Flutter Entertainment Plc · NYSE:FLUT
Flutter Entertainment — Betfair Group — FY2014 Earnings Presentation
26 slides from Flutter Entertainment's earnings presentation, Jun 11, 2014
Slide 1: Preliminary Results FY14
PRELIMINARY RESULTS FY14 11 June 2014
Slide 2: Overview
Overview Delivering our strategic plan Record year for revenue and profitability Sustainable revenue up 9% EBITDA up 24% notwithstanding reinvestment in marketing & products Full year dividend up 54% 2
Slide 3: Financial Results
wat IM ea Ce gO AN Sate
Slide 4: Group P&L
Group P&L FY14 FY13 ¹ YoY % Revenue £393.6m £387.0m 2% COS (£50.9m) (£49.8m) 2% Gross Profit £342.7m £337.2m 2% Operating Costs (£251.6m) (£263.9m) -5% Underlying EBITDA £91.1m £73.3m 24% Margin 23.1% 18.9% +4.2pp D&A (£29.5m) (£37.8m) -22% EBIT £61.6m £35.5m 74% Net Interest £0.7m £1.1m -36% Share
Slide 5: Revenue
Revenue +2% £393.6m £387.0m +20% £306.1m +9% £280.0m -13% +20% US +2% Gaming Sports 1 +3% £107.0m -18% +9% £87.5m -39% -11% FY13 FY14 FY13 FY14 FY13 FY14 Sustainable 2 Other Markets Total • All products contributed to 9% revenue growth in Sustainable Markets • Other Markets comprises over 100 countr
Slide 6: Revenue stability
Revenue stability FY14 weekly revenue 12 £m w/e 23rd March 10 w/e 12th January 8 6 4 2 0 Ranked high to low Our Exchange model continues to maintain low levels of volatility despite adverse sporting results 6
Slide 7: Operating expenses
Operating expenses FY14 FY13 YoY % Sales and marketing £124.2m £113.0m 10% Technology £60.1m £63.0m -5% Operations £35.1m £41.9m -16% G&A £32.2m £46.0m -30% Group £251.6m £263.9m -5% • Approximately £33m cost savings primarily driven by: • Headcount (average FTEs down 327) • Facilities & IT • £11m r
Slide 8: Capex
Capex FY14 FY13 YoY % External Capex £15.0m £17.9m -16% Internal Devex £7.4m £17.4m -57% Total Capex £22.4m £35.3m -37% • Capex includes investment in product innovation, technology infrastructure, TVG conversion to HD and NJ Casino • Expensing a greater proportion of development spend • FY15 Capex
Slide 9: Cash flow
Cash flow FY14 FY13 YoY % Underlying free cash flow £70.4m £50.2m +40% Cash flow from separately disclosed items (£12.4m) (£12.3m) +1% Free cash flow £58.0m £37.9m +53% Dividends paid (£15.6m) (£11.2m) +39% Disposal of Kabam - £18.8m -100% Other ¹ £1.3m £4.3m -70% Net increase in cash and cash equiv
Slide 10: Financial summary
Financial summary Sustainable • Sustainable revenue up 9% in FY14 revenue growth Reducing costs • £30m cost savings target exceeded Strong cash • Underlying free cash flow up 40% to £70m generation • Cash balance increased by £42m to £210m Dividend • Full year dividend up 54% to 20.0 pence per share
Slide 11: Business Review
BUSINESS REVIEW
Slide 12: Delivering our plan
Delivering our plan 1) Focus on sustainable revenues 2) Invest in products and brand Sustainable mix % Sustainable revenue growth Sustainable Actives Sales and Marketing £306m £280m 854 £124m £113m 28% 22% 674 78% 72% +27% +10% +6pp +9% FY13 FY14 FY13 FY14 FY13 FY14 FY13 FY14 3) Become a leaner orga
Slide 13: UK & Ireland focus is paying off
UK & Ireland focus is paying off UK&I activations UK&I actives UK&I revenue +54% +35% +8% +8% +21% +6% +60% -10% -19% FY11 FY12 FY13 FY14 FY11 FY12 FY13 FY14 FY11 FY12 FY13 FY14 Strong customer activity is leading to revenue growth 13
Slide 14: Sportsbook has momentum
Sportsbook has momentum Sportsbook volume • Good website / mobile products +174% • Comprehensive market coverage • Competitive pricing • Robust risk management Q4 Q1 Q2 Q3 Q4 FY13 FY14 FY14 FY14 FY14 Sportsbook investment driving strong volume growth CONFIDENTIAL and not for reproduction without pri
Slide 15: Sports product innovation: Cash Out
Sports product innovation: Cash Out Cash Out: First and best • Singles and multiples • Mobile and desktop • 20 sports including football, tennis, golf and horseracing 1 • Used by 27% of sports customers • Over 30 million Cash Outs to date • Churn amongst Cash Out customers is significantly lower Cas
Slide 16: Sports product innovation: Price Rush
Sports product innovation: Price Rush Bet capture Bet confirmation Price Rush: Exchange value on the Sportsbook • Launched in January 2014; in-play added in May • Football, horseracing, tennis, golf and basketball • 22% of customers received a Price Rush in May • Over 500,000 bets ‘Price Rushed’ sin
Slide 17: Marketing investment is working
Marketing investment is working UK TV share of voice UK advertising awareness UK customer activations +1pp +54% +4pp +2pp +7pp 15% 7% 8% 2012 2013 2014F FY13 FY14 Apr-13 17 Apr-14
Slide 18: Developing leading Social Media capabilities
Developing leading Social Media capabilities 327k 216k Followers / 130k Fans 121k Engagement Content Apr ‘13 Apr ‘14 Apr ‘13 Apr ‘14 • Betting operator most mentioned on Twitter during the Aintree Festival (2nd during Cheltenham) • Connected to >50% (8.2m) of 18+ male Facebook audience via at least
Slide 19: Gaming cross-sell is improving
Gaming cross-sell is improving Gaming cross-sell from Sports CRM Prior year Seamless +46% Current year Wallet +20% -6% +9% Q1 Q2 Q3 Q4 Mobile / on-site banners Integrated Sports /Gaming app 19
Slide 20: Mobile continues to drive revenue growth
Mobile continues to drive revenue growth Mobile % of Sportsbook revenue Mobile % of Gaming revenue 64% 30% 52% 52% 21% 18% 45% 14% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Mobile actives (k) Mobile revenue (£m) 612 64% of 79.9 customers +50% used mobile +70% 408 in Q4 47.1 FY13 FY14 FY13 FY14 20
Slide 21: Italy Exchange launched
Italy Exchange launched betfair.it betfair.com Football, tennis and basketball but no Sports offered Over 25 sports horseracing Market coverage Limited Comprehensive Liquidity Nascent Excellent Pricing Excellent Excellent Early days for Italy Exchange but pricing advantage is comparable to Betfair.c
Slide 22: TVG improvement funding NJ investment
TVG improvement funding NJ investment Betfair US FY14 FY13 YoY % Revenue £45.7m £38.0m 20% EBITDA £2.0m £2.9m -31% Margin 4% 8% -45% • TVG Handle +33% & Revenue +19% (both constant currency) • New Jersey ADW handle up 57% • TVG margin expansion driven by operating leverage and cost savings, offset b
Slide 23: Summary
Summary Growing • 78% of revenue from regulated markets sustainably • 35% increase in UK & Ireland customer base in FY14 • Sales & marketing >£100m Investing for • Technology investment¹ >£80m growth • New Jersey & Italy • Exchange Product • Cash Back Extra differentiation • Cash Out+ • Price Rush •
Slide 24: Appendix
APPENDIX CONFIDENTIAL and not for reproduction without prior written consent. © of The Sporting Exchange Limited.
Slide 25: Group P&L (FY13 Reported)
Group P&L (FY13 Reported) FY14 FY13 ¹ YoY % Revenue £393.6m £387.0m 2% COS (£50.9m) (£49.8m) 2% Gross Profit £342.7m £337.2m 2% Operating Costs (£251.6m) (£263.9m) -5% Underlying EBITDA £91.1m £73.3m 24% SDI Restructuring - (£22.1m) n/a EBITDA £91.1m £51.2m 78% SDI Impairments - (£82.4m) -100% D&A (
Slide 26: FY13 Reported to Underlying Reconciliation
FY13 Reported to Underlying Reconciliation Operating Profit/(Loss) Revenue EBITDA EPS Profit/(Loss) for the year FY13 Reported £387.0m £51.2m (£69.0m) (£45.2m) (44.4p) Separately Disclosed Items - Operating - £22.1m £22.1m £22.1m 21.7p Separately Disclosed Items - Impairment - - £82.4m £82.4m 80.9p