Flutter Entertainment Plc · NYSE:FLUT
Flutter Entertainment — H1 2023 Earnings Presentation
47 slides from Flutter Entertainment's earnings presentation, Aug 9, 2023
Slide 1: Flutter Entertainment Plc Interim Results 2023
FLUTTER ENTERTAINMENT PLC INTERIM RESULTS 2023 9 August 2023
Slide 2: Agenda
AGENDA Introduction 3 “Our ambition is to transform global gaming and betting, Financial Review 7 to deliver long-term growth and a positive, sustainable Business Update 21 future for our sector. Conclusion 37 We are Changing the Game” 2
Slide 3: Introduction
Peter Jackson, Group CEO INTRODUCTION 3
Slide 4: Executive summary: Earnings transformation with US now profitable
Introduction Executive summary: Earnings transformation with US now profitable Group: Delivery against strategic goals drove strong H1 performance • AMPs +28%, Revenue +38%, Adjusted EBITDA +72% • Excellent pro forma1 performance, revenue +24% and Adjusted EBITDA +37% • 42% Play Well tool usage, +7p
Slide 5: Flutter well positioned to deliver sustainable future growth
Introduction Flutter well positioned to deliver sustainable future growth 1 2 3 4 5 Significant market Diversified product The “Flutter Edge” Optimal strategy to Clear vision on opportunity and geographic deliver success sustainability portfolio at scale Access to the 2030 US TAM of scale of a Track
Slide 6: US listing update
Introduction US listing update Strategic and capital markets benefits Process and next steps 1. Enhanced US profile for Flutter and FanDuel • Working toward additional US listing in late Q4 or early Q1 2024 2. Recruitment and retention of key US talent • Potential to move primary listing from LSE to
Slide 7: Financial Review
Paul Tymms – Director of Investor Relations on behalf of: Paul Edgecliffe -Johnson, Group CFO FINANCIAL REVIEW 7
Slide 8: Flutter's growth engine
Financial Review Overview Flutter’s growth engine Sustainable Cashflow generation Capital allocation revenue growth Margin benefits opportunities (slides 11-16) (slides 17-18) (slide 19) • Expanding recreational • Scale and leadership • Low capital intensity spend, customer base benefits targeted on
Slide 9: Financial highlights demonstrate power of Flutter's growth engine
Financial Review Overview Financial highlights demonstrate power of Flutter’s growth engine Pro forma Reported Average Monthly Revenue EBITDA Cashflow EPS Players +144% +100% Group +18% Group +24% Group +37% First US +43% US +63% US profit Ex-US +12% Ex-US +8% Ex-US +4% H1 2022 H1 2023 H1 2022 H1 20
Slide 10: Statutory Group Income Statement
Financial Review Overview Statutory Group Income Statement1 £m H1 2023 H1 2022 YoY • EBITDA includes SDI costs2 of £58m Revenue 4,809 3,388 +42% primarily due to technology-driven efficiency projects, Sisal integration and Gross profit 2,801 2,036 +38% US listing costs EBITDA 765 434 +76% • Deprecia
Slide 11: US now structurally profitable; H1 profit $63m (£49m)
Sustainable revenue growth Financial Review + margin benefits US now structurally profitable; H1 profit $63m (£49m) …now funding cost of player acquisition Proportion of cumulative players acquired Back book of players… and opex at each period end H1’23, $’m FY 2022 H1 2023 New players acquired duri
Slide 12: Existing state growth and new state launches drive long term growth
Sustainable revenue growth Financial Review + margin benefits Existing state growth and new state launches combine to drive long term growth Existing Future state Total US business launches division • Significant market growth • Timing of new state • Confidence remains in projected in existing live
Slide 13: Existing business: Live states provide significant near term growth
Sustainable revenue growth Financial Review + margin benefits Existing business: Live states provide significant near term growth Existing business Strong runway of market growth in existing states… …provides leverage opportunity once market growth achieved3 % of Flutter Market growth H1 2023 Potent
Slide 14: Future states add in-year variability, but drive larger profit pool
Sustainable revenue growth Financial Review + margin benefits Future states add in-year variability, but drive larger profit pool Future state launches Total US division • New state launch: materially loss making in • Combination of existing states and Ohio first twelve months before turning templat
Slide 15: Ex-US revenue performance driven by strong AMP growth
Sustainable revenue growth Financial Review + margin benefits Ex-US revenue performance driven by strong AMP growth AMPs millions, H1’22 – H1’23 +23% +12% pro forma +47% +10% YoY +15% pro forma +7% 3.7 4.1 1.0 2.7 4.0 7.4 9.2 1.1 UK & Ireland Australia International Group ex-US CC YoY +74% to £1.2bn
Slide 16: Ex-US EBITDA growth despite regulatory impacts
Sustainable revenue growth Financial Review + margin benefits Ex-US EBITDA growth despite regulatory impacts Pro forma, EBITDA, £’m H1’22 – H1’23 +4% growth including 4% tax headwind in Australia • UK & Ireland: marketing and other cost efficiencies offsetting operating cost inflation to deliver inc
Slide 17: Low capital intensity helping drive significant cash generation
Financial Review Cash flow generation Low capital intensity helping drive significant cash generation… Capital investment targeted at growth opportunities Strong EBITDA growth resulting in FCF expansion • Pro forma capital expenditure increase of 15% driven by H1 2023, £m1 investment in global capab
Slide 18: Providing platform to rapidly delever and expand balance sheet capacity
Financial Review Cash flow generation …Providing platform to rapidly delever and expand balance sheet capacity US profitability materially reduced Guidance implies further reduction leverage in H1 before considering H2 cash generated • Strong EBITDA growth reducing leverage Leverage ratio 3.9x 3.3x
Slide 19: Significant growth provides capital allocation opportunities
Financial Review Capital allocation Significant growth provides capital allocation opportunities Organic investment Value creative M&A Returns to shareholders Highest return High return Excess cash where returns < WACC • Customer acquisition and retention • Strategic criteria: • EBITDA growth and ca
Slide 20: Financial guidance
Financial Review Guidance Financial guidance Current trading • H2 trading to date in line with expectations • Revenue range of $4.5bn - $4.9bn (£3.6bn-£3.9bn) US1 • EBITDA range of $120m - $240m (£90m – £190m) Group ex-US1 • EBITDA range of £1.44bn – £1.60bn Other modelling items: • Interest: c.£285
Slide 21: Business Update
Peter Jackson, Group CEO BUSINESS UPDATE 21
Slide 22: Group strategy will ensure we deliver long term shareholder value
Business update Strategic overview Group strategy will ensure we deliver long term shareholder value US Group ex – US Invest to win in the US Grow our gold medal positions in Build on our network and invest our core markets for leadership positions across International markets Build on our sustainab
Slide 23: Underpinned by progress on sustainability through Positive Impact Plan
Business update Strategic overview Underpinned by progress on sustainability through our Positive Impact Plan Customers Colleagues Communities Environment Helping customers Empowering colleagues Working with communities Reducing our impact to play well to work better to do more through Go Zero strat
Slide 24: Continued progress on Play Well safer gambling strategy
Business update Strategic overview Continued progress on Play Well safer gambling strategy Substantial progress across the Group in H1 2023 Tool usage metric part of Safer gambling marketing Analytic and Insights group Regular colleague and bonus plan for all divisions in +51% vs H1 2022 established
Slide 25: FanDuel's US strategy: Advantage Edge
US update Invest to win FanDuel’s US strategy delivering share gains and profitability Advantage Edge 1. Acquiring customers more effectively Leveraging the combined power 2. Retaining customers for longer of the Group 3. Growing customer value Extend #1 US sportsbook position Grow iGaming propositi
Slide 26: 'FanDuel Advantage' providing a sustainable leadership position
US update Invest to win ‘FanDuel Advantage’ providing a sustainable leadership position… ‘Efficient acquisition’ delivering a significant …with ‘strong retention’ from category customer base… product leadership FanDuel new sportsbook and casino players acquired, per six-month period +18% • New NBA m
Slide 27: Flutter Edge to grow customer value and expand margin advantage
US update Invest to win …combined with Flutter Edge, to ‘grow customer value’ and expand our margin advantage… Investor Day Reminder US online gross revenue margin1 Expected gross win margin 11.3%, +170bps YoY more choice • Global pricing and risk management capabilities 12.2% continue to add produc
Slide 28: Similar cohort dynamics to our most successful global brands
US update Invest to win …resulting in similar cohort dynamics to our most successful global brands FanDuel revenue by year of customer Sportsbet revenue by year of customer Dynamic underpinned acquisition, 12 months to June1,2 acquisition1 by core aspects of FanDuel Advantage: Covid impact Efficient
Slide 29: Delivering on our iGaming strategy and taking share
US update Invest to win Delivering on our iGaming strategy and taking share Grow the FanDuel Casino brand Online iGaming market share2 • New casino first players +38% YoY1 +4ppt 23% Improve breadth of product offering • Launched FanDuel Casino branded live casino in New Jersey 19% • Personalised gam
Slide 30: Enhanced recreational customer offering driving revenue momentum
Grow our gold medal UK& Ireland update positions Enhanced recreational customer offering driving revenue momentum Delivered through focus on product and generosity Strong growth across sports and gaming • Leveraging the Flutter Edge : Flutter UK&I Online pro forma revenue growth vs UK top operators2
Slide 31: Australia: Scale and product leadership to drive medium term progress
Grow our gold medal Australia update positions Scale and product leadership to drive medium term progress Tax increases and Covid reversion disrupting the market Product innovation key to market leadership Pre mitigation cost of Point Relative size, indexed to H1 2019 of Consumption (‘POC’) tax incr
Slide 32: International: Strategy has delivered strong foundation
International update Buy and build podiums Strategy has delivered strong foundation % International YOY growth Markets Revenue Cont’n Revenue Cont’n • Strong growth in key markets with revenue Consolidate and contribution +19% #1 position • Regulated1 markets 97% of Q2 Group and 77% 71% +19% +19% re
Slide 33: Consolidate and Invest revenue growth highlights
International update Buy and build podiums Consolidate and Invest revenue growth highlights * Strong performance across key markets: Armenia 4% • Italy +17%: #1 operator, strong cross-sell via market leading Sisal product Spain 5% • Georgia +10%: Generosity step up driving performance and leadership
Slide 34: Flutter Edge empowers our brands
International update Buy and build podiums Flutter Edge empowers our brands Product Technology People Capital Disciplined Proprietary Proprietary Sharing investment Group pricing and iGaming Poker Exchange expertise, guided by betting risk content and platform platform talent capital platform capabi
Slide 35: Adjarabet case study: example of value creative M&A
International update Buy and build podiums Adjarabet case study: example of value creative M&A Strategic Financial fit Case study in action criteria 2018-2022 £305m • Primarily a cash deposit industry via local terminals Enhanced Purchase price1 competitive • High brand awareness of incumbent brands
Slide 36: Clear pathway to replicate and capitalise on growth opportunity
International update Buy and build podiums Clear pathway to replicate and capitalise on growth opportunity Significant market size With significant runway of growth for Flutter • Ex-US TAM of £263bn in 2022, just 30% online • Consolidate and Invest just 20% of total ROW regulated market • 9% CAGR ov
Slide 37: Flutter positioned well to deliver sustainable future growth
Conclusion Flutter positioned well to deliver sustainable future growth 1 2 3 4 5 Significant market Diversified product The “Flutter Edge” Optimal strategy to Clear vision on opportunity and geographic deliver success sustainability portfolio at scale Access to the 2030 US TAM of scale of a Track r
Slide 38: Appendices
APPENDICES 38
Slide 39: Average monthly players
Appendices Average monthly players Average Monthly Players1 ('000s) Reported 2023 Q1 Q2 H1 Group 12,349 12,222 12,285 US 3,449 2,789 3,119 UK & Ireland 4,024 4,108 4,066 Australia 993 1,139 1,066 International 3,884 4,186 4,035 2022 Q1 Q2 H1 Group 9,522 9,747 9,635 US 2,359 2,016 2,188 UK & Ireland
Slide 40: US
Appendices US £m H1 2023 H1 2022 YOY YOY CC • Sports revenue +70%, driven by sportsbook: Average monthly players (‘000s) 3,119 2,188 +43% – Four new US states versus H1 2022 Sportsbook stakes 15,547 10,911 +42% +35% Sportsbook net revenue margin 8.1% 6.0% +210bps +210bps – Revenue +51% in pre-2022 s
Slide 41: UK&I
Appendices UK&I ONLINE RETAIL £m H1 2023 H1 2022 YoY CC H1 2023 H1 2022 YoY CC Online Average monthly players (‘000s) 4,066 3,704 +10% • Sports revenue +11% driven by AMPs +10% reflecting: Sportsbook stakes 4,581 4,494 +2% 698 691 -1% – Strong retention of World Cup customers Sportsbook net revenue
Slide 42: Australia
Appendices Australia £m H1 2023 H1 2022 YOY YOY CC • Strong player momentum with AMPs+7% Average monthly players (‘000s) 1,066 993 +7% • Revenue -1% as player growth and Sportsbook stakes 4,953 5,209 -5% -4% favourable sports results offset by lower Sportsbook net revenue margin 12.1% 11.8% +30bps +
Slide 43: International
Appendices International REPORTED PRO FORMA £m H1 2023 H1 2022 YoY CC H1 2023 H1 2022 YoY CC Pro forma Average monthly players (‘000s) 4,035 2,750 +47% 4,035 3,515 +15% • Revenue +8%: Sportsbook stakes 1,979 710 +167% 1,979 1,722 +10% – Consolidate and Invest markets +19% Sportsbook net revenue marg
Slide 44: Separately disclosed items
Appendices Separately disclosed items • Transaction fees primarily due to £m H1 2023 H1 2022 proposed US listing of Flutter shares Transaction fees and associated costs (16) (10) • Restructuring and integration costs due to Restructuring and integration costs (42) (32) technology-driven efficiency p
Slide 45: Cash flow
Appendices Cash flow £m H1 2023 H1 2022 YOY • Adjusted free cash flow doubled due to: Adjusted EBITDA 823 476 +73% – Increased Adjusted EBITDA reflecting US Capex (237) (156) +52% profit inflection Working capital (144) (41) +249% – Higher capex driven by the acquisition of Corporation tax (138) (13
Slide 46: Debt profile, cost and maturity dates
Appendices Debt profile, cost and maturity dates Forecast H2 Principal at Hedged Post hedging Facility Interest rate 2023 interest Debt maturity Jun 2023 currency GBP principal rates1 TLA (USD) $200m GBP £175m SOFR +CSA +2.75% 7.08% July 2026 Fixed: $1,800m EUR, USD & GBP £1,406m SOFR +CSA +2.25% 5.
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