crossover rate in the fourth quarter with its Paddy Power brand.

Flutter declares $1.2bn net loss in 2023

Publishing its full-year financials in dollars for the first time, Flutter reported an overall revenue for 2023 of $11.8bn, up 24.6 per cent YoY (2022: $9.5bn) with average monthly players rising by 20.3 per cent YoY to 12.3 million (2022: 10.2 million).

The group accredited FanDuel as a “key driver” for growth as US revenue grew by 40.7 per cent in comparison to the previous year to $4.5bn (2022: $3.2bn) “despite customer-friendly sports results”. Sportsbook revenue improved by 45.9 per cent while igaming revenue increased by 47.2 per cent.

Excluding US operations, revenue rose by 16.4 per cent to $7.3bn (2022: $6.3bn) after a strong UK&I and “consolidate and invest” international market performance, in addition to its Italian brand Sisal producing $1.2bn in revenue (2022: $465m).

However, gains outside of the US were “partly offset by the impact of softer racing market conditions in Australia combined with a reduced level of Australian player engagement compared with the prior year, following easing of COVID-19 restrictions”.

UK&I revenue rose by 14.4 per cent YoY to $3bn (2022: $2.7bn), with sportsbook rising by 10.5 per cent while igaming improved by 18.1 per cent. Australia revenue fell by 7.1 per cent to $1.4bn (2022: $1.6bn) and international revenue improved by 36.8 per cent to $2.8bn (2022: $2.1bn).

As previously mentioned, Flutter continued to compile a net loss in 2023, rising by 227.3 per cent in 2023 to hit $1.21bn (2022: $370m loss).

The operator noted that net loss grew due to several non-cash expenses, including:

  • $725m loss relating to an impairment of trademarks associated with the PokerStars business reflecting its “local hero” strategy and PokerStars’ presence in predominantly lower growth “optimise and maintain” markets.
  • $165m loss relating to a change in the fair value of the Fox option liability (2022: $83m gain).
  • Amortisation of acquired intangibles charge of $791m (2022: $655m).

“Flutter delivered a strong 2023 performance as we continued to deliver on our strategy.”

Flutter Entertainment CEO Peter Jackson

Adjusted EBITDA grew by 45.4 per cent to $1.9bn following the strong performance across 2023, with US positive adjusted EBITDA being partially offset by “the impact of the annualisation of 2022 point of consumption tax rate increases in Australia and an increase in unallocated corporate overhead (excluding share compensation expense) of 47.2 per cent to $187m”. 

This “reflected greater investment in group resource and Flutter Edge capabilities, due to the rapid growth of the business in recent years, as well as new compliance requirements as a US listed company”. 

Flutter’s loss per share increased to $6.89 per share (2022: $2.44 loss per share), its net cash flow provided by operating activities fell by 19.4 per cent to $937m (2022: $1.2bn), while net debt for the group increased to $5.8bn as of December 31, 2023 (2022: $5.7bn).

CEO Peter Jackson commented: “Flutter delivered a strong 2023 performance as we continued to deliver on our strategy. This was underpinned by a localised approach to technology and product coupled with the unique scale advantages of the Flutter Edge. 

“As anticipated, our number one position in the US has transformed the group’s earnings profile during 2023 as FanDuel delivered a positive US full-year adjusted EBITDA for the first time. 

“Outside of the US, we made excellent progress integrating Sisal into our International business, a business which is a great example of our “local hero” strategy at work, and took market share in UKI. 

“We also made further progress on our sustainability strategy with an increase in Play Well safer gambling tool usage, investment of over $100m in our global safer gambling initiatives including key marketing campaigns in the US with our FanDuel ambassadors to promote responsible play during the year.”

Regional segments

In the US, FanDuel continued to hold a strong position in the sportsbook marketplace with a 53.4 per cent net gaming revenue market share in Q4, while a 25.7 per cent share was achieved in igaming. Across the year, 3.7 million new players were registered, up 19 per cent YoY.

For igaming, Flutter noted that 82 per cent more titles were launched in the US than the previous year, while the segment’s team was expanded. 

The group stated: “Our igaming strategy is delivering strongly, and we believe we have now achieved product parity with our closest competitors. 

“With a strong pipeline of further new products, including greater jackpot and multiplayer functionality expected to be provided by the acquisition of Beyond Play we signed in February 2024, we are well-placed for further market share gains.”

Excluding US operations, Flutter noted that it performed well in retail and online channels in UK&I, with online share rising by two per cent to 30 per cent off the back of new features for SkyBet such as ‘Acca Freeze’.

Igaming grew in the UK&I region thanks to new features and improvements to the cross-sell journey for sportsbook customers, which resulted in AMP growth of 11.8 per cent and record multiproduct player rates, as its Paddy Power brand achieved a 53 per cent crossover rate between sports betting and igaming in Q4.

In Australia, Sportsbet’s AMPs rose by 1.9 per cent to 1.1 million driven by high retention levels, but average spending dropped back to pre-covid levels and there was a “softness in the racing market” in the second half of 2023 which the group expects to continue through the year.

Flutter stated: “We expect the challenging market, along with increased regulatory and compliance costs, to reduce Australian profitability further in 2024. However, we believe Sportsbet’s scale, 45 per cent market share, and leadership in brand and product, position us well for the future.”

In its International segment, the group credited its effective strategy of buying and building podium position operators following growth across revenue and AMPs, as well as a “targeted investment and a ‘local hero’ strategy in key ‘consolidate and invest’ markets” while optimising the PokerStars business which has a greater presence in “optimise and maintain” geographies.

Revenue from Sisal in Italy rose by 10.3 per cent, market share rose in Georgia and Armenia, while improvements to the customer registration journey were achieved in Brazil thanks to local partnerships. 

In addition, Flutter noted “good growth” in Spain thanks to its product, a “strong online adoption” in Turkey, while the group is “well-placed” for continued expansion in India after high customer engagement levels were maintained following a change in tax regime in Q4.

Q1 & 2024 outlook

So far in Q1, Flutter has stated that group total revenue has increased YoY by 23.4 per cent and by 6.3 per cent when excluding US operations. US revenue is up by 55.6 per cent, UK&I revenue has risen by 17.3 per cent, revenue in Australia is down 8.8 per cent, while International revenue is up three per cent.

In January, the group also completed its acquisition of MaxBet in the Serbian market.

Jackson noted: “The year has started well with very good momentum continuing into Q1. Record Super Bowl engagement contributed to US revenue growth of 55.6 per cent for the period from January 1, 2024, to March 17, 2024. We also launched in North Carolina where we have been really pleased with performance to date. 

“Outside of the US, revenue grew 6.3 per cent as the market-driven decline in Australia was more than offset by the growth of our UKI and other International businesses. We believe that our strategy and competitive advantages position us well to continue to grow the business through both organic and inorganic opportunities.”

Jackson also commented on Flutter’s recent listing on the New York Stock Exchange, stating: “I was proud to see Flutter shares trading for the first time on the NYSE on January 29, 2024, and we have been encouraged by the increased focus from new US investors as a result of our US listing. 

“We are working towards a shareholder vote on May 1, 2024, to approve our primary listing move to NYSE.”

Flutter also provided its guidance for 2024. US revenue is expected to be between $5.8bn and $6.2bn with an adjusted EBITDA guidance of $635m to $785m. 

Meanwhile, group ex-US revenue has been given a guidance of $7.65bn to $8.05bn with an adjusted EBITDA guidance of $1.63bn to $1.83bn. Australia’s adjusted EBITDA has been given a guidance of approximately $250m.