Flutter Entertainment (FLUT) Q4 2018 earnings summary

Executive summary

• Revenue rose 7% to £1,873m (9% at constant currency); underlying EBITDA fell 5% to £451m, but was flat on a pro forma constant-currency basis.

• Reported profit before tax was £219m; profit attributable to equity holders was £201m, and underlying EPS was 379p versus 398p.

• Core-market growth and product upgrades were balanced against US sportsbook investment, less favourable sports results and higher regulatory taxes.

Financial highlights

• Sports revenue increased 6% to £1,474m; gaming revenue increased 11% to £399m.

• Gross profit was £1,403m, up 5%; gross margin was 74.9%, down 1.9 percentage points. Underlying operating profit fell 8% to £360m.

• Statutory profit for the year was £180.7m versus £217.7m; adjusted diluted EPS was £3.772 versus £3.941.

• Separately disclosed items totalled £123.1m after tax, including £100.7m acquisition-intangible amortisation, £27.2m impairment and £28.0m restructuring and strategic costs.

Outlook and guidance

• The new financial year started in line with expectations; Adjarabet was expected to join the Online division in 2019.

• New Jersey sportsbook contribution was expected to remain negative through 2019; a positive contribution was anticipated 18–30 months after launch.

• US operating costs excluding marketing were expected to rise from £106m to £145m–£155m in 2019, reflecting annualised and additional investment.

• US fantasy, TVG and casino operations had positive momentum entering 2019, with continued customer-base investment planned.