Flutter brands steal UK market share as Q1 revenue jumps 46%
Topline numbersTotal Q1 revenue reached £2.41bn amid an annual rise of 46%.
Sports revenue rose by 53% to £1.5bn, while gaming revenue came in at £916m following a year-on-year increase of 35%.
The US, where Flutter is the market leader through FanDuel, was the standout performer on a geographic basis as revenue soared 92%, including a 147% climb in sportsbook revenue.
Flutter said this culminated in 50% US sports betting market share for FanDuel, with the US business “firmly on track” for profitability this year. Its iGaming market share is closer to 23%.
“In the US, the combination of the FanDuel Advantage and the Flutter Edge drove further market share gains,” said Flutter CEO Peter Jackson.
The operator added more than 1.5 million US customers in Q1 and its US sports betting handle of $10.9bn represented nearly 60% of the group’s overall sportsbook stakes.
Flutter reported revenue growth in all key markets except for Australia, where revenue declined by 4% year-on-year to £289m. This was blamed on tough Covid comparatives.
UK & Ireland revenue rose by 17% to £608m. In this market, online revenue rose by 17% to £532m as retail revenue grew by 15% to £77m driven by Paddy Power.
International revenue jumped by 69% to £605m and was boosted by Italian market leader Sisal.
Finally, average monthly players rose by 30% in Q1 to more than 12.3 million.
The US has dominated the headlines for Flutter recently, and rightly so, but one of the most interesting takes from this report is that the company is also stealing market share in the UK.
The UK & Ireland division continued to significantly outperform the market with AMP growth of 11% to more than 4 million.
Sports revenue from the region grew by 16% driven by good retention of World Cup players from Q4 and strong customer acquisition.
A regional net revenue margin of 11.1% was in line with expectations but 150 basis points higher than last year thanks to an increase in the penetration of the operator’s BetBuilder products.
Regulus Partners analyst Paul Leyland said the Q1 numbers point to material market share gains versus both Entain and 888.
UK & Ireland gaming revenue rose 17% and was helped in the quarter by enhanced daily prize mechanics, with the introduction of bonus rounds and guaranteed jackpots.The firm’s Sky Vegas brand also benefitted from an expansion of live casino content which boosted player engagement.
Peel Hunt analyst Ivor Jones said Flutter was “clearly taking market share” in the UK.
“Customers acquired during the World Cup have been retained and contributed to sports
revenue being up 16%,” said Jones.
“Increased use of BetBuilder contributed to margin improvement and is further evidence of the advantages of Flutter’s scale in terms of technology and product development,” he added.
For context, Susquehanna analyst Joseph Stauff asked whether Saturday’s Kentucky Derby was likely to be as big an acquisition event in the US for Flutter as Cheltenham Festival is in the UK.
Jackson said that people in 33 US states would be able to bet on the Kentucky Derby via the FanDuel racing app.
“All those Californians who are desperate to get a bet on can open their FanDuel app and I think we’re going to give people a $20 free swing,” said Jackson. “It will be a big opportunity for us to acquire customers,” he added.
Ed Young of Morgan Stanley was the first analyst to ask a question on today’s call.
With a credit card ban set to be introduced in Australia, Young asked about Flutter’s exposure to credit card deposits in the market and the potential financial impact going forwards.
Flutter is also the market leader in Australia with its Sportsbet brand, despite the 4% Q1 revenue decline.
“We’ve seen this happen all around the world,” said Jackson. “When regulatory changes happen, we grow through those typically and it helps reinforce our market-leading position.”
Jackson said that only a small percentage of Flutter’s Australian customers solely use credit cards.
“If we look at what happened when credit cards were banned in the UK, we guided to a 2% revenue headwind and I think that is probably a reasonable estimate for you to use in Australia,” he added.
Current trading and outlook
Leyland of Regulus Partners provided some competitive market outlook commentary following Flutter’s strong performance in both the UK and the US.“Flutter’s ability to use a strong central platform and local businesses with sufficient scale and flexibility to differentiate is not just paying off, it is changing the nature of the competitive landscape in regulated markets, in our view.
“While we do not believe that gambling markets ever adopt ‘winner takes all’ economics (outside liquidity-led products), we are now seeing ‘winner makes it very uncomfortable for everybody else’ dynamics which look set to become more pronounced rather than less in the medium term.”
The advisory firm believes Flutter’s main competitive threats are now coming from the black market, which is taking advantage of Flutter’s increasing compliance-led focus on recreational customers.
“For regulated markets to work effectively, legitimate VIPs need a champion too,” Leyland added.