Flutter Entertainment's growth was led by its US operations which saw revenue increase by 55.6{8780be08f1a67b4bc220f8eeb4c20364dbe4fa195e9f9c0f0235f3fd5002a648}. Bank of America names it the top pick while Goldman Sachs expects profits to double by 2026.
The world's leading online sports betting and iGaming operator, Flutter Entertainment, has revealed its financial results for the fiscal year ending December 31, reporting a 24.6{8780be08f1a67b4bc220f8eeb4c20364dbe4fa195e9f9c0f0235f3fd5002a648} increase in global revenue and a 20.3{8780be08f1a67b4bc220f8eeb4c20364dbe4fa195e9f9c0f0235f3fd5002a648} increase in average monthly players.
The US market, in particular, stands out as a powerhouse for Flutter, showing revenue growth of 55.6{8780be08f1a67b4bc220f8eeb4c20364dbe4fa195e9f9c0f0235f3fd5002a648} year-over-year. The increase was attributed to structural improvements in sports betting net revenue margins, reduced promotional expenses in Ohio compared to the prior year and notable product improvements in iGaming.
Outside of the U.S., the company posted more modest revenue growth of 6.3{8780be08f1a67b4bc220f8eeb4c20364dbe4fa195e9f9c0f0235f3fd5002a648}, indicating broad, if uneven, global performance.
Richard Hunter, head of markets at Interactive Investor, highlighted the US as the hub of Flutter's growth, highlighting its number one position in sports betting with a market share of net gaming revenues of 53.4{8780be08f1a67b4bc220f8eeb4c20364dbe4fa195e9f9c0f0235f3fd5002a648} in the last quarter of the year. The FanDuel business alone captured a 26{8780be08f1a67b4bc220f8eeb4c20364dbe4fa195e9f9c0f0235f3fd5002a648} share over the same period, underscoring Flutter's dominant presence in the industry.
According to Hunter, Flutter's portfolio of brands, including FanDuel, Sky Betting & Gaming, PokerStars, Sportsbet, Sisal and Betfair, among others, taps into a large addressable market, previously estimated to expand beyond $40 billion (36 .7 billion euros) by 2030.
Earnings increased by the increase in the monthly average of players
“The UK business, which includes the likes of Paddy Power and Betfair and represents 26{8780be08f1a67b4bc220f8eeb4c20364dbe4fa195e9f9c0f0235f3fd5002a648} of group revenues, has seen a strong period of trading following a period of strong marketing, customer and engagement investment,” Hunter said.
A critical factor in Flutter's revenue growth is the 20.3{8780be08f1a67b4bc220f8eeb4c20364dbe4fa195e9f9c0f0235f3fd5002a648} increase in average monthly players, which now stands at 12.3 million. The company is focused on optimizing customer acquisition costs and reducing net debt, which increased slightly to $5.8 billion (€5.34 billion).
However, a net loss of $1.2 billion (€1.1 billion) was reported, primarily due to significant non-cash charges, including impairment write-downs. Excluding these expenses, the group's adjusted earnings rose 45{8780be08f1a67b4bc220f8eeb4c20364dbe4fa195e9f9c0f0235f3fd5002a648} to $1.87 billion (€1.72 billion), substantially beating expectations.
“Flutter is leveraging its growth cylinders in the US and is also aligning other existing regions to produce significantly profitable returns,” added Hunter.
Wall Street analysts are overly optimistic about Flutter
Wall Street analysts are extremely optimistic about Flutter's prospects. Among the 27 analysts covering the stock, 23 have given it a “Strong Buy” rating, reflecting widespread bullish sentiment.
The average one-year price target for Flutter currently stands at $234.92 (€217.42), suggesting an increase of 8.6{8780be08f1a67b4bc220f8eeb4c20364dbe4fa195e9f9c0f0235f3fd5002a648} from current levels. Projections range from a conservative estimate of $199.1 (184 euros), which indicates a potential loss of 7.8{8780be08f1a67b4bc220f8eeb4c20364dbe4fa195e9f9c0f0235f3fd5002a648}, to an ambitious estimate of $344.98 (319.27 euros), which implies a notable increase in 59{8780be08f1a67b4bc220f8eeb4c20364dbe4fa195e9f9c0f0235f3fd5002a648}.
Revenue forecasts paint a rosy picture, with expectations to reach £5.2 billion (€4.44 billion) by the end of the first half of 2024 and £5.41 billion (€4.69 billion ) before the end of the year. These projections indicate growth rates of 11{8780be08f1a67b4bc220f8eeb4c20364dbe4fa195e9f9c0f0235f3fd5002a648} and 15{8780be08f1a67b4bc220f8eeb4c20364dbe4fa195e9f9c0f0235f3fd5002a648} respectively.
Bank of America Securities has identified Flutter as the “key stock for 2024” in the European media and gaming sector.
Analysts Kiranjot Grewal believe Flutter's FanDuel business puts it in the best position to capture market share in the deregulated U.S. sports betting market. According to Bank of America, as the largest publicly traded online gaming operator, Flutter offers an attractive entry point into the growing global online gaming industry.
Goldman Sachs predicts a transformational phase for Flutter's earnings profile, highlighting the imminent profitability of its US division in 2024. This division is expected to become the main driver of the company's earnings growth, driving a doubling of EBITDA of the group over the next three years (2023-26E).