Betfair full year results more promising

Online gambling group Betfair posted its full year results ending April 30 1012 on Friday, highlighting a 15 percent rise in underlying profits from its core businesses and reporting strong current trading helped by the European soccer championships in the Ukraine.

Key financial developments included:

* Core Betfair revenue growth of 10 percent in H2 resulted in full year revenue up 6 percent to GBP 349.5 million
* Core Betfair adjusted EBITDA up 15 percent to GBP 92.1 million
* Core Betfair adjusted EBITDA margin up 2.1ppts to 26.4 percent
* Group underlying earnings per share up 21 percent to 41.1 pence per share
* Final dividend up 19 percent to 7.0 pence per share to give a full year dividend of 10.2 pence per share
* Completed GBP 50 million share buyback in the year

Operational highlights included:

* Good exchange performance: Non-risk sports revenue up 11 percent in FY12
* Mobile driving growth: 44 million bets (up 122 percent) and GBP 22.7 million of revenue (up 97 percent)
* Technology re-architecture and data centre consolidation completed allowing focus on new products
* Next generation sports products launched, including ‘fixed odds’ bets, which will drive future growth
* Strong current trading: Core Betfair revenue up 18 percent in the last 8 weeks

Commenting on the results, Stephen Morana, Betfair’s interim Chief Executive Officer, said betting had been strong across all major sports and highlighted the rapid development of mobile apps as a driver of growth.

The new financial year had started well, he said, with core revenue up 18 percent in the first eight weeks.

“We have delivered double-digit net gaming revenue growth in Core Betfair in each of the last three quarters and a healthy increase in profits.” Morana said. “We have also started to deliver on our strategic objectives, including the launch of important new products that will drive future growth.

“Our unique Betting Exchange has continued to be the main driver of growth this year, with contributions from all major sports.

“Mobile betting has been a key feature of the year for the industry and our substantial investment in the channel has given us a clear product advantage. The increasing penetration of smartphones and the convenience of the channel for customers have led to strong growth in mobile usage and revenues. In April alone, customers placed over 6 million mobile bets and almost 50 percent of UK and Ireland actives used the channel.

“We are making further enhancements to our mobile exchange betting product and have recently broadened our offering to include sports multiples and casino games on mobile.

“We have now completed the major re-architecture of our technology platform, which allows the introduction of new customer facing products and has enabled substantial improvements to our website. Most recently, we have commenced the rollout of our next generation sports products, which integrate our risk product with the Exchange to create a one-stop shop for sports betting.

“FY13 has started well, with Core Betfair revenue up 18 percent in the first 8 weeks against the prior year, driven by the European Championships and a return to historical margin levels in risk products, as well as the continued success of our value led marketing campaign and further mobile growth.

“New products and the opening up of new geographies leave us well placed for future growth. I am pleased to have had the opportunity to lead the business in this interim period and would like to thank all employees for their support.”

Morana, the company’s finance director, is holding the CEO role on a temporary basis ahead of the arrival of Breon Corcoran, who will join the company in August from Irish bookmaker Paddy Power plc .

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