Amid Tumbling Stock, Flutter Affirms FanDuel US Pivot

Like millions of Irish folk who sought economic salvation in America in the 19th Century, Flutter Entertainment, increasingly, is looking across the Atlantic to boost its fortunes and long-term future.

The stock value of the Ireland-origin Omnichannel–owner of the storied Paddy Power, FanDuel and Sisal brands, among many others–took a significant 10 percent hit today, Thursday (November 9), on early morning trading following the release of the company’s Q3 financial report, which revised projected full year Adjusted EBITDA–ex USA–to a lower end £1.44 billion (US$1.76bn).

And all this despite a range of fiscal metrics and indicators in the Q3 that, on paper at least, looked eminently respectable.

Markets, with tightening UK gambling legislation ahead, and perhaps greater taxes, are nervous indeed.

But Flutter’s prospects in the US–where its FanDuel brand, acquired in May 2018, when still just a daily fantasy sports operator–look very different indeed.

Wall Street

FTSE-100 Flutter saw a 12 percent growth in revenue in Q3, year-on-year, to £668 million (US$820.58m) in the US, which has considerably bolstered its ambition to (dual) list on the New York Stock Exchange early next year.

With a 37 percent increase in new sports betting and iGaming players in the quarter, ending September 30: “We are particularly pleased by the great progress we are making in the US,” affirmed Flutter CEO Peter Jackson.

“We are the first online operator [in the USA] to achieve structural profitability, and the strong ramp in EBITDA during 2023 will continue into 2024 and beyond, as our profit margins expand materially.

“I am excited about our plans heading into the sports-rich months of November and December as we execute on our winning strategy which, combined with the FanDuel Advantage, keep us leading the industry.”

Yet overall–despite delivering eight percent, year-on-year, revenue growth in Q3 to £2.04 billion (US$2.5bn)–Flutter is now positing lower Full Year guidance.

Flutter’s sports betting revenue declined by two percent to £1.12 billion (US$1.37bn) in the quarter, compared to Q3 2022; while gaming revenue grew by some 22 percent, year-on-year, to £914 million (US$1.12bn).

America, The Beautiful

In Australia, revenue fell 18 percent to £262 million in Q3, which was partially offset by 16 percent growth in the International Division to £539 million (US$662.11m) — thanks, in large part, to Flutter’s acquisition of Italian lottery heavyweight Sisal in August last and good growth in both India and Turkey.

Revenue in Flutter’s home market of UK and Ireland, meanwhile, rose 11 percent to £566 million (US$695.28m) in Q3, with Online up 11.5 percent to £494 million (US$606.83m) and Retail up 9.1 percent to £72 million (US$88.44m), year-on-year.

“We were pleased to add MaxBet to the Flutter portfolio [in September], in line with our strategy for acquiring ‘Local Hero’ brands in attractive markets,” noted Jackson.

But America remains the key.

“We are making good progress towards our US listing, which will bring the Group significant benefits from accessing the world’s deepest and most liquid capital markets,” stressed the Flutter boss.

“Overall, the significant potential for US growth and ability to leverage scale benefits across our diversified portfolio outside of the US, underpins our confidence in our significant and sustainable long term earnings growth potential.”

Yet judging by today’s response to the flagship company’s latest results, it would seem that the LSE, if not convinced, remains peeved by Flutter’s US pivot.

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