Shares in Flutter Entertainment soared in London on Thursday in anticipation of its upcoming U.S. stock-market listing, despite a warning about lower-than-planned revenue due to a series of favorable sporting results for customers.
Flutter Entertainment shares (FLTR, +12.23%) jumped by 11% ahead of its scheduled listing on the New York Stock Exchange on Jan. 29. While the company plans to retain its primary London listing, it will delist from Euronext Dublin.
According to Russ Mould, investment director at AJ Bell, investors remained optimistic about the company’s imminent U.S. stock market listing and were encouraged by ongoing business momentum, which helped offset the impact of customer-friendly sporting results from Flutter Entertainment’s operations in the U.S.
By heavily capitalizing on the emerging opportunity in the U.S., Flutter Entertainment aims to attract a higher valuation through its U.S. listing. The legalization of sports betting in various states across the U.S. has opened up a vast new market that many U.K. bookmakers, including Flutter Entertainment, are striving to tap into with varying levels of success.
FanDuel Remains the Top Sportsbook in the U.S.
During the fourth quarter, Flutter declared that FanDuel continues to hold its position as the leading sportsbook in the United States. Despite facing competition from DraftKings, Penn Entertainment, and others, Flutter anticipates a decrease in fourth-quarter U.S. revenue by $225 million, bringing the total to $1.42 billion.
Steady Growth in U.S. Sportsbook Gross Revenue Margins
Flutter expressed satisfaction with the increase in its U.S. sportsbook gross revenue margins, which now stand at 13.5%. This represents a growth of 2.2 percentage points compared to the previous year. CFO Paul Edgecliffe-Johnson emphasized that this growth is a result of the company’s strong market share in the parlay product and its exceptional risk management and trading capabilities. These factors contribute to higher margins, making it a significant source of revenue for Flutter.
Q4 and Q1: The Prime Quarters for Sports
The fourth quarter and the first quarter are crucial for sports betting, particularly in the sports where Flutter dominates. As such, they deliver the highest margins for the company. It is important to note that replicating this level of performance every quarter is not feasible, especially given the current circumstances. Flutter remains cautiously optimistic about the upcoming first quarter and will closely monitor the developments in the sports industry.
Ex-U.S. Trading Meets Expectations
Flutter reassured investors that its trading outside of the United States aligns with its projected performance and expectations. The company continues to manage its global operations efficiently.
Flutter’s Reporting Transition
Flutter, a prominent corporation, has announced its intent to provide forward guidance upon the approval of its registration statement by the U.S. Securities and Exchange Commission. This milestone will facilitate the transition of reporting results in conformity with U.S. Generally Accepted Accounting Principles (GAAP) instead of International Financial Reporting Standards (IFRS).
By aligning with GAAP, Flutter aims to enhance the accuracy and consistency of its financial reporting, thereby ensuring transparent and comprehensive disclosure. The company remains committed to delivering pertinent updates and maintaining its commitment to regulatory compliance throughout this transition. Striving for continued excellence, Flutter reinforces its dedication to effectively communicate vital information to investors and stakeholders.
Stay tuned for forthcoming updates as we embark on this significant transition.