Flutter confident despite wider quarterly net loss

Flutter reported a net loss of $177m in its first quarter on Tuesday - a $66m increase year-on-year, which it attributed to non-cash charges of $356m.

The FTSE 100 gambling giant said those charges included $172m in acquired intangibles amortisation and $184m in fair value change in the Fox Option liability, surpassing the first quarter 2023 mark by $120m.

However, the group still saw a 46% surge in group adjusted EBITDA, reaching $514m.

Flutter reported a significant turnaround in the US segment, where adjusted EBITDA soared to $26m from -$53m a year earlier.

That growth was fuelled by robust revenue expansion and substantial operating leverage, driving the adjusted EBITDA margin up by 680 basis points.

The group's Ex-US segment also saw an uptick, with adjusted EBITDA reaching $488m, reflecting a 20% increase.

Growth was mainly propelled by increased revenue and a 260-basis point expansion in the adjusted EBITDA margin.

Moreover, Flutter's financial growth contributed to a 310-basis point accretion in the adjusted EBITDA margin to 15.1%.

On the operational front, Flutter saw a substantial increase in net cash provided by operating activities, which jumped $386m to $337m.

The upswing was chiefly driven by strong operational performance and a year-on-year surge in US player deposits.

Additionally, the company reported an adjusted free cash flow of $157m and a leverage ratio of 2.8x at the end of March, both benefiting from improved financial performance year on year.

Looking ahead, Flutter said it was confident in its 2024 guidance, despite unfavourable US sports results in the last two weeks of March

“We have had an excellent start to the year,” said chief executive officer Peter Jackson.

“In the US, FanDuel's top line momentum is translating into strong growth in US adjusted EBITDA and market share gains.

“We are focused on continuing to expand our player base, market share, and embedding future profits within our business through disciplined investment.”

Outside the US, Jackson said the company’s focus on delivering the best products for our players was driving good momentum in key markets such as the UK, where the launch of Super Sub on Paddy Power had been its most successful product launch to date, and in Italy where it had been taking online sports betting and iGaming market share during the quarter to reach an all-time record in April.

“We are proud to be one of the founding members of the US Responsible Online Gaming Association whose goal is to develop and advance responsible gaming practices.

“We are a strong advocate for building a sustainable sector in the US.

“We believe that our global experience positions us well to help lead the way.”

On 1 May, shareholders voted to move the company’s primary listing to the US, Peter Jackson noted.

“We believe a US primary listing is the natural home for the Group and we look forward to this becoming effective on 31 May.

“With a greater proportion of the Group's future profits expected to be generated in the US, we have moved our operational headquarters to New York reflecting the importance of the US sports betting and iGaming market to our business.”

At 0835 BST, Flutter Entertainment shares were down 3% at 15,705p.

Reporting by Josh White for Sharecast.com.