Flutter Entertainment plc Fireside chat
Review the key takeaways and the transcript of this earnings call.
- Flutter reported accelerating customer engagement, notably around the World Cup, with 2.3 million customers engaging and a third reactivated from the prior football season.
- Incremental promotional investments of about $270 million impacted EBITDA, focused on FanDuel to extend leadership in online sports betting (OSB).
- FanDuel's sports book improvement plan, including a loyalty program and Bet Protect Plus, has driven increased active users and handle, such as 26% more actives and 40% more handle during the NBA finals compared to last year.
- US online sports betting market growth is estimated at about 5% for the second half of the year, with iGaming growing faster.
- Internationally, Flutter's Italian and Turkish businesses are growing strongly, with Turkey outstripping inflation at over 40% growth.
- The UK remains a number one position for Flutter in sportsbook (39% share) and iGaming (22% share), despite recent tax increases.
- Alberta's launch in Canada has been strong, achieving iGaming volumes comparable to Ontario within two weeks and 75% of Ontario's sportsbook volumes within three weeks.
- Flutter is targeting $500 million in incremental cost savings by 2029, mostly from international and corporate segments, with about 20% from the US.
- Leverage stood at 4.3x exiting the quarter, with plans to reduce to a number starting with three by year-end and further deleveraging in 2027.
- Management changes include Peter stepping down in October, with Dan closely aligned and taking over leadership at FanDuel.
- Prediction market product rollout has been slower than expected but is improving, with a focus on customer acquisition and market making, expecting $50 million in market making profits this year.
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Transcript
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All right. Thanks everyone for joining us this morning. I'm Jed Kelly, senior analyst at Oppenheimer. Happy to have Peter and Rob from Flutter to talk about recent developments in the company, what's going on into football. Exciting time as always. Thank you, Peter, and thank you, Rob, for joining us.
Jed, lovely to see you. Thank you for having us.
All right, thanks. Okay. We'll just dive right into it. You reported results last week, and we saw accelerating engagement, especially around the World Cup. But the big news is the incremental promotional investments impacting EBITDA by about $270 million you're making into FanDuel. Can we dive into that decision and sort of the strategic rationale behind it?
Of course. I mean, look, we've been talking to a lot of people about this, Jed, and it's been a very straightforward decision for us to make. Let me give you the background to it. I think the first thing I'd say is that the sportsbook improvement plan we put into place in FanDuel has been working very well. When I think about the recent performance of the business on a number of dimensions, I think we've been very pleased to see the progress that we're making. Whether it's the introduction of the loyalty program, which is improving average player days, whether it's actually us providing better engagement and entertainment for our customers, I think that's certainly been the case. Look, as someone who's spent a lot of time in New York, you'll have some sympathy for those customers who are betting on the Mets.
When they were on their long losing streak, we had a bit of fun with that and we were refunding customers their money. At the start of the Soccer World Cup, we did that big promo around goals to be scored, particularly for the American team, but also around the group stage of the tournament, knowing that that would give customers the winning feeling and get them excited as we are going into the tournament. I think all those have, from a loyalty perspective, we had great traction with the Bet Protect+ product, which dealt with the injury issue. I think we have had really good traction sort of landing the excitement that FanDuel brings to our customers.
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