Shares in online betting giant Flutter Entertainment jumped over 15% today after analysts said fourth quarter market share gains and stronger-than-expected win margins in the fast growing US market augured well for 2024.
While the world's largest online betting company did not provide full year guidance in its trading statement, the response from the market was in sharp contrast to rival 888 Holdings, whose shares slumped yesterday on a weaker than expected 2024 outlook.
Flutter, home to the Paddy Power, Betfair and Sportsbet brands, posted a 15% increase in fourth-quarter revenue, but said growth at its US Fanduel unit was below its expectations due to a series of customer-friendly results.
Bookmakers generally lose money when favourites win and the losing streak was anticipated by analysts.
They were instead impressed by a 220 basis point year-on-year jump in Fanduel's expected gross revenue margin and increases in its share of the sports betting and online gaming markets to 43% and 26%.
Analysts at Goldman Sachs said those trends provided reassurance on Flutter's 2024 outlook, while Davy Stockbrokers said the strong underlying momentum in the US business augured well for this year and beyond.
Flutter said the £1.139 billion of fourth quarter net US revenue was £147m below the guidance provided in November and would have an approximate 35% flow through to adjusted US earnings.
Last year, Flutter became the first online betting operator to turn a profit in the US since the lifting of a sports betting ban there in 2018. It had forecast full year US core earnings of £140m in November.
Fanduel's share of the US market rose on a quarterly basis to 43% during what it described as the peak period for sporting activity, as the American Football season ramped up. Its share stood at 40% at the end of September and 50% a year ago.
Its full year revenue in the US was 41% higher year-on-year, driving a 25% increase across the group to £9.5 billion. That was ahead of the £9.4 billion LSEG SmartEstimate, weighted toward forecasts from analysts who are more consistently accurate.
Fourth quarter revenue growth of 4% in its international division, a 2% dip in Australia and 19% jump in the UK and Ireland, where it won further market share, were in line with guidance, the company said.
It added that its UK & Ireland Online revenue for the fourth quarter of 2023 rose by 21% to £572m from £472m the same time the previous year, while its UK and Ireland Retail revenue increased by 6% to £75m from £71m.
Flutter is due to delist from the Dublin Stock Exchange later this month in favour of a listing on the New York Stock Exchange. Its shares will list on Wall Street on January 29.
It also said it will report its full year results for 2023 in US dollars in March.
Peter Jackson, Flutter's chief executive, said that while sports results were very customer friendly,
particularly on the NFL in November, the underlying momentum in the business remains very strong heading into 2024.
"Outside of the US, the quarter traded in line with expectations, with continued strong momentum in the
UK & Ireland supported by recent product enhancements and International growth driven by our 'Consolidate and Invest' markets", the CEO added.
"Subject to the effectiveness of our Form 20-F registration statement with the US Securities and Exchange
Commission, we are very excited that the addition of a US Flutter listing is now just days away," Mr Jackson said.
"This is a pivotal moment for the Group as we make Flutter more accessible to US based investors and gain access to deeper capital markets. I am looking forward to 2024 and further building on the momentum within the Group to continue delivering growth," he added.
Shares in the company jumped in Dublin trade today.
Additional reporting by Glenda Sheridan
