THIS ANNOUNCEMENT CONTAINS INSIDE
INFORMATION AS DEFINED UNDER ASSIMILATED REGULATION (EU) NO.
596/2014 WHICH IS PART OF THE LAWS OF THE UNITED KINGDOM BY VIRTUE
OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (AS AMENDED)
FOR IMMEDIATE RELEASE
Flutter Entertainment outlines
long-term growth plan and up to $5bn share repurchase program
authorization
New York, September 25, 2024: 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
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· 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
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· Expected 2027 existing state revenue CAGR of 15-17%, or
approximately $9.7bn, at the midpoint4,7
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· 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
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· This would
already be within our long-term 25-30% target range, which we are
reiterating today8
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· 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
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· ROW
regulated TAM expected to be approximately $298bn by
20303
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·
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
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· ROW
cost efficiency programs are forecast to create savings of ~$300m
in 202711
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·
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
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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.
For further information on the
Announcement, please contact:
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Investor Relations:
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Media Relations:
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Paul Tymms, Investor
Relations
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Kate Delahunty, Corporate
Communications
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Ciara O'Mullane, Investor
Relations
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Rob Allen, Corporate
Communications
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Liam Kealy, Investor
Relations
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Rupert Gowrley, Corporate
Communications
|
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Email: investorrelations@flutter.com
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Email: corporatecomms@flutter.com
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Notes
1. 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.
2. Flutter number one
online sports betting and iGaming operator based on revenue for
last twelve-months to June 2024
3. 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
4. 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.
5. 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
6. 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
7. 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
8. 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
9. 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
10. 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.
11. 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