How March Madness Impacted FanDuel Parentʻs Q1 Earnings

[Pelican Press 0]

This is the hidden content, please

• Sign In
• or
• Sign Up

How March Madness Impacted FanDuel Parentʻs Q1 Earnings

Flutter Entertainment (NYSE:), the parent company of online sports betting site FanDuel, missed on both revenue and estimates in the first quarter – and it was due to one major reason, March Madness.

The sports betting company saw revenue rise 8% in the quarter to $3.67 billion, but that fell short of consensus revenue estimates of $3.96 billion.

Net income was $355 million, or $1.57 per share, up from a net loss of $289 million in the same quarter a year ago. On an adjusted basis, earnings came in at $1.59 per share, which was up 51%. However, it fell short of estimates of $2.05 per share.

Flutter stock was fluttering around even after the news, so investors mostly took the earnings miss in stride. Wall Street analysts at BTIG and Barclays lowered their price targets but maintained a buy rating. Barclays analyst Brandt Montour lowered his price target to $300 from $308, but kept an overweight, or buy, rating, according to Business Insider.

Montour said gaming markets have been resilient, but he lowered the target based on the potential impact of an economic slowdown.

Flutter is currently trading at $244 per share and has a median price target of $325 per share, which would suggest a 33% return over the next year.

“Poor” Results in March Madness Hurt Earnings

Flutter remains the leader in the U.S. online sports betting market with a 43% market share in gross gaming revenue (GGR), the same as last quarter. Its iGaming market share ticked up to 27%, from 26%. Further, it had a 49% market share in terms of net gaming revenue (NGR).

It also increased its average monthly players (AMP) by 8% year-over-year to $14.9 million. In the US, AMPs for the sportsbook grew 11% while it surged 28% in iGaming.

In Q1, sportsbook revenue jumped 15% year-over-year, driven by 8% handle growth, which was in line with expectations. Further, the net revenue margin increased by 50 basis points to 7.8%. The spike in net revenue margin was due to the addition of sports betting revenue from North Carolina, which launched in March of the prior year.

What caused Flutter to miss earnings and revenue projections was “adverse” March Madness results. With all four number one seeds making the final four, things went according to plan, which meant that bettors cleaned up. Also, Florida, the winner, had the second biggest handle, behind only Duke, so it was favorable for bettors, but not for FanDuel.

“We missed consensus estimates because we saw some poor sports results, particularly around March Madness,” Flutter CEO Peter Jackson said in a CNBC interview. “You’ve talked about the number of favorites that won, and if we adjusted results on that basis, we would have been a little bit ahead of consensus.”

Flutter Boosts Its

This is the hidden content, please

• Sign In
• or
• Sign Up

Despite the earnings miss, Flutter boosted its guidance for the rest of the fiscal year. While the initial guidance remains intact, Flutter raised it due to revenue projections from two recent sports betting acquisitions, Snai in Italy and NSX in Brazil.

The Snai acquisition, completed on April 30, and the NSX purchase, which closed May 8, are projected to add $1.07 billion in revenue and $120 million in adjusted EBITDA.

So, Flutter boosted its revenue guidance to $17.08 billion and its adjusted EBITDA guidance to $3.18 billion. Those numbers represent year-over-year growth of 22% and 35%, respectively. Before the acquisitions, Flutter was projecting 14% revenue and 30% adjusted EBITDA growth.

For investors, this

This is the hidden content, please

• Sign In
• or
• Sign Up

likely offset the missed earnings, which were almost entirely due to a bad sports outcome. Otherwise, Flutter is poised for solid growth. Its trailing P/E ratio looks astronomical, but that is because it just became profitable in the first quarter, so the trailing results reflect net losses. The forward P/E is a more reasonable 27.

Based on lofty price targets and a robust

This is the hidden content, please

• Sign In
• or
• Sign Up

, analysts are bullish on Flutter stock.

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up

#March #Madness #Impacted #FanDuel #Parentʻs #Earnings

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up