Betfair, the world's largest betting exchange, has reported lower than expected half-year profits, sending its shares down more than 9% to well below their price in a flotation just two months ago.
Betfair, founded 10 years ago by one-time professional gambler Andrew Black and former JP Morgan trader Edward Wray, said results in poker had fallen short of expectations while the cancellation of horse racing meetings due to bad weather had moderated growth rates in the current quarter.
Shares in Betfair, which had been sold at £13 in October's IPO, were down to £10.67 after the results.
Betfair finance chief Stephen Morana said the group's target of returning to 2010's levels in poker in 2011 was not likely to be met, with core poker revenue down 6.5% after users were moved to a new platform in July.
The group nonetheless maintained its target for double-digit growth in adjusted EBITDA - or underlying profits - in 2011.
Betfair said it would address the issues in poker and horse racing with a number of product enhancements and initiatives in the second half.
The company said its underlying adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 24% to £31.2m in the six months to the end of October. Underlying revenue rose 12.3% to £188.5m, with the strongest performing product being Games, which posted a 17.6% rise.
Betfair generated core revenue growth of just 1.6% year-on-year in the second quarter. Its active customers rose by 31% to 654,000, with strong revenue growth of 22% in the first quarter, driven by the football World Cup.
