FanDuel parent company Flutter Entertainment (FLUT 1.43%) reported strong Q3 2024 results on Tuesday, Nov. 12, that topped analyst estimates. Q3 revenue reached $3.25 billion, up 27% from the prior year. Further, the adjusted earnings per share soared to $0.43, a stark contrast to the loss of $0.10 per share in Q3 2023. Management also raised its full-year guidance.
Overall, the quarter reflected the company's strategic market expansions and product innovations, though cash flow challenges were noted.
| Metric | Q3 2024 | Analyst Estimate | Q3 2023 | Change (YOY) |
|---|---|---|---|---|
| Revenue | $3.25 billion | $3.03 billion | $2.56 billion | 27% |
| Adjusted EPS | $0.43 | ($0.26) | ($0.10) | N/A |
| Net income (loss) | ($114 million) | N/A | ($262 million) | N/A |
| Adjusted EBITDA | $450 million | $359.1 million | $258 million | 74% |
| Average monthly players | 12.92 million | N/A | 11.14 million | 16% |
Source: Flutter Entertainment. Note: Analyst consensus estimates for the quarter are provided by FactSet. YOY = Year over year. EBITDA = Earnings before interest, taxes, depreciation, and amortization.
Overview of Flutter Entertainment
Flutter Entertainment is a global leader in sports betting and gaming with notable brands like FanDuel, Paddy Power, and Betfair. It operates across multiple markets including the U.S., the U.K., Australia, and various international regions. The company is working to expand its U.S. presence, capitalizing on iGaming and sports betting in states where it is legal through its FanDuel brand, a sector that accounted for 38% of its revenue in 2023.
Recently, Flutter prioritized market expansion in the fast-growing U.S. segment, driven by ongoing legalization and strategic development. It leverages "The Flutter Edge," a significant competitive advantage supported by its scale, proprietary technology platforms, and innovation.
Quarterly Highlights and Developments
Flutter's 27% revenue jump in Q3 was driven mainly by significant gains in the U.S. market. The U.S. division reported a 51% year-over-year rise in revenue, underpinned by a 62% increase in sportsbook operations and a 46% surge in iGaming operations, notably through its leading brand, FanDuel.
Internationally, the company managed 15% year-over-year revenue growth, boosted by the Italian market and "Flutter Edge" capabilities. In Australia, a 12% increase in revenue was noted, supported by favorable sports results, despite the overall market's decline in racing revenue. In the U.K. and Ireland, a diversified product range resulted in growth across both sports and iGaming sectors.
Flutter also reported declining free cash flow, dropping to $112 million from $434 million, primarily due to derivative settlements, highlighting the need for improved cash management. Regulatory pressures, such as Illinois tax increases, also posed challenges impacting the U.S. financial landscape.
Noteworthy is Flutter's commitment to shareholder returns with a share repurchase program of up to $5 billion, marking an initial $350 million repurchase planned through Q1 2025.
Management acknowledged the headwinds facing its operations, including seasonal sports outcomes that may affect Q4 2024 guidance, particularly in the U.S. Nevertheless, the company's strong Q3 results and strategic initiatives reveal a potent business model that continues to drive growth across various geographies.
Forward-Looking Expectations
Flutter Entertainment's management modestly raised its full-year 2024 guidance by 1% for both revenue and adjusted EBITDA, underlining its confidence in continued strategic and financial momentum. Flutter management now expects 22% revenue growth for the year at the midpoint of guidance and 35% growth in adjusted EBITDA. A strong focus remains on U.S. market expansion, capitalizing on new state legalization opportunities to further solidify its position in sports betting and iGaming.
Management emphasized ongoing investment in technology and product innovation as central to its future approach, seeking to build on its competitive advantages and customer engagement strategies. Regulatory considerations, such as tax changes, will require careful operational adjustments.
Investors should monitor Flutter's commitment to disciplined capital allocation and the execution of its strategic initiatives to navigate the dynamic and evolving gaming market landscape.
