Paddy Power owner grows revenue to €618m in third quarter

Paddy Power-owner Flutter Entertainment grew revenues 10 per cent to £533 million (€618 million) in the third quarter, the company said in a trading update on Thursday.

The betting company singled out Australia and the US as top performers with net revenue growth in Australia of 19 per cent. In the US, Flutter saw revenues rise 67 per cent after its brand there, FanDuel, launched online sports betting in Pennsylvania, West Virginia and Indiana.

Retail revenue at the company decline 9 per cent in the period to £75 million caused by a 37 per cent decline in sales from fixed odds betting terminals following their regulation in the UK.

The company’s online revenues also fell, down 1 per cent to £247 million, but this was attributed to enhancements to Flutter’s responsible gambling measures, international market “switch offs” and challenging world cup comparatives.

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Last month, Flutter signed a deal which would make it the largest gambling group in the world if it is approved. The company agreed to merge with Toronto-based the Stars Group, owner of Poker Stars, Full Tilt and Sky Bet, to form a business with global revenues of £3.8 billion.

"We believe that this deal will accelerate delivery of all of our core strategic objectives and we are very excited about the international growth prospects for the combined group," said Flutter chief executive Peter Jackson.

Online remains the largest source of revenue for the group, followed by its Australian and US markets. Mr Jackson noted that, after FanDuel launched in Pennsylvania, it "quickly became the market leader with around 50 per cent share while we remain the clear number one operator in New Jersey also". Its ongoing US success led the company to raise its full-year guidance for its US operations. And while it still plans to post an earnings loss of between £40 to £45 million, that is lower than the previous expectation of £55 million.

Excluding the US, the company left its 2019 earnings guidance unchanged with a range of £420 million to £440 million.

"The same challenges - shifting to a more sustainable and profitable online business - and opportunities - including in the US and Australia - remain prominent features of its current performance," Davy analysts Michael Mitchell and Jack O'Halloran said in a note to clients.