Flutter Cuts 2024 Revenue Outlook Amid ‘Customer Friendly’ Outcomes

Posted on: January 7, 2025, 05:22h. 

Last updated on: January 7, 2025, 05:22h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Shares of Flutter Entertainment (NYSE: FLUT) traded lower by nearly 2% in Tuesday’s after-hours session after the FanDuel parent lowered its 2024 earnings and revenue guidance, citing unusually weak results on NFL wagers.

The company said it now expects 2024 revenue of $5.78 billion, down from a prior forecast of $6.05 billion to $6.25 billion. Earnings before interest, taxes, depreciation, and amortization (EBITDA) is expected to be $205 million lower than the previously issued midpoint of $505 million. For the fourth quarter, the operator expects EBITDA of $161 million on sales of $1.59 billion, headwinds in the October through December period.

The 2024/2025 NFL season to date has been the most customer friendly since the launch of online sports betting with the highest rate of favorites winning in nearly 20 years,” according to Flutter.

The NFL is the most wagered on league in the US and most recreational bettors have a tendency to bet favorites, not underdogs. As of Dec. 31, 2024, NFL favorites won 71.8% of games this season, good for the highest percentage in nearly 20 years, according to ESPN data. Through week 17, NFL “chalk” covered the spread at an almost 54% clip – the highest level since 2017 and the seventh-highest in the Super Bowl era, added ESPN.

Flutter Warning Has Implications

Flutter updating investors on what could be a tough fourth quarter could reverberate across the landscape of gaming equities because it’s unlikely the FanDuel owner is the only operator being pinched by NFL favorite winning at customer friendly rates.

In after-hours trading, DraftKings (NASDAQ: DKNG) — FanDuel’s nearest rival — was off almost 1%, but other sports wagering-linked stocks traded higher, including ESPN Bet parent Penn Entertainment (NASDAQ: PENN) and Rush Street Interactive (NYSE: RSI). Flutter is the first sportsbook operator to update investors on fourth-quarter goings on. BetMGM is scheduled to deliver 2024 results on Feb. 4.

While the fourth-quarter update could weigh on Flutter over the near-term, the company is actively repurchasing its stock, indicating that there could be some support for the shares despite the reduced guidance. The operator is aiming to buy back at least $350 million worth of its shares by the end of the current quarter.

Flutter Long-Term Outlook Still Bright

Flutter noted that the results seen over the course of the 2024 NFL season are “transitory” and do not dent the long-term outlook provided by the company at its investor day last September.

At that time, the Betfair parent said 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%.

Due to its large footprints in Australia and Europe, Flutter has avenues for mitigating occasional US-induced headwinds, such as an unusual percentage of NFL favorites covering.

“In the Group Ex-US, continued good momentum in UK/Ireland in particular with favorable sports results in the English Premier League, means we now estimate 2024 revenue and adjusted EBITDA will be approximately 1% and 2% higher than the mid-points of our previous guidance provided at Q3,” added the operator.