Flutter Entertainment (FLUT) Q4 2020 earnings summary

Executive summary

• Completed the all-share merger with The Stars Group in May and raised ownership of FanDuel to 95% in December, expanding scale, geographic reach and exposure to the US.

• Covid disrupted sports schedules and retail operations, while online migration and increased home-based leisure supported player and revenue growth.

• Pro forma revenue rose 28% to £5,264m and adjusted EBITDA increased 16% to £1,231m; US investment remained a material drag on reported divisional profitability.

Financial highlights

• Pro forma revenue £5,264m, +28% YoY at constant currency; sports revenue +25% and gaming revenue +32%.

• Pro forma adjusted EBITDA £1,231m, +16% at constant currency; adjusted operating profit £990m, +18%; adjusted EPS 496.6p, +19%.

• Statutory revenue was £4,398m; profit before tax £1m and net loss £34.7m after £565.1m of separately disclosed items, mainly acquisition amortisation and merger costs.

• Adjusted free cash flow reached £1,197m pro forma; average monthly players increased 19% to 6.4m.

Outlook and guidance

• Revenue increased 36% in the first seven weeks of 2021 versus the comparable 2020 period, with player volumes encouraging across divisions and sports results favourable, particularly in UK & Ireland.

• Annualised merger cost synergies are expected to reach £170m, up from £140m guidance; additional annual capex synergies are estimated at £20m.

• While UK and Irish shops remained affected by Covid restrictions, each month of closure was expected to cost £5m EBITDA in the UK and £4m in Ireland.

• US addressable market estimate exceeded $20bn by 2025; sportsbook availability was forecast to reach 65% of the adult population and online gaming 16%.

• The proposed German 5.3% turnover tax on online poker and slots from July 2021 could reduce contribution by £15m–£25m in 2021 if implemented.