Shares of Flutter Entertainment surged in extended trading Thursday after the gaming company reported third-quarter results that significantly outperformed Wall Street expectations. Flutter, which owns FanDuel, reported earnings of 43 cents per share on revenue of $3.25 billion for the July through September period. These earnings figures, not based on generally accepted accounting principles (GAAP), surpassed analysts’ forecasts of 23 cents per share on sales of under $3.20 billion. In the U.S., where FanDuel ranks among the largest online sportsbook operators, Flutter capitalized on a strong start to the 2024 NFL season.
“We had a fantastic start to the new NFL season in the U.S., with peak wagers per minute already surpassing those of Super Bowl LVII. Our proprietary product offering continued to drive strong parlay penetration and a rise in live betting handle,” CEO Peter Jackson stated.
The company’s U.S. third-quarter results were bolstered by a 28% increase in average monthly player (AMP) growth and a 10% year-over-year rise in customer acquisition. Flutter highlighted AMP growth of 23% in states where it launched mobile sports wagering before 2022 and a 37% increase in states where it went live in 2022 and 2023.
Flutter refined its 2024 guidance for FanDuel, aligning with some competitors who noted that bettors had the upper hand in October. The company trimmed the mid-points of its EBITDA and revenue forecasts by 4% and 1%, respectively. The Dublin-based operator now anticipates fourth-quarter U.S. sales of $6.05 billion to $6.25 billion and EBITDA of $670 million to $750 million, a slight reduction from previous estimates of $6.05 billion to $6.35 billion and EBITDA of $680 million to $800 million. Nevertheless, even at the mid-points of the new estimates, Flutter expects FanDuel to achieve fourth-quarter revenue and EBITDA growth of 40% and 206%, respectively.
Flutter also projected a $40 million net impact in the second half of 2024 due to the sports betting tax increase implemented in Illinois in July. The state shifted to a graduated levy system in which larger operators like FanDuel and DraftKings face higher taxes than their smaller competitors.
Last month, Jackson cautioned states about the potential adverse effects of excessively high gaming taxes, noting that if tax rates rise too steeply, revenue might not increase as anticipated and could even decline.
In September, Flutter announced a $5 billion share repurchase program. The company revealed that this initiative would begin on Nov. 14, targeting $350 million in buybacks by the end of the first quarter. The comprehensive share repurchase plan is expected to span three to four years. Flutter’s robust balance sheet could support its share buybacks. By the end of the third quarter, the company’s net debt 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, a reduction from 3.1x at the end of 2023, in line with its medium-term leverage target of 2.0-2.5x.
