Flutter Entertainment CEO Peter Jackson has highlighted “another strong quarter” for the operator in its Q2 2024 financial results, where total group revenue rose by 20% year-over-year.
Net income benefited from the revenue growth and improved by over 350% in comparison to the same period last year, with US and UK&I operations being a major driving force behind the revenue increase.
Reflecting the strong Q2, Flutter has raised its full-year 2024 guidance, where the operator expects revenue to be 20% higher YoY and adjusted EBITDA to improve by 34% YoY at their respective midpoints.
Q2 revenue growth for Flutter
Publishing its financials, Flutter declared a total group revenue for Q2 of $3.6bn, up 20% YoY and 22% in constant currency (Q2 2023: $3bn), after continued growth of its US business, UKI and International segments. Average monthly players grew by 17% YoY to 14.3 million (2023: 12.2 million).
The operator also noted that the addition of MaxBet in Q1 added $52m to group revenue growth YoY.
Excluding US operations, group revenue improved by 10% in comparison to the same period the previous year and by 11% in constant currency to $2.1bn (2023: $1.9bn).
Net income rose by 364% YoY to $297m (2023: $64m) with a margin of 8.2% (2023: 2.1%). This was also a rebound from a net loss of $177m reported by the operator in Q1.
Flutter attributed the growth to the aforementioned segment performances, as well as “after the non-cash impacts of a gain in the fair value of the Fox Option liability of $91m (Q2 2023: $53m loss) and a charge relating to the amortisation of acquired intangibles of $147m (Q2 2023: $195m)”.
“Flutter delivered another strong quarter, beating consensus and increasing our revenue and adjusted EBITDA guidance as we continued to capitalise on our global scale and the Flutter Edge.”
Flutter Entertainment CEO Peter Jackson
Unallocated corporate overhead increased by 10% to $45m (2023: $41m) “due to the annualisation of H2 2023 investment in Flutter Edge capabilities and compliance requirements” arising from the operator’s US listing which began at the end of May this year.
The group’s adjusted EBITDA rose by 17% YoY and 19% in constant currency to $738m (2023: $633m) with a margin of 20.4% (2023: 21.1%), reflecting “strong revenue performance and ongoing adjusted EBITDA margin expansion in the US”.
Excluding US operations, adjusted EBITDA grew by 4% YoY and 6% in constant currency to $478m (2023: $461m), primarily driven by a “weaker racing market in Australia”.
Net cash provided by operating activities improved by 688% YoY to $323m (2023: $41m), while free cash flow rose as well in comparison to the same period last year to $171m (2023: negative $95m).
Flutter noted that the improvements were due to the continuation of a “good conversion of operational performance to cash” as well as a “lower cash flow during Q2 2023 driven by the large payout within player deposits relating to the record Sisal lottery jackpot, which was partly offset by a cash receipt on settlement of derivatives in the same period”.
Jackson commented: “Flutter delivered another strong quarter, beating consensus and increasing our revenue and adjusted EBITDA guidance as we continued to capitalise on our global scale and the Flutter Edge.”
FanDuel continues US growth
In the US, Flutter stated that YoY improvements were achieved in revenue and average monthly players as FanDuel continued to grow in the North American market.
US revenue rose by 39% YoY and in constant currency to $1.5bn (2023: $1.1bn), with a total online gross gaming revenue market share of 38%, including 47% sportsbook GGR share, 51% net gaming revenue share and a 25% igaming GGR share. Average monthly players rose by 27% to 3.5 million.
Sportsbook revenue grew by 41% to $1.1bn with average monthly players and stakes rising by 30% and 35% respectively, while the margin was 10%, up 40bps.
Alongside average monthly players and stake increases, sportsbook benefited from launches in North Carolina in March and new customer acquisition rising in early-to-regulate states by 16% YoY, which Flutter says “points to a very long runway of growth still to come in these older states”.
The vertical was also supported by the operator’s product proposition, Flutter Edge, which it says “continued to drive customer engagement and positions us well for the seasonally quieter Q3 period”.
Igaming revenue rose by 47% YoY to $357m, with average monthly players increasing by 30% following “continued focus on casino customer acquisition” and product proposition improvements, including the launch of exclusive titles such as Fort Knox Cats and features from the FanDuel Reward Machine. Online slots rose by 62% YoY.
“The returns we are seeing give us the confidence to continue driving customer acquisition in the second half, building a bigger business, which bodes well for 2025 and beyond.”
Flutter Entertainment CEO Peter Jackson
Flutter noted that FanDuel Casino was migrated onto its proprietary technology platform, which it says will provide FanDuel with access to an improved suite of unique capabilities over time “including increased in-house content, more integrated cross-product promotional capabilities, as well as greater platform stability”.
The operator added that its focus on “delivering best-in-class customer experiences is generating results”, as direct-to-casino customer acquisition is up 58% YoY and a market share gain has risen by four percentage points.
US adjusted EBITDA increased by 51% YoY to $260m (2023: $172m) with a margin of 17% “driven by revenue growth and good operating leverage”.
Jackson noted: “Our US performance was excellent in new and existing states reflecting our disciplined approach to customer acquisition and our best-in-class product, which offers our sportsbook customers the best pricing in the market.
“We continue to make improvements to our proprietary product offering which drove the proportion of live betting handle to be more than 400 basis points higher than last year during the NBA playoffs, while we also increased our MLB parlay penetration.
“The returns we are seeing give us the confidence to continue driving customer acquisition in the second half, building a bigger business, which bodes well for 2025 and beyond. We look forward to setting out this growth potential in more detail, and the capital allocation opportunities that will unlock, at our Flutter Investor Day in New York on September 25.”
The CEO added: “We achieved important milestones during Q2, as the NYSE became our primary listing and we moved our operational headquarters to New York. This reflects the importance of the US market to Flutter and our view that the US is the natural home for our business.”
Euros drive UKI & International
In its UKI segment, Flutter’s revenue rose by 18% YoY to $928m (2023: $789m) “driven by continued momentum in igaming, a positive European Football Championship and favourable sports results”. Average monthly players stood at 4.4 million.
Sportsbook improved by 12% to $451m with 10% of stakes in Q2 coming from the Euros, but stakes declined by 1% as a higher sportsbook net revenue margin of 14% reduced staking volumes. The margin increase was due to structural revenue margin expansion with an uptick in same game parlay adoption and sports results being more favourable.
Igaming grew by 25% to $423m following average monthly players rising by 14% and increasing engagement due to product improvements. Flutter added that the capabilities of Flutter Edge benefited all four igaming brands, with each brand growing by more than 20%.
During the quarter, Paddy Power launched its first branded live game show, Paddy’s Mansion Heist, which Flutter says is its “most successful live casino game launch ever”. Regarding cross-selling between sports and igaming, the operator noted that 43% of Euros bettors were also active on igaming.
Adjusted EBITDA increased by 18% YoY to $293m (2023: $249m) “in line with revenue growth, and includes increased sales and marketing costs for the Euros”.
“Outside of the US, we delivered an engaging offering during the European Football Championships, as over four million customers placed a bet on the tournament, with results during the tournament very favourable for us.”
Flutter Entertainment CEO Peter Jackson
The Euros also drove performance in Flutter’s International segment, as well as the aforementioned acquisition of MaxBet in January earlier this year and Flutter Edge “driving outperformance in local markets”. Revenue rose by 11% YoY to $807m (2023: $726m) with 5.3 million average monthly players.
Sportsbook revenue rose by 28% YoY to $197m, with stakes up 23% and margin standing at 13.4%. Euros accounted for 11% of stakes in the quarter. Igaming revenue grew by 6% to $574m, but the operator stated that “the addition of MaxBet and growth in Italy and Georgia offset by tax changes in India”.
In particular, Flutter highlighted improvements made in Italy with Sisal, which benefited from the same game parlay launch for sportsbook, as well as expanded online casino content and a new SuperEnalotto lottery app for igaming, driving average monthly players up by 25%.
International adjusted EBITDA improved by 8% YoY to $156m (2023: $145m) with a margin of 19.3%, reflecting “operating cost savings from the closure of FOXBet and the optimisation of the PokerStars’ business model, offset by the phasing of general and administration expenses in the prior year”.
In Australia, while average monthly players rose by 5% YoY to 1.2 million, revenue fell by 10% to $349m (2023: $389m) as staking declined by 8% due to “racing market challenges and regulatory and compliance costs”, as well as net revenue margin falling to 12.8% following “less favourable sports results versus the comparable period”.
Adjusted EBITDA for the segment fell by 31% YoY to $74m (2023: $108m) due to the lower revenue. However, Flutter did state that it is “seeing encouraging growth in our customer base and player engagement on key sporting events such as the Rugby League State of Origin games during Q2, where we doubled our new customer acquisition year-over-year.”
Jackson noted: “Outside of the US, we delivered an engaging offering during the European Football Championships, as over four million customers placed a bet on the tournament, with results during the tournament very favourable for us.
“We enhanced our Same Game Parlay experience in the UK and Ireland with the addition of QuickBuild, and launched a first-to-market version in Italy. We also expanded our igaming portfolio with new exclusive content driving market share gains.”
Guidance update
Following the strong performance in Q2 and to reflect “positive sports results benefit and continued momentum into Q3”, Flutter has raised its guidance for the full year 2024.
At their midpoints, group revenue was increased by 20% YoY, while adjusted EBITDA was increased by 34%. This reflects a US revenue increase of 3% to $6.2bn, US adjusted EBITDA improvement of 4% to $740m and group ex-US revenue and adjusted EBITDA increase of 2% to $8bn and $1.77bn respectively.
Flutter noted that the US adjusted EBITDA increase comes “after an estimated H2 gross impact of $50m, $40m net of mitigation, from Illinois’ gaming tax increase”.