Flutter Entertainment Plc · NYSE:FLUT
Flutter Entertainment — Betfair Group — H1 FY16 Earnings Presentation
20 slides from Flutter Entertainment's earnings presentation, Nov 25, 2015
Slide 1: Interim Results FY16
INTERIM RESULTS FY16 25 November 2015
Slide 2: Overview
Overview An excellent H1 with strong performances in all key markets Revenue up 15% against a comparative period containing the World Cup Growth led by Sportsbook (stakes up 93%) and Betfair US (up 38%) EBITDA up 9%, notwithstanding POC tax 2
Slide 3: Financial Results
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Slide 4: Group P&L
Group P&L H1 FY16 H1 FY15 YoY % Revenue £274.4m £237.6m 15% Cost of Sales (£60.4m) (£37.2m) -62% Gross Profit £214.0m £200.4m 7% Operating Costs (£133.5m) (£126.5m) -6% EBITDA £80.5m £73.9m 9% Margin 29.3% 31.1% -1.8pp D&A (£13.3m) (£14.0m) 5% Operating Profit £67.2m £59.9m 12% Net Interest / Share
Slide 5: Revenue: growth driven by regulated countries
Revenue: growth driven by regulated countries £274.4m +15% Betfair US 39.3 £238.9m £237.6m Gaming 28.4 +38% +24% 49.7 £192.0m +38% Sports 42.0 +18% +32% +11% 184.8 +20% 166.6 £45.6m -22% £35.5m -34% -19% H1 FY15 H1 FY16 H1 FY15 H1 FY16 H1 FY15 H1 FY16 Sustainable markets ¹ Other markets Total 1 In F
Slide 6: Operating expenses
Operating expenses H1 FY16 H1 FY15 YoY % Sales & marketing £62.7m £62.0m 1% Technology £35.0m £29.3m 19% Operations £18.9m £18.7m 1% G&A £16.9m £16.5m 2% Group £133.5m £126.5m 6% 6
Slide 7: Capex
Capex H1 FY16 H1 FY15 YoY % External capex £9.3m £4.3m 116% Internal devex £2.9m £3.1m -6% Total capex £12.2m £7.4m 65% • Capex increase driven by data centre and infrastructure upgrades • FY16 total capex expected to be in line with previous guidance (c.£25m). 7
Slide 8: Cash flow
Cash flow H1 FY16 H1 FY15 YoY % Free cash flow £57.4m £67.2m -15% Dividends paid (£23.1m) (£14.6m) 58% Proceeds from disposal of stake in Betfair Australia - £12.0m n/a Other ¹ £0.2m (£2.2m) n/a Net (decrease)/increase in cash and cash equivalents ² £34.5m £62.4m -45% Cash and cash equivalents as at
Slide 9: Merger update
Merger update Competition • Filings submitted to relevant regulators in UK, Ireland & US clearance Shareholder • Betfair Scheme Circular, Paddy Power Class 1 Circular & Paddy documents Power Betfair Prospectus to be published on 27 November Timing • Continue to expect completion in Q1 2016 9
Slide 10: Business Review
BUSINESS REVIEW
Slide 11: Delivering our plan
Delivering our plan Plan Objective H1 FY16 progress Focus on sustainable • Improved quality of • Sustainable revenues up 24% revenues earnings • Sustainable mix up to 88% • Larger addressable mkt • Sustainable actives up 31% in Q2 Invest in product & • Product differentiation • Sales & marketing up
Slide 12: Sustainable markets revenue
Sustainable markets revenue Sustainable markets YoY revenue growth Q2 sustainable revenue mix 34% 30% 27% 24% 25% 23% 18% 11% 12% 88% -7% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Sustainable markets FY14 FY15 FY16 Other markets Sustained revenue growth from key markets leaves Betfair with low regulatory risk 1
Slide 13: Source of revenue growth
Source of revenue growth Customer category 1 Opportunity Offline only bettors Online shift led by mobile Online bettors unaware of Betfair Online bettors Customer acquisition aware of Betfair, but non-users Betfair customers Customer retention & share of wallet Success requires focus on acquisition,
Slide 14: Customer acquisition
Customer acquisition Strong, efficient growth in customer numbers Sales and marketing spend (£m) Sustainable activations Sustainable actives (‘000) 62 63 1,043 52 Excl. WC +52% 861 CAGR Excl. WC 509 +10% +52% +43% CAGR CAGR CAGR H1 FY14 H1 FY15 H1 FY16 H1 FY14 H1 FY15 H1 FY16 H1 FY14 H1 FY15 H1 FY16
Slide 15: Customer retention & share of wallet
Customer retention & share of wallet Improving product depth Cross sell to Gaming Product development headcount Proportion of Sports customers playing Gaming products 1 636 26% 521 21% Oct'14 Oct'15 H1 FY15 H1 FY16 Sportsbook no. of in-play markets Sustainable Gaming Revenue (£m) 44.1 33.5 +32% May
Slide 16: Acquisition & retention is working
Acquisition & retention is working Revenue by customer cohort 1 Customers acquired post April 2013 Customers acquired up to April 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY14 FY14 FY14 FY14 FY15 FY15 FY15 FY15 FY16 FY16 Stable base & successful customer acquisition has delivered strong revenue growth 1 A
Slide 17: Betfair Italia
Betfair Italia Product depth Differentiation • Significant enhancement through Complementary Palinsesto: Exchange Football customers using Cash Out in October: ‒ 100+ more football leagues ‒ More basketball markets (including in-play) ‒ New sports added (e.g. Formula 1, cycling & boxing) 56% 36% ‒ E
Slide 18: Betfair US
Betfair US • Handle up 14%1 and revenue up 25%1 • Growth driven by mobile channel (+75%) and new premium content (from HRTV acquisition) TVG • New mobile website to complement native iOS app • Broadcast 22,000 races in H1 (up 57% YoY) following the acquisition of HRTV • HRTV rebranded to TVG2 in Oct
Slide 19: Summary
Summary Growing • Nine quarters of double-digit growth in sustainable markets sustainably • Sustainable mix up to 88% Operating • EBITDA up 9% despite POC tax leverage Dividend • Interim dividend up 67% to 15.0 pence per share Investing for • Sales and marketing spend up 13% (excluding 2014 World Cu
Slide 20: Thali ey
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