Published on: November 12, 2024, 05:12h.
Last updated on: November 12, 2024, 05:12h.
Flutter Entertainment (NYSE: FLUT) saw a surge in its stock price during after-hours trading following the release of its third-quarter results that exceeded expectations set by Wall Street analysts.
The company, which owns FanDuel, reported earnings of 43 cents per share on revenue of $3.25 billion for the period covering July to September. These earnings do not adhere to generally accepted accounting principles (GAAP). Analysts had predicted earnings of 23 cents per share on revenue below $3.20 billion. The strong performance in the US market was largely due to a successful start to the 2024 NFL season, where FanDuel is a major player in online sports betting.
CEO Peter Jackson commented, “In the US, we had a fantastic start to the new NFL season with peak wagers per minute already higher than Super Bowl LVII. Our proprietary product offering continued to drive strong parlay penetration as well as a step up in live betting handle.”
In the US, Flutter saw a 28% increase in average monthly players (AMP) and a 10% growth in customer acquisition during the third quarter. The company noted a 23% AMP growth in states where mobile sports wagering was launched before 2022, and a 37% growth in states where it was introduced in 2022 and 2023.
Flutter Tightens FanDuel Guidance
Flutter adjusted its 2024 guidance for FanDuel due to bettors outperforming expectations in October. The company reduced the midpoints of its forecasts for EBITDA and revenue by 4% and 1% respectively.
The company now anticipates fourth-quarter sales for its US business to range between $6.05 billion and $6.25 billion, with EBITDA of $670 million to $750 million. These figures are lower than the previous estimates of revenue between $6.05 billion and $6.35 billion, and EBITDA of $680 million to $800 million. Despite the adjustments, Flutter still projects a 40% revenue growth and 206% EBITDA growth for FanDuel in the fourth quarter.
Flutter expects a negative impact of $40 million in the second half of 2024 due to higher sports betting taxes in Illinois. The state implemented a graduated tax system where major operators like FanDuel and DraftKings pay higher taxes compared to smaller competitors.
“States need to be cautious about raising gaming taxes too high, as excessive rates could lead to lower or declining revenues,” said CEO Peter Jackson.
Flutter Buyback Program to Begin Soon
In September, Flutter announced a $5 billion share repurchase program. The company confirmed that the buyback plan will start on November 14, with an initial target of $350 million in repurchases by the end of the first quarter. The buyback program is expected to span over three to four years.
Flutter’s strong balance sheet supports the share repurchase initiative. The company’s net debt at the end of the third quarter stood at $5.56 billion, $226 million lower than at the end of 2023.
“As of September 30, 2024, the Group’s leverage ratio was 2.4x, based on the last 12 months Adjusted EBITDA, a reduction of 0.7x from 3.1x at December 31, 2023 due to growth in the Group’s Adjusted EBITDA. The Group is now within its medium-term leverage target of 2.0-2.5x,” according to the press release.