Flutter Entertainment (NYSE:FLUT; LSE:FLTR), the world's leading
online sports betting and iGaming operator will host an investor
event today, introducing medium-term 2027 guidance and the
authorization of an up to $5bn share repurchase program.
Flutter holds unparalleled leadership positions in the US and
Rest of World (“ROW”)1 through a diversified portfolio of
market-leading brands2. These brands enjoy local scale positions
and the unique advantages of the Flutter Edge. This key
differentiator enables our brands to benefit from, and contribute
to, leading global capabilities including product and technology as
well as the benefits of our vast expertise and our global scale.
This empowers our local brands with the benefits of a global
leader, while still retaining their local focus and challenger
mindset.
With access to a large and growing total addressable market
(“TAM”), we believe we are very well positioned to deliver
significant profitable growth and value creation for shareholders
in the long-term.
Key financial highlights:
Group
- Significant 2030 regulated TAM of $368bn, global gross gaming
revenue (“GGR”) with forecast compound annual growth (“CAGR”) of
8%3
- Midpoint of US and ROW 2027 guidance expected to deliver
Flutter Group revenue of approximately $21bn, representing
three-year CAGR of 14%4,5 and creating path to:
- Flutter Adjusted EBITDA6 in 2027 of over $5bn
- Adjusted EBITDA6 margin expansion of 700 basis points by 2027
to approximately 25%4,5
- Free cash flow6 generation of approximately $2.5bn in 2027, a
forecast 36% CAGR4,5
US
“Existing states” refers to all states in which we currently
operate online sports betting, and iGaming. 2027 guidance excludes
the benefit of new state launches between now and 20277
- North American mature TAM now expected to be approximately
$70bn3, of which the US is forecast to be approximately $63bn, 1.5
times our previous US market estimate8, and Canada is estimated to
be $7bn
- Expect our best-in-class pricing, generosity, and product to
drive
- Sportsbook structural GGR margin9 to 16% in the long-term,
reaching 15% in 2027, and delivering a long-term net gaming
revenue9 (“NGR”) margin of 12% for FanDuel
- Expected 2027 existing state revenue CAGR of 15-17%, or
approximately $9.7bn, at the midpoint4,7
- Existing state projected Adjusted EBITDA of approximately
$2.4bn at the midpoint with Adjusted EBITDA margin expansion of 13
percentage points to approximately 25% by 20274,7
- This would already be within our long-term 25-30% target range,
which we are reiterating today8
- Significant further opportunity from states yet to regulate;
reiterating 80% sportsbook and 25% iGaming population coverage
expectations8
ROW
2027 guidance includes the benefit of the recently announced
acquisitions Snai and NSX which are subject to customary regulatory
clearances and are expected to close by Q2 2025. Forecasts for
these acquisitions are included in both 2024 and 2027.10
- ROW regulated TAM expected to be approximately $298bn by
20303
- Our unmatched scale and diversification, is expected to deliver
a ROW long-term revenue CAGR of 5%-10% with 2027 revenue forecast
to be approximately $11.5bn at the midpoint, including Snai and NSX
(Existing ROW revenue approximately $9.5bn)4,10
- ROW cost efficiency programs are forecast to create savings of
~$300m in 202711
- Sustainable revenue growth, together with these efficiencies,
are expected to deliver ROW Adjusted EBITDA margin6 expansion of
1-2 percentage points to approximately 26% in 2027 and
approximately $3bn at the midpoint4,10
Flutter value-creation model: capital allocation
update
Flutter’s value-creation model enables significant capital
allocation opportunities, with the capacity to pursue organic
growth, and value creative M&A, and shareholder returns
The Board has authorized a share buyback program of up to $5bn,
expected to be deployed over the next three to four years, and
expected to launch following our third quarter earnings in November
2024. The timing and the actual number of shares repurchased will
depend on a variety of factors, including legal requirements,
price, and economic and market conditions.
Our medium-term target leverage ratio6 remains at 2.0-2.5x with
the flexibility to be higher than this range in support of
value-creating acquisition opportunities and where we have
visibility that we will de-lever quickly. The announced share
repurchase program is expected to continue provided our leverage
ratio is either within or below our target range, or is expected to
reduce back into the target range in the near term.
Peter Jackson, CEO, commented:
“I am very excited about Flutter’s strong trajectory and how
well positioned we are to capitalize on a global regulated
addressable market of nearly $370bn. With our unmatched scale,
diversification, and our global differentiator, The Flutter Edge,
we have clear sustainable global advantages that will continue to
drive sustainable growth and power our financial model with
operating leverage building over time. This will provide us with
significant optionality for capital allocation, allowing us to be
an ‘And’ business with the capacity to invest for organic growth,
and engage in value creative M&A, and also return a significant
amount of capital to shareholders. Our intention to deliver up to
$5bn of share repurchases over the next three to four years
reflects our confidence in Flutter’s future.”
Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. These statements reflect our current expectations as to
future events based on certain assumptions and include any
statement that does not directly relate to any historical or
current fact. In some cases, you can identify these forward-looking
statements by the use of words such as “outlook”, “believe(s)”,
”expect(s)”, “potential”, “continue(s)”, “may”, “will”, “should”,
“could”, “would”, “seek(s)”, “predict(s)”, “intend(s)”, “trends”,
“plan(s)”, “estimate(s)”, “anticipates”, “projection”, “goal”,
“target”, “aspire”, “will likely result”, and or the negative
version of these words or other comparable words of a future or
forward-looking nature. Such forward-looking statements are subject
to various risks and uncertainties. Accordingly, there are or will
be important factors that could cause actual outcomes or results to
differ materially from those indicated in these statements. Such
factors include, among others: Flutter’s ability to effectively
compete in the global entertainment and gaming industries;
Flutter’s ability to retain existing customers and to successfully
acquire new customers; Flutter’s ability to develop new product
offerings; Flutter’s ability to successfully acquire and integrate
new businesses; Flutter’s ability to maintain relationships with
third-parties; Flutter’s ability to maintain its reputation; public
sentiment towards online betting and iGaming generally; the
potential impact of general economic conditions, including
inflation, rising interest rates and instability in the banking
system, on Flutter’s liquidity, operations and personnel; Flutter’s
ability to obtain and maintain licenses with gaming authorities,
adverse changes to the regulation of online betting and iGaming;
the failure of additional jurisdictions to legalize and regulate
online betting and iGaming; Flutter’s ability to comply with
complex, varied and evolving U.S. and international laws and
regulations relating to its business; Flutter’s ability to raise
financing in the future; Flutter’s success in retaining or
recruiting officers, key employees or directors; litigation and the
ability to adequately protect Flutter’s intellectual property
rights; the impact of data security breaches or cyber-attacks on
Flutter’s systems; and Flutter’s ability to remediate material
weaknesses in its internal control over financial reporting. In
addition, the ability to achieve estimated cost synergies and
efficiencies in the timeframe described in this press release, or
at all, is subject to various assumptions, which involve risks and
uncertainties. In addition, we may incur additional or unexpected
costs to realize these cost synergies and efficiencies. The ability
to predict results or actual effects of our plans and strategies is
inherently uncertain. Accordingly, actual results may differ
materially from those expressed in, or implied by, the
forward-looking statements.
Additional factors that could cause the Company’s results to
differ materially from those described in the forward-looking
statements can be found in Part I, “Item 1A. Risk Factors” of the
Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2023 as filed with the Securities and Exchange
Commission (SEC) and other periodic filings with the SEC, which are
accessible on the SEC’s website at www.sec.gov. Accordingly, there
are or will be important factors that could cause actual outcomes
or results to differ materially from those indicated in these
statements. These factors should not be construed as exhaustive and
should be read in conjunction with the other cautionary statements
that are included in the Company’s filings with the SEC. The
Company undertakes no obligation to publicly update or review any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as required by law.
About Flutter Entertainment plc
Flutter is the world’s leading online sports betting and iGaming
operator, with a market leading position in the US and across the
world. Our ambition is to leverage our significant scale and our
challenger mindset to change our industry for the better. By
Changing the Game, we believe we can deliver long-term growth while
promoting a positive, sustainable future for all our stakeholders.
We are well-placed to do so through the distinctive, global
advantages of the Flutter Edge, which gives our brands access to
group-wide benefits to stay ahead of the competition, as well as
our clear vision for sustainability through our Positive Impact
Plan.
Flutter operates a diverse portfolio of leading online sports
betting and iGaming brands including FanDuel, Sky Betting &
Gaming, Sportsbet, PokerStars, Paddy Power, Sisal, tombola,
Betfair, MaxBet, Junglee Games and Adjarabet. We are the industry
leader with $11,790m of revenue globally for fiscal 2023, up 25%
YoY, and $3,611m of revenue globally for the quarter ended June 30,
2024.
The person responsible for arranging release of this
Announcement on behalf of Flutter is Edward Traynor, Company
Secretary of Flutter.
Notes
- Rest of World, (“ROW”) includes the UKI, International and
Australia segments. ROW does not include unallocated corporate
overhead. Unallocated corporate overhead includes shared
technology, research and development, sales and marketing, and
general and administrative expenses that are not allocated to
specific segments.
- Flutter number one online sports betting and iGaming operator
based on revenue for last twelve-months to June 2024
- Total addressable gross gaming revenue market size based on (i)
internal estimates for US ($63bn) and Canada ($7bn) representing
the North American expected mature market TAM for online sports
betting and iGaming products of states expected regulate by 2030
and (ii) total regulated ROW TAM of ~$300bn including online and
retail sports betting, gaming and lottery products excluding the US
and Canada
- All forecasts are provided (i) on the basis that sports results
are in line with our expected revenue margin (ii) at current
foreign exchange rates, (iii) on an existing state and province
basis in the US and Canada, and (iv) on the basis of a consistent
regulatory and tax framework. The 2024 base included in
calculations reflects expected full year Flutter Group guidance
issued in Flutter’s second quarter earnings release on August 13,
2024.
- Flutter Group quoted growth rates do not include forecast data
for Snai and NSX Group in the 2024 base year, or the impact of new
US states we expect to launch within that period
- Adjusted EBITDA, Adjusted EBITDA margin, ROW Adjusted EBITDA,
Free Cash Flow, Net Debt and Leverage Ratio are non-GAAP financial
measures. See definitions below. A reconciliation of our
forward-looking non-GAAP financial measures to the most directly
comparable GAAP financial measure cannot be provided without
unreasonable effort. This is due to the inherent difficulty of
accurately forecasting the occurrence and financial impact of the
adjusting items necessary for such a reconciliation to be prepared
of items that have not yet occurred, are out of our control, or
cannot be reasonably predicted
- US existing state 3-year revenue CAGR from 2024 to 2027 of 16%,
and US existing state 2027 projected Adjusted EBITDA margin of
~25%, are based on an expected revenue CAGR range of 15-17% ($9.4bn
- $10bn) for states in which we are currently live for online
sports betting, and excludes the impact of any new states we expect
to launch within that period
- US mature TAM of $63bn compared with market size of $40bn as
disclosed at 2022 Investor Day. Long-term IFRS Adjusted EBITDA
margin ranges disclosed at the 2022 Investor Day. Long term
expectations for sportsbook population coverage of 80% and iGaming
population coverage of 25% set at 2022 Investor Day
- Sportsbook gross revenue margin is defined as sportsbook gross
gaming revenue as a percentage of the amount staked. Gross gaming
revenue is a key performance indicator in the industry and excludes
the impact of all generosity including generosity recorded as an
offset to revenue. Net revenue margin is after the deduction of all
generosity types and represents our sportsbook revenue as a
percentage of amounts staked
- ROW 3-year revenue CAGR from 2024 to 2027 of 5-10% ($10.7bn -
$12.3bn), and ROW 2027 projected Adjusted EBITDA margin of ~25%
includes forecast data for Snai and NSX Group in 2024 and 2027. ROW
forecasts comprise an Existing ROW expected revenue CAGR range of
5-8% ($9bn - $10bn) and projected Adjusted EBITDA margin of ~26%
and a Snai/NSX combined expected revenue CAGR range of 10-20%
($1.7bn - $2.3bn) and projected Adjusted EBITDA margin of ~25%.
Snai and NSX estimates may not fully align with Flutter’s US GAAP
accounting policies and reporting following completion of the
transactions in 2025. Snai revenue is net of gaming taxes, which
may result in higher revenue but a lower Adjusted EBITDA margin
when policies are aligned.
- Forecast cost efficiency program includes PokerStars platform
integration, Snai synergy expectations, UKI platform migration and
UKI cost efficiencies with cost savings to be achieved by 2027.
Costs to achieve are expected to be 1.0x the level of cost savings
and are excluded from ROW Adjusted EBITDA
Non-GAAP definitions
Adjusted EBITDA is defined as net income (loss) before
income taxes; other income, net; interest expense, net;
depreciation and amortization; transaction fees and associated
costs; restructuring and integration costs; impairment of PPE and
intangible assets and share based compensation expense.
Adjusted EBITDA margin is Adjusted EBITDA as a percentage
of revenue
ROW Adjusted EBITDA is defined as Group Adjusted EBITDA
excluding our US Segment Adjusted EBITDA and unallocated corporate
overhead. Unallocated corporate overhead includes shared
technology, research and development, sales and marketing, and
general and administrative expenses that are not allocated to
specific segments.
Free Cash Flow is defined as net cash provided by
operating activities less payments for property and equipment,
intangible assets and capitalized software.
Net debt is defined as total debt, excluding premiums,
discounts, and deferred financing expense, and the effect of
foreign exchange that is economically hedged as a result of our
cross-currency interest rate swaps reflecting the net cash outflow
on maturity less cash and cash equivalents
Leverage ratio is defined as net debt divided by Adjusted
EBITDA
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240925172170/en/
For further information on the Announcement, please contact:
Investor Relations: Paul Tymms, Investor Relations Ciara
O'Mullane, Investor Relations Liam Kealy, Investor Relations
Email: investorrelations@flutter.com
Media Relations: Kate Delahunty, Corporate Communications Rob
Allen, Corporate Communications Rupert Gowrley, Corporate
Communications Email: corporatecomms@flutter.com
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