Flutter to Repurchase up to $5B in Stock, Lifts Long-Term FanDuel Outlook

Posted on: September 25, 2024, 06:39h. 

Last updated on: September 26, 2024, 10:23h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Flutter Entertainment (NYSE: FLUT) introduced medium-term 2027 guidance Wednesday, forecasting better-than-expected growth in North America where its FanDuel unit dominates while telling investors it could repurchase up to $5 billion worth of its shares over the next several years.

The Dublin-based gaming company sees the total addressable market for regulated global gross gaming revenue (GGR) swelling to $368 billion by 2030, representing a compound annual growth rate (CAGR) of 8%. At the midpoint of its 2027 US and rest of the world (ROW) guidance, Flutter forecast 2027 revenue of $21 billion, indicating a three-year CAGR of 14%.

That would result in 2027 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of more than $5 billion with margin expansion of 700 basis points. The Betfair parent said 2027 free cash flow generation could reach $2.5 billion, good for a 36% CAGR.

Flutter Repurchase Reflects Confidence

Flutter’s plans to return capital to shareholders in the form of a repurchase program is the operator’s first such announcement since it listed on the New York Stock Exchange (NYSE) earlier this year, and reflects long-term confidence in the company, said CEO Peter Jackson in a statement.

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,” according to the press release.

North America, where FanDuel is one of the largest iGaming and online sportsbook operators, is one of the primary sources of that confidence. Flutter now believes its total addressable market in North America is $70 billion — $63 billion for the US and $7 billion for Canada. That US forecast is 1.5x higher than prior estimates.

That 2027 guidance issued by Flutter is based on existing states in which FanDuel is operational and doesn’t include the possibility of more states approving iGaming, sports betting, or both.

“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 2027,” added the company.

Global Growth Supports Flutter

While Flutter is often viewed as the parent of FanDuel, the gaming company’s exposure to markets outside the US sets it apart from some rivals in this country and adds to its long-term growth story. Outside of the US, Flutter forecast a total addressable market of $298 billion for global regulated wagering by 2030.

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,” added the company.

Flutter said that outlook is bolstered by the recently announced acquisitions of a 56% interest in Brazil’s NSX Group and Snaitech in Italy. Both of those transactions are scheduled to close by the second quarter of 2025.