Playtech reported revenue of €859.6m in H1 2023, an increase of 8.5% year-on-year.
The company’s results can be separated into B2B and B2C revenue, and can be broken down further by geographical region in each category.
B2B breakdown
B2B operations accounted for some 39% of Playtech’s total H1 revenue, at €334.5m, amid year-on-year growth of 7.2% for the segment.
Of the B2B total, €99.7m came from regulated markets in the Americas as the region delivered year-on-year growth of 42.8%.
Regulated markets in Europe (excluding the UK) delivered a further €96.6m, up 4.8% year-on-year, while the UK generated €62.9m in revenue amid a 1.6% decline.
Regulated markets across the rest of the world accounted for just €3.3m, up from €2.9m in H1 2022.
That gave Playtech total regulated B2B revenue of €262.5m in H1 2023, up 14.7% year-on-year.
Meanwhile, unregulated revenue totalled €42.6m outside Asia, down 13.4% year-on-year, while Asian revenue was also down by 13.5% at €29.4m.
Playtech said the growth in B2B revenue was driven by key markets including Mexico, Poland and Spain.
Declining revenue in the UK was the result of “the continued impact of the uncertain regulatory climate,” it added.
Meanwhile, the revenue decline from unregulated markets outside Asia was mostly put down to unregulated markets shifting to the regulated category, such as in the Canadian province of Ontario.
Asian B2B revenue dropped “due to the continued pressures in the region,” Playtech concluded.
B2C breakdown
Playtech’s B2C operations generated €532.1m in H1, up 9.2% year-on-year and accounting for around 62% of the company’s total.
The lion’s share of that revenue came from the Snaitech business in Italy, in which Playtech acquired a 70.6% stake in 2018 for €291m.
Snaitech generated €488.4m in revenue in H1, up 9.5% year-on-year and accounting for 57% of Playtech’s overall revenue.
Sun Bingo and other B2C brands generated a further €34.1m in revenue, up 7.6%, while Happybet generated €10.3m in revenue amid a decrease of 3.7%.
Results and management commentary
Overall, EBITDA grew by 19.2% year-on-year to €207.3m in H1 2023.
The business reported a post-tax profit of just €3.1m, however, compared to €71.4m in H1 2022.
That decline was due to “an overall reduction in the fair value of the derivative financial assets recognised in the income statement, and the derecognition of brought forward deferred tax assets,” Playtech said.
The company ended the period with €786m in cash and cash equivalents (up from €426.5m at the end of H1 2022), and net debt of €248.2m, down from €275.2m in the prior year.
“We delivered our highest ever Adjusted EBITDA in the first half of 2023, demonstrating the benefits of the continued strategic and operational progress made in recent years,” said Playtech CEO Mor Weizer.
“Our success in the period was driven by our diversified portfolio, spanning B2B and B2C, in some of the fastest-growing regulated markets around the world.
“Having laid the groundwork in the US, we are growing our offering across multiple states and are confident in our future prospects following the landmark agreement with Hard Rock Digital.
“Additionally, we further cemented our leadership in Latam with Caliente in Mexico and Galera.bet in Brazil. Snaitech in Italy enjoyed another strong period, with the management team continuing to leverage their retail presence to grow the online business.”
Weizer concluded that the second half of 2023 has started well, and the business is on track to deliver full-year adjusted EBITDA slightly ahead of expectations.
Analyst reaction
London-based brokerage Peel Hunt reiterated its Buy rating and 800p target price for the stock.
“With Snaitech accounting for the majority of profits and B2B pivoting steadily to regulated markets, Playtech is a much better-quality business than the market gives it credit for,” wrote Peel Hunt analyst Ivor Jones in a note to investors.
“It has barely scratched the surface of the opportunity in the US, but it is scratching away enthusiastically: it is licensed in 10 states; has a US headcount of 150; and, in Hard Rock Digital, has a very well-qualified and financed partner for the US and beyond,” he added.
Madrid-headquartered Codere Online posted total net gaming revenue (NGR) of €39.1m in Q2 2023, up 33.9% year-on-year.
Revenue breakdown
Of the total NGR, €18m came from Mexico, up 51.3%, €17.5m from Spain, up 24.1%, and €2.1m from Colombia, down 4.5% year-on-year.
The remaining €1.4m came from other markets, where revenue was up 40% compared to €1m in Q2 2022.
Online casino operations delivered some 54% of revenue during the quarter, as online sports betting delivered the remaining 46%.
Growth was driven by an increase in average monthly active players (MAPs) across most of Codere Online’s active markets.
In Mexico, MAPs grew 53.9% from 32,300 to 49,700, while the number of MAPs in Spain climbed 10.6%, from 36,800 to 40,700.
Colombia’s revenue drop was accompanied by a 6.1% reduction in the number of MAPs in that market, from 28,000 to 26,300.
In other markets, the number of MAPs grew 19.7% from 7,600 to 9,100.
At the end of the quarter, Codere Online posted an adjusted EBITDA loss of €4.5m, down by more than 50% from a €9.9m adjusted EBTIDA loss in Q2 2022.
The business ended the reporting period with a net loss of €1.7m, compared to a €6.7m net loss in Q2 2022.
Full-year outlook
Following the release of its Q2 results, Codere Online has upgraded its previously issued earnings guidance for full-year 2023.
NGR is now expected to fall between €150m and €160m, with an expected adjusted EBITDA loss of between €15m and €25m.
The business also reiterated its plan to turn to EBITDA profitability and positive cash flow for the full-year 2024.
“We continue delivering strong revenue growth, despite a lower level of marketing investment, on the back of strong brand recognition, higher quality customers and continued improvement in our product offering,” said Codere Online CFO Oscar Iglesias.
Genius Sports revenue totalled $86.9m in Q2 2023, ahead of previously issued guidance of $80m, and 22.1% ahead of the $71.1m generated in Q2 2022.
Revenue breakdown
Of the total revenue, the lion’s share came from the firm’s Betting Technology, Content and Services division, which generated $56.9m, up 26.8% year-on-year.
That growth was driven by “increased customer utilisation of available event content and growth in business with existing customers,” Genius said.
The Media Technology, Content and Services division, meanwhile, generated $18.4m in revenue, up 22.4% year-on-year.
There, growth was driven by increased business in the Americas region, particularly in the area of programmatic advertising services.
The Sports Technology & Services segment saw significantly slower growth than Genius’ other business segments, as it generated revenue of $11.6m, up 3% year-on-year.
That modest growth was attributed primarily to higher revenues from non-cash consideration contracts.
EBITDA and net loss
Following the significant revenue growth, the business declared adjusted EBITDA of $15.7m, up 87.2% on the prior-year period. That figure was also well ahead of previously issued guidance of $14m.
Genius boasted an adjusted EBITDA margin of 18% in Q2 2023, up from 11.8% in Q2 2022.
Still, the business posted an overall net loss of $10.3m for the quarter, compared to a $4.8m net loss in Q2 2022.
The year-on-year increase in net loss required some further explanation from Genius, however.
The group’s loss from operations was in fact down year-on-year in Q2, the business said, from $39.7m in 2022 to $7.8m in 2023.
That improvement was offset by a $29m reduction in gain on foreign currency compared to the prior year, resulting in the increased net loss of $10.3m.
2023 outlook
Now, Genius expects to generate group revenue of around $410m and adjusted EBITDA of $52m throughout the full year 2023.
It added that it also expects “to reach an important inflection point as it begins generating sustainable free-cash-flow in the second half of 2023 and beyond.”
CEO Mark Locke said: “Following the financial outperformance in the first half of the year and the recently renewed partnerships with Football DataCo and the NFL, we have validated our core strategy, differentiated our technology stack, and proven our sustainable business model.
“The ongoing success through the second quarter perfectly demonstrates our balanced approach in delivering near-term results, while accelerating Genius towards our long-term growth and profit targets.”
As of the end of the reporting period, Genius held cash and cash equivalents of $89.8m.
Frankfurt-listed operator bet-at-home.com managed to increase its EBITDA more than threefold year-on-year in the first half of 2023, despite a near-10% reduction in GGR.
H1 results
GGR fell by 9.3% year-on-year during the first half of 2023, to €24.2m, from €26.7m in H1 2022.
That reduction was caused by the impact of regulatory change in bet-at-home’s core market of Germany, it said, primarily driven by the introduction of cross-product and cross-operator monthly betting limits in July 2022.
There was also a “weaker than expected” development in the operator’s online casino segment, it added, due to the “limitation of the licensed offering compared to the previous year.”
Still, thanks to a significant reduction in costs, bet-at-home was able to grow its level of EBITDA more than threefold compared to H1 2022, from €1.1m to €3.8m.
That was helped by a reduction in expenses across three key areas; personnel costs fell by 39.3% to €4.7m, marketing costs were down 5.6% to €5.5m, and other operating expenses fell by 13.9% to €6.2m.
Bet-at-home’s consolidated equity totalled €30.4m as of 30 June, with the business holding €37.8m in cash and cash equivalents.
2023 outlook
Following the release of the results, bet-at-home management reiterated previously issued revenue guidance for 2023 of between €50m and €60m.
Those results will be “supported by an expected stronger performance of the online sports betting segment in the second half of 2023, due to a higher customer acquisition and marketing activity,” the operator said.
Despite the positive EBITDA development in H1, it added that it continued to expect EBITDA levels between a €3m loss and a €1m positive contribution for the full year.
That will be driven by “a significant increase in marketing costs related to the start of the football season” in H2, bet-at-home said, with a corresponding impact on EBITDA expected.
International Game Technology (IGT) has raised its earnings guidance for the full-year 2023 after reporting “strong” financial results in Q2.
Gambling.com Group reported a record quarter in Q1 2023 as revenue jumped 36.3% year-on-year and net income increased by 47%.
Topline numbers
Revenue for the quarter totalled $26.7m, up 36.3% year-on-year, as the business delivered more than 88,000 new depositing customers (NDCs) to its operator partners, up 31%.
North American revenue accounted for $14.1m of the total, a 33% increase year-on-year despite the comparative period including what Gambling.com CEO Charles Gillespie called the “blockbuster” launch of New York’s regulated sports betting market.
The company also reported record results in the UK and Ireland, as revenue there rose for the fifth consecutive quarter, up 36% to $8.5m.
Revenue from other European markets and the rest of the world was also up by 51%, the group said.
Total adjusted EBITDA came to $10.7m, up 48.5% amid an adjusted EBITDA margin of 40%, up from 37%.
Net income for the period totalled $6.6m, up 47%.
News nugget
For Gambling.com Group, the take-home message of these results is that there remains plenty of opportunity for the business to grow, even without any transformative change taking place.
The group pointed to its growth in North America in spite of launching just two new states during the quarter, Ohio and Massachusetts, and in spite of the tough comparative period.
In the UK and Ireland, the business also delivered impressive growth, outstripping the rate seen even in nascent North America, despite having operated in those markets for more than 10 years.
Further growth is expected this year as the business increases its focus on the online casino vertical with the launch of Casinos.com, which it expects “to be a tremendous vehicle to drive revenue growth over the coming years”.
The business also celebrated its new media partnerships signed during the quarter, with newspaper giant McClatchy and USA Today publisher Gannett.
Gambling.com Group is also prepared to adjust its earnings guidance once it has greater clarity on the possibility of new state launches in the US.
Sports betting legislation in Vermont is “more or less a done deal,” according to Gillespie, while the business also believes North Carolina is likely to get legislation over the line this year.
Beyond the US, Gillespie suggested “the combined opportunity of newly regulating markets outside of North America and Europe is equally compelling and thoroughly under-appreciated”.
Best quote
“If you are a large media owner, you can make more money by partnering with an affiliate that can help you monetise with all of the operators versus trying to monetise with one single operator. It’s kind of obvious in retrospect.”
– CEO Charles Gillespie on the benefit of media owners partnering with affiliates over operators
Best question
David Katz from Jefferies made reference to some of this week’s biggest news stories in his question, as he asked management for their thoughts on the big M&A deals recently seen in the industry.
Gillespie suggested that “anytime a company that’s in your exact sector, that’s also a significant B2B supplier, is acquired at a premium in excess of 100%, that can only reflect positively on the companies in the peer group. So we take our hats off to NeoGames on a fantastic transaction.”
The deal, he added, will hopefully bring more investor attention back to the online gambling sector, after signs of diminishing interest over the past two years.
With major operators in the US either profitable or “on the brink of profitability,” Gillespie suggested that investor perception of the industry will be further catalysed in the near future.
Katz followed up by asking whether the affiliate sees opportunities for further acquisitions.
Gillespie suggested the business is “having a lot of good conversations,” and that “there’s no shortage of things out there to consider.”
“I’m hopeful that we’ll be able to announce something at some point, but we also remain as picky as ever,” he replied. “We feel like we’re under absolutely no pressure to do M&A, so we are only going to do the big deals – back to doing fewer, better, bigger transactions.”
Current trading and outlook
Following the release of the results, Gambling.com Group raised its full-year revenue guidance to between $95m and $99m, with adjusted EBITDA expected to fall between $33m and $37m.
The midpoints of those ranges represent revenue growth of 27% and EBITDA growth of 45%.
The business said it does not anticipate going live in any additional North American markets for the remainder of the year and will see no benefit from any new acquisitions.
Las Vegas Sands performed strongly in Q1 2023 as mass gaming revenue returned to pre-pandemic levels for the first time.
Topline numbers
Group revenue for the quarter came in at $2.12bn, an increase of 124.8% on Q1 last year.
Of that total, $1.54bn came from the firm’s casino operations, which climbed 145.8% year-on-year.
The operator’s Marina Bay Sands property in Singapore continued to be its biggest earner, generating $848m in revenue, up 112.5% and generating 40% of the quarterly total.
Adjusted EBITDA across the business totalled $792m, up more than sevenfold from the $110m generated in the prior-year period.
Despite a 39.9% increase in operating expenses to $1.74bn, the business achieved an operating income of $378m, compared to a $302m operating loss in Q1 2022.
The business paid income tax expenses of $50m and declared a net income from continuing operations of $145m.
News nugget
The business is now bouncing back strongly from the impact of the Covid-19 pandemic, as “a robust recovery in travel and tourism spending across our markets is now underway,” according to chairman and CEO Robert G. Goldstein.
Mass gaming revenue from the Marina Bay Sands reached an all-time record of $549m in the quarter, while mass gaming revenue across Sands’ Macau properties surpassed $1bn for the first time since 2019.
The firm’s long standing investment into Macau to improve its appeal as a tourism destination and global business centre “positions us exceedingly well to deliver strong growth as visitation to the market increases and the recovery in travel and tourism spending proceeds,” Goldstein added.
The business also has a strong balance sheet to continue its investment and capital expenditure programmes in both Macau and Singapore, “as well as our pursuit of growth opportunities in new markets,” Goldstein concluded.
The firm held unrestricted cash balances of $6.53bn as of the end of Q1, with access to $2.48bn in borrowing under its revolving credit facilities, with total debt outstanding of $15.97bn.
Best question
The most interesting question on Sands’ Q1 earnings call came from Brandt Montour at Barclays, who asked management for an update on the process of applying for a casino licence in New York State.
In response, CEO Goldstein said that the business continues to await a response from the government there, and while nothing is certain, “we’ve been told it could be early first quarter of 2024.”
Goldstein also added some colour on the strength of LVS’ bid. He said: “We do believe we have a very compelling bid, the project’s in sync with our historical approach to developments – a large-scale resort with enormous non-gaming amenities; hotel, convention space, entertainment, spa etc.
“It’s a very beautiful design, very much the LVS spirit of the way hotels should be – designed as a real resort, a real destination. We have close to 80 acres, so I think we have a very special bid, a very compelling bid and I hope the market sees it that way.”
Best quote
CEO Goldstein mixes his sports metaphors when asked about the company’s continuing recovery:
“We’re early innings here. In fact, I would say if you’re playing golf, we’re still in the driving range. We haven’t even gotten the first tee yet. My point is that it’s evolving so quickly, and I don’t think it’s easy to spot trends.”
Current trading and outlook
Sands expects to continue growing its earnings from its properties in Macau and Singapore as visitation levels continue to increase, pushing up revenues across all of its business segments.
The company lauded its investments made during the pandemic and suggested it would be a “raging bull” on investing further in Macau in the future, not least through the new gaming concession it was granted by the government in December 2022.
Those investments will take place across all business areas, Goldstein suggested, as “we believe non-gaming assets are wildly profitable, but they also drive gaming assets. It’s all in sync. So we build more hotels or we build more retail, and it drives the gaming wind.”
XLMedia has released its full-year 2022 financial results, showing a 10% year-on-year increase in revenue as the group embraces a new operating structure.
Topline numbers
XLMedia’s audited 2022 results fell broadly in line with previously issued guidance reported by iGaming NEXT in January.
Total revenue for the year came to $73.7m, up 10.2%, with $71.8m coming from continuing operations (up 24.2%) and $69.6m coming from XLMedia’s core affiliation business (up 27.5%).
Non-core business areas include the discontinued personal finance division, affiliate network revenue and external agency revenue.
Adjusted EBITDA across the group was $16.7m, down 6.7%, however the figures suggest that adjusted EBITDA from the core business ($18.2m, up 24.7%) was negatively impacted by losses in non-core business segments.
North America was the company’s highest earning region in 2022, generating $47.7m in revenue, up 114.9%.
Of the North American revenue, the vast majority came from sports betting, at $46.4m (up 111.9%), while iGaming generated just $1.3m (up from $0.3m).
European operations showed a more equitable split between sports betting and iGaming, albeit biased in favour of online casino.
The European iGaming segment generated $14.3m in revenue, a reduction of 37.6%, while sports betting in Europe generated a further $7.6m, down 20%.
Operating profit from continuing operations totalled $5.1m for the year, up more than fourfold from $1.1m in 2021. Overall profit for the year from continuing operations was $2.4m, down from $2.8m.
Discontinued operations, however, left the business with an $11.8m loss in 2022, compared to a $2.8m profit in 2021. That was largely the result of a $10.7m impairment charge.
News nugget
Growth in North American markets alongside a reduction in European revenue appears to be in line with XLMedia’s expectations and objectives for the future.
The business is nearing the end of a restructuring process which has seen it turn its core focus away from European iGaming and towards US sports betting.
XLMedia said its strategy going forward is “to diversify our revenue streams in North America while expanding our footprint, optimising our sustainable gaming business and upgrading and innovating our European sports sites.”
Since beginning its restructuring, the business has made significant changes to its senior management team with the introduction of David King as CEO in July, as well as the appointment of Caroline Ackroyd as CFO.
Other senior management changes in 2022 included the appointment of Karen Tyrrell as chief people and operations officer with responsibility for European sports and gaming, the promotion of Elizabeth Carter to CMO, and the addition of Peter McCall as company secretary and group legal counsel.
Overall staff numbers, meanwhile, have been reduced, with the business entering 2022 with 267 staff and ending the year with 193.
“This major programme of change is now largely complete, and we anticipate a more stable operational base going forward,” XLMedia said.
Following the end of the reporting period, Kevin Duffey took up his new role as president of XLMedia North America in early 2023.
Duffey was the founder of Saturday Down South, one of XLMedia’s US sports media sites, and has now been tasked with overseeing all of XLMedia’s North American assets.
Those assets include acquired businesses such as CBWG, Sports Betting Dime and Saturday Football Inc, the integration of which into XLMedia’s core business has now been completed, the business said.
The integration of those acquired businesses saw the departure of the founders of Crossing Broad, a Philadelphia-based sports blog, and Elite Sports NY.
Best question
A highly topical question came from one of the listeners on today’s earnings call, referred to only as Natalie.
Natalie asked how the business intends to leverage the possibilities offered by new AI technologies, and what the related opportunities and threats would be.
In response, CEO King said: “We don’t use it at the moment to generate content. And indeed, in traditional search, Google puts a premium on ‘EAT’, meaning expertise, experience, authority and trust.
“Therefore, we have been putting a premium on creating content that fulfils those obligations, and we’ve looked very carefully and done a number of tests in the world of ChatGPT.
“We obviously see lots of opportunities and indeed have already started using this technology to educate ourselves about word selection and optimisation in our casino brands.
“We think that there’s a lot of use for selectively targeting these tools at specific areas of expertise, applying them to our own content, and educating ourselves not just through our own A/B testing, but also through using these tools to learn what others have done and apply that to our optimisation programmes.
“We also see opportunities to actually educate these tools to help us in creating our content and updating our content on a more regular basis.
“By writing high quality content that meets the ‘EAT’ criteria, we think we can then apply technology and AI to enhance and republish that content, to give the user a more fulsome experience.”
Best quote
CFO Caroline Ackroyd on XLMedia’s debt arrangements: “We’re providing sufficient headroom for investment in organic growth. The business currently has no debt arrangements in place, but this remains a consideration for the future if working capital or acquisitions present a reason for the board to put this in place.”
Current trading and outlook
XLMedia said it has “enjoyed a strong start to 2023 with Ohio going live in January 2023 and Massachusetts going live in March 2023,” though it noted that no additional state launches have been confirmed for the remainder of the year.
With regards to its North American strategy for the remainder of the year, the business holds two key priorities.
One is to increase its focus on iGaming markets in the US, of which there are currently seven regulated state markets.
XLMedia holds a presence in just one of those markets at present, however, and said building its gaming presence is a key priority for the business.
Another of the firm’s key objectives is to turn towards rev share model agreements with operators in the US, where currently it operates on a principally cost-per-acquisition (CPA) basis.
In 2022, CPA agreements generated 69.4% of core revenue, at $48.3m, while rev share deals generated 26.6% at $18.5m.
XLMedia is currently in discussions with several of its US operator partners to shift its agreements from pure CPA to hybrid deals, offering reduced upfront costs to operators but allowing the affiliate to benefit longer term from the players they refer.
Flutter Entertainment continued to dominate leaderboards in key markets throughout 2022 as it grew full-year revenue by more than 27% year-on-year.
Topline numbers
Flutter generated revenue of £7.69bn during full-year 2022, an increase of 27.5% year-on-year.
Of that total, £5.09bn, or around two-thirds, came from the group’s operations outside of the US, amid annual revenue growth of 9.6%.
The remaining 33.8% of revenue, at £2.6bn, came from Flutter’s FanDuel-led US operations, where revenue rocketed by 87.2% year-on-year.
Non-US operations generated £1.3bn in adjusted EBITDA, up 4.1%, while US operations generated an EBITDA loss of £250m, compared to a £243m EBITDA loss for 2021.
(On a constant currency basis, however, EBITDA losses from the US shrank by 6%.)
As a result, overall group adjusted EBITDA came in at £1.05bn, up 4.4% year-on-year.
The number of average monthly players (AMPs) across the group throughout 2022 was 10.2 million, up 25.8% year-on-year, driven by increased numbers of players both in and outside the US.
News nugget
Flutter’s market dominance in several key markets was laid bare in its 2022 results.
FanDuel’s leadership position in the US, where it holds 50% of sports betting market share and 21% of iGaming, is widely recognised across the industry.
Meanwhile in the UK & Ireland, Flutter is also the number one operator by market share, with 38% of sports betting and 22% of iGaming.
In Australia, where Flutter operates its mass market Sportsbet brand, the business also holds the top spot for sports betting with 48% market share. Online casino is illegal in the country.
Following its acquisition of Sisal in August 2022, the operator also now holds the market-leading position in Italy.
That scale allows Flutter to launch into newly regulating jurisdictions with relative ease, as was demonstrated in Maryland towards the end of 2022, and in Ohio following the end of the reporting period.
Market share across those two states has shot to 50% already according to Flutter’s figures, with more than 6% of the states’ combined adult population using the operator’s products.
They were Flutter’s most successful launches ever. In Ohio, first-month customer acquisition as a percentage of the state population was three times higher than in New York following its launch last year.
Flutter made combined strategic investments in Ohio and Maryland of $78m in Q4 2022, consisting predominantly of pre- and post-launch generosity and brand content to acquire customers, which is intended to create greater future value by front-loading investment now.
In Q4 specifically, Flutter posted positive US EBITDA of £31m, excluding its investments in those two new state launches. The operator reported a full-year EBITDA loss of $313m in the US. For comparison, closest market-share rival DraftKings reported an EBITDA loss of $722m over the same period.
Best question
Also referring to the balance between investing in future growth and short-term profitability was the best question on Flutter’s 2022 earnings call, which came from Craig-Hallum analyst Ryan Sigdahl.
With many operators guiding to positive EBITDA at some point this year, he said: “Our thesis is that some of those had structural challenges scaling to meaningful profits beyond that.
“We agree with you that FanDuel can and will, but how do you think about the need to achieve positive EBITDA now, versus making investments in the near-term to build the business that can earn potentially billions in profits longer term?”
In response, Flutter CEO Peter Jackson said: “I think the important thing is that we’re compounding the advantages we have in the market.
“We’re continuing to see higher levels of hold against our handle than our competitors do. The parlay penetration was fantastic in things like the Super Bowl, and the product offering that we have there is the best in the market, and we’re continuing to develop and improve it.
“So we have a structural advantage in revenues, and we know that we are more efficient than anybody else from a customer acquisition perspective.”
CFO Jonathan Hill added some additional colour on Flutter’s strategy regarding profitability.
“Some of our competitors are targeting getting to profitability in Q4 of this year,” said Hill. “We’ve never targeted getting to profitability this year.
“We said it was a resultant outcome of [the building momentum among cohorts of US customers]. So this is not the be all and end all target. We expect it to happen because of the cohorts.”
Hill made reference here to the below slide in Flutter’s results presentation, demonstrating that each new group of customers brought in by the operator has required increasing levels of investment each year since 2018, but that as the investment in each new cohort grows, so too do the resulting revenues.
Best quote
The idea of growing momentum in the US market was also the topic of the best quote from Flutter’s earnings call, which came from CEO Jackson. He said:
“The strong performance we’re seeing in the US is not just being driven by recently launched states. I think the benefits that we have are compounding.”
This was once again supported by an accompanying slide, which Jackson said demonstrated improvement in revenue performance and more efficient marketing, thus “powering the flywheel”:
Current trading and outlook
Flutter said trading in the first eight weeks of 2023 was in line with expectations, with the US continuing to deliver strong growth across existing states, and following successful launches in Maryland and Ohio.
Flutter has already acquired more than 1.2 million customers in those two states in 2023, it added.
The US remains on track to deliver positive EBITDA for the full-year 2023, it said, which will mark the first time any US sports betting operator has delivered a full-year profit since the market began to open following the repeal of PASPA in 2018.
“The group is currently at an earnings transformation point and we look forward to delivering future growth and progressing further against Flutter’s strategic priorities in the coming year,” commented Jackson in the firm’s financial report.
Non-US revenue is also benefitting from strong momentum in the UK & Ireland and in International, which is helping to offset the impact of a “more challenging environment and tough comparatives in Australia,” Flutter added.
For 2023 across the group, Flutter said it expects capital expenditure of between £480m and £500m, alongside adjusted depreciation and amortisation charges of another £480m as a result of increased US product investment, as well as group investment in casino studios and shared platforms.
In a note sent to investors, Regulus Partners said of the firm’s performance: “There are reasons to be positive for each of Flutter’s divisions. Perhaps most crucially, Flutter is clearly showing that a strong central investment in product and technology can drive revenue synergies as well as cost synergies.
“If Flutter’s capex is anything to go by, it is hard to see how disruptors dent Flutter’s market share in key markets without a radical shakeup of the customer proposition (which in fairness the online gambling sector is due for).”
ASX-listed BlueBet will consider launching a B2B sportsbook solution for US partners after revenue fell by 5.1% in the first half of its 2023 financial year.
Topline numbers
In H1 FY23 (six months ended 31 December 2022) total amount wagered with BlueBet increased 6.1% year-on-year to A$280.5m, resulting in wagering revenue or net win of A$27.1m.
That net win was down 5.1% against the prior-year comparative period, while gross profit also slipped by 10.7% to A$13.1m.
EBITDA losses for the half reached A$10.5m, compared to A$0.2m in H1 FY22.
Losses after income tax hit A$9.9m, compared to A$0.8m, while net cash from operating activities was a negative A$8.6m, compared to positive net cash of A$2.5m.
Earnings breakdown
BlueBet said the decrease in net win was the result of a mix shift away from racing and towards sports betting, as well as increased promotional investment.
Net margin for the company is expected to return to above 10% in H2, it added, compared to the 9.7% margin recorded for H1 FY23.
BlueBet CEO Bill Richmond: “We have had strong early interest for our white-labelled sportsbook-as-a-solution B2B offer in the US, with discussions underway with multiple potential B2B partners.”
The operator said its significant investment in product and marketing “positions BlueBet for continued market share growth,” a claim backed up by the 60,328 active customers recorded during the period, up 33.8% year-on-year.
The average cost to BlueBet of acquiring a first time depositor (FTD) was A$447 on a 12-month rolling basis, while the average annual customer value was A$884.
The company’s total cash balance was A$32.2m as of 31 December 2022.
Geographical and vertical mix
The firm’s US operations are off to a relatively sedate start, with its ClutchBet brand having soft launched in Iowa in August. The brand is expected to launch in Colorado in March.
BlueBet also holds market access in Louisiana and Indiana, but said it is taking a ‘capital lite’ approach to entering US markets.
Its $500,000 strategic investment in fantasy sports provider Low6 was leveraged to launch BlueBet’s first free-to-play game ahead of the NFL Super Bowl.
The operator also revealed “significant interest” in the creation of a B2B sportsbook-as-a-solution model using BlueBet tech in the US. Discussions are reportedly underway with several potential partners.
BlueBet’s domestic Australian operations, meanwhile, are expected to return to operating cash flow positive in H2.
Just over half of the firm’s betting handle in Australia came from thoroughbred horse racing, at A$143.5m, up 4.8% year-on-year.
Greyhound racing was the next most popular sport by handle, with customers placing bets worth A$70.1m, though this was down 3.6% on the prior year.
Bets placed on harness racing totalled A$24.5m, up 0.5%, while betting on other sports grew by 34.7% to A$41.2m.
Management commentary
“The BlueBet team delivered a strong performance in H1, remaining focused on delivering the strategy and on providing an excellent experience for our customers in the face of increased market competition,” said BlueBet CEO Bill Richmond.
“As a result, we continue to gain market share in Australia and make strides in our US market entry. Our effective investment in brand and product continues, with our differentiated approach winning new customers and delivering marketing efficiencies.
“In the US, the rollout of ClutchBet continues, with first bets taken in Iowa in August as we head towards an expected go-live in Colorado in March. We have had strong early interest for our white-labelled sportsbook-as-a-solution B2B offer in the US, with discussions underway with multiple potential B2B partners.
“We are well capitalised to execute our growth plans in Australia and the US, and with a strong US team now in place, we are well placed to deliver our growth strategy in H2 and beyond.”
Priorities for H2 FY23
Besides returning its Australian operations to positive operating cash flow and continuing to expand operations in the US, BlueBet’s priorities for H2 23 include improving its use of customer segmentation to drive “more efficient media targeting, improved promotional effectiveness and better conversion.”
The brand will also increase its investments in marketing tech to help deliver improved channel efficiency, better personalisation and higher customer conversion rates.
Another free-to-play game is also in development with Low6, with a view to launching by the end of H2 23.
The firm said it would take a “hyper-local” approach to market entries in the US. For example, in Iowa, the operator runs three ClutchBet Sports Lounges in Dubuque, North Liberty and Iowa City, as well as holding a partnership with the US Hockey League’s Dubuque Fighting Saints.
That strategy reflects BlueBet’s brand presence in Australia, where it holds partnerships with the National Rugby League (NRL) Dolphins and with Penrith Panthers, whose home stadium is now called BlueBet Stadium.