Slide 1: Flutter Entertainment Plc Preliminary Results 2019
Flutter Entertainment Plc Preliminary Results 2019 27 February 2020
Slide 2: Introduction
Introduction Peter Jackson, Group CEO 2
Slide 3: Today's agenda
Today’s agenda • Introduction • Financial review • Operating review − US market and FanDuel − PPB − Sportsbet • Combination with The Stars Group • Q+A 3
Slide 4: Introduction
Introduction • Transformational year for Group as we progress 4 pillar strategy − Proposed combination with The Stars Group − Acquisition of Adjarabet, market leader in Georgia − Leadership position in US sports betting and gaming market • Underlying business performing well − Good momentum in both
Slide 5: Building a sustainable business through RG initiatives
Building a sustainable business through RG initiatives • Pivotal time for sector on responsible gambling and regulation • Customer affordability is key to future regulation • Encouraging a “race to the top” on responsible gambling • As an operator − Improving technology globally (i.e. CAAP) to ident
Slide 6: Financial Review
Financial Review Jonathan Hill, CFO 6
Slide 7: Key financial highlights
Key financial highlights 2019 2018 YOY% Revenue Revenue 2,140 1,873 +14% • Strong revenue increase driven by good organic growth, US sports betting expansion and acquisition of Underlying EBITDA (Pre-IFRS 16) 385 451 -15% Adjarabet Underlying Profit before tax 266 357 -25% Profitability Reported Pro
Slide 8: EBITDA bridge – proforma group (ex US)
EBITDA bridge – proforma group (ex US) Underlying EBITDA +£52m / +14% • Revenue growth reflects (3) 18 (107) good momentum in 52 14 (14) Sportsbet and Adjarabet • Sales and marketing lower given absence of World Cup • Other operating cost 465 374 426 growth of 3% (proforma) • Total Group (ex US) EBI
Slide 9: Group P&L summary
Group P&L summary 2019 £m 2019 Pre-IFRS 16 2018 YOY % Revenue 2,140 2,140 1,873 +14% • IFRS16 impact of £1m on PBT Gross profit 1,490 1,490 1,403 +6% • D&A increase reflects product Underlying EBITDA 425 385 451 -15% investment and US expansion Depreciation & amortisation (145) (108) (90) +19% • Hig
Slide 10: PPB Online
PPB Online £m, Pre-IFRS 16 2019 2018 YOY Sportsbook stakes 5,184 5,453 -5% • Stakes 1% lower (ex World Cup) reflecting Sportsbook net revenue margin 8.1% 7.7% +40bps reduced low value staking following roll-out of country specific pricing Sports revenue 666 678 -2% Gaming revenue 340 270 +26% • Expe
Slide 11: Australia
Australia £m, Pre-IFRS 16 2019 2018 YOY YOY CC Sportsbook stakes 4,298 4,308 Flat +3% • Revenue growth from Sportsbook net revenue margin 10.4% 9.4% +100bps +100bps − Active customer growth (+9% ex Revenue 446 403 +11% +14% World Cup) Cost of sales (182) (121) +50% +54% − Increase in expected margin
Slide 12: US
US £m, Pre-IFRS 16, Proforma1 2019 2018 YOY US$ YOY Sportsbook stakes 2,326 423 +450% +446% • Sports growth driven by Sportsbook net revenue margin 4.4% 2.6% +180bps +180bps – Sportsbook revenue of £102m Sports revenue 325 216 +51% +45% – Margin improvement aided by Gaming revenue 51 20 +160% +149%
Slide 13: Retail
Retail £m, Pre-IFRS 16 2019 2018 YOY Sportsbook stakes 1,793 1,779 +1% • Sports revenue growth Sportsbook net revenue margin 12.8% 12.5% +30bps − UK +7%, driven by an increase in stakes Sports revenue 230 222 +4% − Ireland +2% Gaming revenue 82 110 -25% • Gaming revenue -34% since introduction of To
Slide 14: Cash flow
Cash flow £m, Pre-IFRS 16 2019 2018 Underlying EBITDA 385 451 • Capex increase reflects online product Capex (136) (107) development and additional US market access Working capital 86 (38) investment Corporation tax (41) (60) Underlying free cash flow 295 247 • Working capital benefitted from Cash f
Slide 15: 2020 current trading and financial guidance
2020 current trading and financial guidance • Trading year to date has been strong, with good customer and revenue momentum across Current trading all divisions • Annualised revenue impact of UK credit card restrictions expected to be circa £20-25m Regulatory • Switch off of B2B partners will reduce
Slide 16: US and FanDuel update
US and FanDuel update Matt King, FanDuel CEO 16
Slide 17: Significant legislative progress and momentum
Significant legislative progress and momentum 1 Online legislation FanDuel sportsbook FanDuel casino • Online sports betting now legislated in 14 states (24% % of live / live / of US population), with 14% legislated in 2019 population expected live expected live New Jersey 2.7% • Online casino l
Slide 18: Total addressable online market could exceed $10 billion
Total addressable online market could exceed $10 billion FanDuel’s online addressable 1 market estimate Gross gaming revenue at maturity > $10bn • Forecast based on states likely to legislate over the next 5 years, Eilers & Krejcik data used to size each state • Online sportsbook market now expected
Slide 19: First skin access across 15 states
First skin access across 15 states % of First skin Legislated in • First skin access is important population access medium term − Where legislation/regulation is yet to be enacted Live states (NJ, PA, IN, WV) 9.2% − Some states may take single skin route Legislated states (CO, IA, IL, MI) 9.7%
Slide 20: Already a business of significant scale
Already a business of significant scale National presence through Nearly $0.5bn dollars in Breadth and expertise of team DFS & Racing revenue today • Paid actives in 47 states • FanDuel team now over 1,000 • Contribution growth from DFS/TVG helping to fund sports • Facilitates national advertising •
Slide 21: FanDuel brand drives efficient acquisition at scale
FanDuel brand drives efficient acquisition at scale Unaided Brand Awareness > $600m Google search trends 54% 58% 57% FanDuel brand (NJ, PA, IN combined) 52% 51% 46% 49% spend to date 45% 53% 51% 51% 51% 48% 49% 46% 47% 8.5 million customer database 10% 9% 8% 7% 7% 7% 9% 8% 42% of sports betting cust
Slide 22: Market-leading products
Market-leading products Leading product features More betting options Embedded casino drives cross-sell NFL Markets Pre-play In-play 2.0x 2.7x average average • First to market with same game parlays • Most comprehensive player prop • 54% of casino revenue from sports • Only operator offering them o
Slide 23: Largest online sportsbook and casino business in US
Largest online sportsbook and casino business in US Last 12 months vs. our expectations #1 online sportsbook #1 online casino Online sportsbook market share New Jersey casino market share (2019 - NJ, PA, IN, WV) 22% 1. Acquired more customers 47% 47% 44% 18% 19% 43% 16% 2. Better retention rates 34%
Slide 24: Operating Review
Operating Review Peter Jackson, Group CEO 24
Slide 25: Paddy Power: Continued recreational growth
Paddy Power: Continued recreational growth Strong brand, product and promotions Driving customer growth 2019 total active customers Incl WC Ex WC “Great games on offer” #1 • Paddy Power best-in-class for brand – Portfolio of games 22% 4th – Offers/promotions 16% ranked brand – Easiest to use product
Slide 26: Betfair: Good underlying customer activity
Betfair: Good underlying customer activity Putting Betfair on a sustainable footing International improvements driving customer growth • Enhancements to RG and compliance measures affecting top-line CSP impact on International Sportsbook International Exchange daily active customers growth 8.0% ex W
Slide 27: Sportsbet: Brand, generosity and product driving growth
Sportsbet: Brand, generosity and product driving growth Innovative brand Main mobile account used Active customers Source: brand tracker Oct – Dec 2019 Source: brand tracker Oct – Dec 2019 +9% ex 52% World Cup 42% 1,250 1,188 1,103 956 29% 23% 22% 767 20% 16% 578 14% 11% 9% 9% 3% Sportsbet TAB Ladbr
Slide 28: Sportsbet: Underlying operating leverage continues
Sportsbet: Underlying operating leverage continues P&L breakdown as % of net revenue Response to regulation Net Revenue CAGR 15%1 • Changes to taxes and product fees have increased cost EBITDA % Opex % Cost of Sales % of sales as a % of net revenue by 16 percentage points since 2015 41% 28% • EBITDA
Slide 29: The Stars Group combination - brief update
The Stars Group combination - brief update Anti-trust Integration timeline Synergies • Working with relevant • Expected completion in Q2 or Q3 • Good progress on future financing competition authorities and regulatory bodies globally • Shareholder vote in April • Pre-tax cost synergies of £140m, wit
Slide 30: Growing a more diversified and sustainable business
Growing a more diversified and sustainable business 1 2 3 4 Maximise profitable Attain podium Pursue US Grow our business in growth in core positions in additional opportunity rest of world markets regulated markets rigorously • Leading on RG in • Strong Betfair • Good performance • US performance P
Slide 31: Q&A
31 &A @)
Slide 32: US: The online sportsbook addressable market
US: The online sportsbook addressable market 1 Online sportsbook – market size estimates Currently Medium Online sportsbook gross gaming revenue > $7bn legislated term Online sportsbook Market size $2.9bn > $7bn % of pop 21% c. 50% • Market size for states already legislated significant $2.9bn • Our
Slide 33: US: Online gaming addressable market
US: Online gaming addressable market 1 Currently Medium Online gaming – market size estimates legislated term Online casino gross gaming revenue > $2bn Online gaming Market size $1.5bn > $2bn % of pop 10% c. 15% • Online gaming currently addressable in 4 states $1.5bn $1bn − In these states, market
Slide 34: US: Total addressable online market could exceed $10bn
US: Total addressable online market could exceed $10bn 1 FanDuel’s online addressable market estimate Gross gaming revenue at maturity Currently Medium > $10bn legislated term Online Sportsbook Market size $2.9bn > $7bn % of pop 21% c. 50% $5bn Online Casino Market size $1.5bn > $2bn % of pop 10% c.
Slide 35: IFRS 16 impact on reporting
IFRS 16 impact on reporting £m Online Australia Retail US Group Pre Reported Pre Reported Pre Reported Pre Reported Pre Reported IFRS 16 IFRS 16 IFRS 16 IFRS 16 IFRS 16 IFRS 16 IFRS 16 IFRS 16 IFRS 16 IFRS 16 2019 Impact 2019 2019 Impact 2019 2019 Impact 2019 2019 Impact 2019 2019 Impact 2019 Operat
Slide 36: www.flutter.com
=lutter www-flutter.com