Flutter Entertainment swings back to first-half profit with impressive US growth

Gambling giant Flutter Entertainment reported a return to first-half profitability on Wednesday, after a period of substantial growth, particularly in the United States.

The FTSE 100 company said that on a reported basis, its profit after tax was £128m, swinging from a loss of £112m in the first half of 2022.

On an adjusted basis, its revenue surged 42% in the six months ended 30 June to £4.81bn.

It also recorded a 73% increase in adjusted group EBITDA to £823m, while its adjusted profit after tax surged 138% to £420m.

Adjusted earnings per share ascended 144% year-on-year to 237.5p.

On a pro forma basis, the group's EBITDA still jumped 38%, while on a reported basis, the company demonstrated robust revenue growth of 38%, underpinned by stellar performances in the US, UK and Ireland, and international markets.

The acquisition of Sisal in August last year also contributed significantly to the growth.

Notably, Flutter said its US segment experienced a remarkable turnaround, with adjusted EBITDA of £49m - a stark contrast to the £132m loss reported a year ago.

That shift was attributed to Flutter's leadership in the US sportsbook market, where it commanded a dominant 47% market share.

The strategic expansion into NBA basketball markets and the strengthening of the iGaming proposition were also noted as contributors.

Elsewhere, Flutter said the UK and Ireland market experienced a revenue increase of 13%, supported by strategic product enhancements and efficient generosity strategies.

In Australia, despite a 1% revenue dip, effective customer base retention was evident, along with a 7% growth in average monthly players.

Flutter's international division reported an 8% revenue increase, driven by its ‘consolidate and invest’ markets, which now made up 77% of the division's revenue.

Flutter Entertainment said it remained on course for a US listing, aiming for late in the fourth quarter, or early in 2024.

Looking ahead, the company anticipated the second half would continue in line with expectations, assuming normalised sports results.

Flutter said that in the US, projected net revenue would be between £3.6bn and £3.9bn, with adjusted EBITDA expected to range from £90m to £190m.

For the group ex-US, adjusted EBITDA was projected to be between £1.44bn and £1.6bn, with strong momentum expected in the UK and Ireland and international markets, partially offset by softer market conditions in Australia.

“The first half of 2023 marks a pivotal moment for the group, with our US business now at a profitability inflection point, helping transform the earnings profile of the group and significantly enhance our financial flexibility,” said chief executive officer Peter Jackson.

“With our divisions and their brands benefitting from the competitive advantages provided by the Flutter Edge, group performance in the period was very strong, with delivery of our strategic objectives resulting in pro forma EBITDA growth of 37%.

“The second half of the year has started well and we look forward to adding a US listing for Flutter shares later this year or early next year.”

Reporting by Josh White for Sharecast.com.