Paddy Power Betfair posts Q3-2018 trading update
News on 2 Nov 2018
News on 2 Nov 2018
Online and retail gambling group Paddy Power Betfair posted its Q3-2018 trading update Friday, reporting:
* Group revenue in Q3 up 12 percent in constant currency and up 8 percent on a proforma basis at GBP 483 million;
* World Cup football contributed GBP 22 million revenue to the quarter;
* Online divisions contributed revenue up 15 percent at GBP 248 million (sportsbook +17 percent; exchange +1 percent; gaming +26 percent) as momentum accelerated in Q3 in both Paddy Power and Betfair;
* Australian activity declined with revenue down 2 percent despite good customer activity that saw stakes grow 25 percent in the quarter; revenue was impacted by bad sports results to the tune of GBP 9 million;
* US revenues up 22 percent on a proforma basis with strong momentum in existing products (revenue +14 percent pre-sports betting), supplemented by New Jersey sports betting revenues;
* Following the merger of Betfair US with FanDuel and subsequent sport betting launch, the group’s US business now comprises revenues from FanDuel fantasy sports (across 41 states); TVG horseracing (across 33 states); the FanDuel sportsbook (currently operating in New Jersey and West Virginia); and the Betfair Casino and Exchange in New Jersey.
Revenue was up 22 percent, with good underlying growth in each of these businesses supplemented by $5 million of sports betting net revenue. Excluding sports betting, revenue was up 14 percent, comprising of 18 percent growth in fantasy sports, 7 percent growth in TVG and 40 percent growth in the Betfair Casino.
* The Group’s objective for sports betting in the USA is to launch within key regulated states and quickly achieve online scale;
* Retail revenues were down 4 percent in Q3 at GBP 82 million (UK shops -1 percent; Irish shops -6 percent) with sports revenues impacted by weaker margin;
* Q3 proforma EBITDA was flat year-on-year (cc) and up 6 percent excluding the impact of US sports betting losses and betting tax increases;
* The Group had net debt of GBP 96 million at 30 September 2018, excluding customer balances.
During the quarter, a total of GBP 234 million was returned to shareholders via dividends and an ongoing share buyback programmes, taking the total cash returned in the year to 30 September to GBP 435 million;
* The company notes remote gaming tax increases approved in Australia, Ireland and the UK which will impact future earnings, along with cuts in FOBT stakes in the retail sector. Had these applied throughout 2018, the Group estimates that the gross impact on EBITDA from the combination of regulatory, tax and product fee changes in the UK, Australia and Ireland would have been approximately GBP 115 million;
* The Group also acknowledges that it settled a GBP 2.2 million penalty from the UK Gambling Commission regarding five cases of responsible gambling and anti-money laundering failures;
* Management expects full year EBITDA, pre-US sports betting, will be between GBP 465 million and GBP 480 million (previous guidance: GBP 460-480 million); with 2018 US sports betting investment currently expected to be around GBP 25 million.
Group CEO Peter Jackson reported:
“Q3 was a good quarter for the Group. In Europe, the encouraging momentum that we saw in Q2 accelerated further, with online revenue up 15 percent. This momentum, which was evident in both Paddy Power and Betfair, is driven by enhancements in product and good execution in promotions and marketing.
“In Australia, we continue to see very good scope to enhance Sportsbet’s leading customer proposition and target additional market share gains. Strategically, Q3 was a key period for increased investment in promotional generosity given both the sporting calendar and the changing brand landscape and this investment is driving increased customer activity.
“In the US, the exciting potential of the sports betting opportunity and the strength of our strategic positioning has been evidenced by our experience to date in New Jersey. FanDuel recorded a 30 percent share of the sports-betting market in September, driven by a market-leading customer proposition, our strong brand presence and the ability to cross-sell from our fantasy sports player base.
“Overall, we are pleased with the substantial progress we continue to make against our strategic priorities. Our continued investment in brands and customer proposition means that all our businesses will exit the year with enhanced competitive positioning. Together with our scale and strong balance sheet this means we are better positioned to face the significant regulatory and fiscal headwinds that apply next year and to capitalise on the long-term industry growth opportunity.”
News on 2 Nov 2018
Online and retail gambling group Paddy Power Betfair posted its Q3-2018 trading update Friday, reporting:
* Group revenue in Q3 up 12 percent in constant currency and up 8 percent on a proforma basis at GBP 483 million;
* World Cup football contributed GBP 22 million revenue to the quarter;
* Online divisions contributed revenue up 15 percent at GBP 248 million (sportsbook +17 percent; exchange +1 percent; gaming +26 percent) as momentum accelerated in Q3 in both Paddy Power and Betfair;
* Australian activity declined with revenue down 2 percent despite good customer activity that saw stakes grow 25 percent in the quarter; revenue was impacted by bad sports results to the tune of GBP 9 million;
* US revenues up 22 percent on a proforma basis with strong momentum in existing products (revenue +14 percent pre-sports betting), supplemented by New Jersey sports betting revenues;
* Following the merger of Betfair US with FanDuel and subsequent sport betting launch, the group’s US business now comprises revenues from FanDuel fantasy sports (across 41 states); TVG horseracing (across 33 states); the FanDuel sportsbook (currently operating in New Jersey and West Virginia); and the Betfair Casino and Exchange in New Jersey.
Revenue was up 22 percent, with good underlying growth in each of these businesses supplemented by $5 million of sports betting net revenue. Excluding sports betting, revenue was up 14 percent, comprising of 18 percent growth in fantasy sports, 7 percent growth in TVG and 40 percent growth in the Betfair Casino.
* The Group’s objective for sports betting in the USA is to launch within key regulated states and quickly achieve online scale;
* Retail revenues were down 4 percent in Q3 at GBP 82 million (UK shops -1 percent; Irish shops -6 percent) with sports revenues impacted by weaker margin;
* Q3 proforma EBITDA was flat year-on-year (cc) and up 6 percent excluding the impact of US sports betting losses and betting tax increases;
* The Group had net debt of GBP 96 million at 30 September 2018, excluding customer balances.
During the quarter, a total of GBP 234 million was returned to shareholders via dividends and an ongoing share buyback programmes, taking the total cash returned in the year to 30 September to GBP 435 million;
* The company notes remote gaming tax increases approved in Australia, Ireland and the UK which will impact future earnings, along with cuts in FOBT stakes in the retail sector. Had these applied throughout 2018, the Group estimates that the gross impact on EBITDA from the combination of regulatory, tax and product fee changes in the UK, Australia and Ireland would have been approximately GBP 115 million;
* The Group also acknowledges that it settled a GBP 2.2 million penalty from the UK Gambling Commission regarding five cases of responsible gambling and anti-money laundering failures;
* Management expects full year EBITDA, pre-US sports betting, will be between GBP 465 million and GBP 480 million (previous guidance: GBP 460-480 million); with 2018 US sports betting investment currently expected to be around GBP 25 million.
Group CEO Peter Jackson reported:
“Q3 was a good quarter for the Group. In Europe, the encouraging momentum that we saw in Q2 accelerated further, with online revenue up 15 percent. This momentum, which was evident in both Paddy Power and Betfair, is driven by enhancements in product and good execution in promotions and marketing.
“In Australia, we continue to see very good scope to enhance Sportsbet’s leading customer proposition and target additional market share gains. Strategically, Q3 was a key period for increased investment in promotional generosity given both the sporting calendar and the changing brand landscape and this investment is driving increased customer activity.
“In the US, the exciting potential of the sports betting opportunity and the strength of our strategic positioning has been evidenced by our experience to date in New Jersey. FanDuel recorded a 30 percent share of the sports-betting market in September, driven by a market-leading customer proposition, our strong brand presence and the ability to cross-sell from our fantasy sports player base.
“Overall, we are pleased with the substantial progress we continue to make against our strategic priorities. Our continued investment in brands and customer proposition means that all our businesses will exit the year with enhanced competitive positioning. Together with our scale and strong balance sheet this means we are better positioned to face the significant regulatory and fiscal headwinds that apply next year and to capitalise on the long-term industry growth opportunity.”
