Flutter Entertainment Plc · NYSE:FLUT
Flutter Entertainment — FY2020 Earnings Presentation
38 slides from Flutter Entertainment's earnings presentation, Mar 2, 2021
Slide 1: Flutter Entertainment Plc Preliminary Results 2020
Flutter Entertainment Plc Preliminary Results 2020 2 March 2021
Slide 2: Introduction
Introduction Peter Jackson, Group CEO 2
Slide 3: Agenda
Agenda • 2020 Highlights • Financial review • Business update • Conclusion 3
Slide 4: Highlights
Highlights • Transformational year for Group: – TSG merger providing unparalleled scale and diversification – Accelerated FanDuel buy-out at compelling valuation – Balance sheet well capitalised • Protecting customers and colleagues during Covid • Excellent momentum and recreational player growth •
Slide 5: Financial Review
Financial Review Jonathan Hill, Group CFO 5
Slide 6: Key financial highlights
Key financial highlights FY FY YOY Pro forma1 2020 2019 CC • Excellent financial performance, Sports revenue £3,000m £2,400m +25% benefitting from scale and Revenue Gaming revenue £2,264m £1,743m +32% diversification Total revenue £5,264m £4,144m +28% • Revenue growth supporting reinvestment across
Slide 7: Statutory Group P&L
Statutory Group P&L £m Reported FY 2020 FY 2019 YOY • TSG inclusion from May 5 leading to high year on year variances Revenue 4,398 2,140 +106% Gross profit 2,859 1,490 +92% • TSG debt assumed from May 5 increasing Adjusted EBITDA interest expense 889 425 +109% Depreciation & amortisation (213) (145
Slide 8: Growth in average monthly players across all divisions
Growth in average monthly players across all divisions • Reporting average monthly players Average monthly players (millions) (AMP) quarterly (see Appendix for 2.0 +12% data) +34% +26% +55% • Group online AMP of 5.6m and 1.5 7.1m in H1 and H2 respectively, growth of 6% and 32% year on +53% year 1.0
Slide 9: Divisional revenue momentum growing through 2020
Divisional revenue momentum growing through 2020 Pro forma revenue growth (YoY% CC) +101% • PPB online: 100% – Exchange materially impacted by event cancellations in Q2 +66% – Improving performance through H2 50% +36% +38% +37% • Retail shut for 38% of year +9% • SBG: Material sports results benefit
Slide 10: Adjusted EBITDA bridge (ex-US)
Adjusted EBITDA bridge (ex-US) £m 70 1 25 • Pro forma growth of 23% 147 754 ( 46 ) ( 31 ) 135 • SBG and Australia driving ( 40 ) ( 75 ) profit growth • PPB online weak H1 followed by EBITDA uplift in H2, even 1,401 after significant investment 1,170 1,139 FY 2020 growth +23% • PPB retail impact clea
Slide 11: Diversification and scale benefits clear
Diversification and scale benefits clear Adjusted EBITDA (£m) Adjusted EBITDA margin (%) FY FY YoY FY FY YoY Pro forma 2020 2019 CC 2020 2019 PPB 271 390 (30%) 21% 29% (9%) • Significant operating leverage in SBG and Australia Online 269 314 (13%) 25% 31% (6%) Retail 2 76 (98%) 1% 24% (24%) • Lower
Slide 12: Synergy guidance upgraded by annualised £30m
Synergy guidance upgraded by annualised £30m FY23 - Divisional split 15% Cost synergy by financial year (£m) UK&I FY 2020 25 40% International FY 2021 90 Australia FY 2022 140 30% Corporate FY 2023 170 15% • Synergy guidance increased to £170m from £140m at merger announcement, due to single brand s
Slide 13: Positive cash flows in 2020
Positive cash flows in 2020 Pro forma £m FY 2020 Adjusted EBITDA 1,231 • Excellent conversion of EBITDA to adjusted free Capex (252) cash flow Working capital 310 Corporation tax (93) • Pro forma capex increase £6m Adjusted free cash flow 1,197 Cash flow from separately disclosed items (SDI) (120) •
Slide 14: Robust balance sheet with potential finance cost savings
Robust balance sheet with potential finance cost savings Underlying As at 31 December £m currency Term Loan A (GBP) 950 940 • Leverage of 2.3x at 31 December 2020, materially reduced Term Loan B (USD) 1,456 1,043 from 3.2x at merger completion Term Loan B (EUR) 507 449 Senior Notes (USD) 1,000 707 •
Slide 15: 2021: Current trading/technical guidance
2021: Current trading/technical guidance • Strong trading YTD1 with year on year revenue growth of 36% Current trading • Driven by good customer growth globally and favourable sports results versus expectations, particularly in UK & Ireland • Retail estate expected to remain closed until at least mi
Slide 16: Business update
Business update Peter Jackson, Group CEO 16
Slide 17: Enhanced scale creating virtuous circle
Enhanced scale creating virtuous circle Increased scale and flexibility to invest • Flutter is the global leader in the online gaming sector today • Largest player achieves superior Market economics in digital markets Greater Enhanced operating share customer • Our experience in our core markets lev
Slide 18: Accelerated delivery of Group strategy in 2020
Accelerated delivery of Group strategy in 2020 1 2 3 4 Maximise profitable Grow our business in rest Attain podium positions Grow US leadership growth in core markets of world in international markets position • Vastly increased scale in • TSG merger provided additional podiums • Ownership of US mar
Slide 19: Safer gambling continues to be a top priority
Safer gambling continues to be a top priority Continuous global improvement… …ensuring recreational growth Effective regulation key to sustainability • Expanded safer gambling (‘SG’) teams and increased investment in SG technology +32% +34% • Gambling Act review commenced and Group wide we welcome a
Slide 20: Core: Structural shifts creating opportunity
Core: Structural shifts creating opportunity Traditional spend patterns disrupted… …and recreational appeal of our brands… …driving online customer growth 2020 revenue decline in travel and leisure companies1 Average monthly players (YoY %) (YoY %) 60% 53% 34% 30% -29% 12% -38% 0% -66% -67% -72% -30
Slide 21: Core: Scale benefits to drive future efficiencies
Core: Scale benefits to drive future efficiencies ‘Complement and compete’ in UK&I… …and seamless Australian integration... …enabling market share gains Number of sports betting brands used monthly1 Monthly number of players Online share by market2 UK Australia Jun 3.2 46% BetEasy 28% monthly Jul 27
Slide 22: International: Investing to revitalise PokerStars
International: Investing to revitalise PokerStars PokerStars: our #1 International brand Reassert leadership through brand and product PokerStars brand awareness by country1 PokerStars P&L breakdown 94% % of gross revenue • Multi-year investment to correct 93% 89% 88% 28% foundational tech challenge
Slide 23: International: Expanding our addressable market
International: Expanding our addressable market Invest in direct casino acquisition Pursue bolt-on opportunities in growth markets New direct casino players PokerStars casino revenue growth Adjarabet revenue growth Find the next Adjarabet: (YoY %) 1.9x • Georgian market leader with +37% 3x Quality o
Slide 24: US: Market opportunity significant and growing
US: Market opportunity significant and growing Increase in Flutter total addressable market (‘TAM’) … Flutter in #1 position to maximise opportunity • TAM now expected to exceed $20bn in 2025; over 60% already legislated • Upgrade due to: − Higher customer values − Increase in addressable population
Slide 25: US: Early customers funding further growth
US: Early customers funding further growth Cumulative contribution from 2018-2019 customers1… …demonstrates strength of business model $m 2020 contribution: $91m 60 • Early customer cohorts generated $91m in contribution 50 in 2020 driven by: 40 − High volume of early customers acquired Cumulative c
Slide 26: US: Size of US business unparalleled
US: Size of US business unparalleled Flutter clear scale advantage… …with product leadership lead and more to come Revenue 2020 Flutter $896m • Continuous product innovation 1.4x our nearest − First-to-market sports betting products such as Same Draftkings $644m competitor Game ParlayTM leveraging F
Slide 27: US: Proven model to deliver further success
US: Proven model to deliver further success Efficient acquisition at scale continuing in 2021… …with the year kicking off ahead of expectations Sportsbook and iGaming customer acquisition1 • FanDuel launched mid January in Michigan and Virginia − Significant volume of pre-live registrations − Greate
Slide 28: Conclusion
Conclusion • Transformational year for Group • Investing to build and maintain momentum • Well placed for further growth opportunities • Continue to evolve our safer gambling measures • 2021 has started strongly 28
Slide 29: Appendix
Appendix 29
Slide 30: KPI: Average monthly players
KPI: Average monthly players Average monthly players Q1 Q2 Q3 Q4 H1 H2 FY Pro forma ('000s) Group 5,793 5,451 6,584 7,642 5,622 7,113 6,367 PPB Online 1,358 1,107 1,457 1,719 1,232 1,588 1,410 SBG 1,621 1,297 1,574 1,766 1,459 1,670 1,564 Australia 581 611 876 1,109 596 992 794 PokerStars 1,469 1,98
Slide 31: PPB
PPB ONLINE RETAIL Online Pro forma £m FY 2020 FY 2019 YOY FY 2020 FY 2019 YOY • Sportsbook revenue +12%: Average monthly players (‘000s) 1,410 1,327 +6% – Strong H2 on return of sports Sportsbook stakes 4,848 5,189 -7% 998 1,793 -44% – Favourable sports results (+140bps) Sportsbook net revenue margi
Slide 32: SBG
SBG Pro forma £m FY 2020 FY 2019 YOY • Favourable sports margin movement: Average monthly players (‘000s) 1,564 1,525 +3% – Sports results +330bps Sportsbook stakes 4,173 4,578 -9% – Racing mix and pricing refinement Sportsbook net revenue margin 13.6% 9.1% +450bps • Staking impacted by results, H2
Slide 33: Australia
Australia Pro forma £m FY 2020 FY 2019 YOY YOY CC • Retail to online channel shift drove 46% Average monthly players (‘000s) 794 629 +26% player growth in H2 Sportsbook stakes 9,713 6,751 +44% +46% Sportsbook net revenue margin 11.1% 10.1% +100bps +100bps • Staking +46% reflective of high levels of
Slide 34: PokerStars
PokerStars Pro forma £m FY 2020 FY 2019 YOY YOY CC • Revenue growth +23% broadly aligned Average monthly players (‘000s) 1,627 1,275 +28% to player growth of +28% Sportsbook stakes 748 755 -1% +1% Sportsbook net revenue margin 8.5% 7.5% +100bps +100bps • Q2 restrictions drove material H1 Sports reve
Slide 35: US
US Pro forma £m FY 2020 FY 2019 YOY YOY CC • Sportsbook revenue growth of 101%: Average monthly players (‘000s) 972 598 +62% – 4 new state launches (FanDuel 4, FOX Bet 1) Sportsbook stakes – Continued strong growth in existing states 4,411 2,396 +84% +86% – Structural margin increase due to demand f
Slide 36: Separately disclosed items
Separately disclosed items £m FY 2020 FY 2019 Amortisation of acquisition related intangible assets (432) (113) Acquisition fees and associated costs (33) (18) Restructuring and integration costs (96) Impairment (23) VAT refund 11 Operating profit impact of separately disclosed items (573) (131) Fin
Slide 37: Pro forma results reconciliation
Pro forma results reconciliation Adjusted EBITDA TSG US Align Flutter Add legacy Reported Flutter basis Flutter pro Flutter Total Flutter TSG segment transferred to accounting Flutter pro (US$m) (US$m) forma (£m) segment pro forma (£m) Flutter US ($m) policies ($m) forma (£m) PPB 390 390 UK 325 - (2
Slide 38: www.flutter.com
=lutter www. flutter.com