Slide 1: Preliminary Results FY15
PRELIMINARY RESULTS FY15 17 June 2015
Slide 2: Overview
Overview Customer numbers up 52%; revenue up 21% EBITDA up 32% (up 53% excluding UK POC tax) Underlying free cash flow up 47%; full year dividend up 70% Continuing to invest for profitable growth 2
Slide 3: Financial Results
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Slide 4: Group P&L
Group P&L FY15 FY14 YoY % Revenue £476.5m £393.6m 21% UK Point of Consumption Tax (£19.2m) £0.0m n/a Other Cost of Sales (£71.4m) (£50.9m) -40% Total Cost of Sales (£90.6m) (£50.9m) -78% Gross Profit £385.9m £342.7m 13% Operating Costs (£265.7m) (£251.6m) -6% EBITDA £120.2m £91.1m 32% Margin 25.2% 2
Slide 5: Revenue
Revenue Excluding revenue from the World Cup: - Sustainable markets1 revenue up 23% - Other markets revenue down 4% - Total revenue up 17% £476.5m +21% 58.8 £388.5m £393.6m +29% +27% 45.7 88.5 £306.1m +29% +34% 66.2 US +46% Gaming Sports +17% 328.0 +1% 280.5 +22% £87.5m £88.0m -4% +2% FY14 FY15 FY14
Slide 6: Operating expenses
Operating expenses FY15 FY14 YoY % Sales & marketing £136.1m £124.2m 10% Technology £62.4m £60.1m 4% Operations £36.4m £35.1m 4% G&A £30.8m £32.2m -4% Group £265.7m £251.6m 6% • World Cup advertising drives sales & marketing spend up 10% • Technology spend up 4% reflecting increased product investme
Slide 7: Growth Operational gearing
Growth Operational gearing EBITDA margin % Underlying free cash flow 1 (£m) 29.3% excluding UK POC 25.2% 103.8 23.1% +47% 18.9% 70.4 +40% 50.2 FY13 FY14 FY15 FY13 FY14 FY15 Operational gearing driving margin expansion and strong cash generation 1 Defined as EBITDA plus cash flows from changes in wor
Slide 8: Capex
Capex FY15 FY14 YoY % External capex £13.2m £15.0m -12% Internal devex £6.6m £7.4m -11% Capex (excl. HRTV) £19.8m £22.4m -12% HRTV acquisition1 £31.7m £0.0m n/a Total capex £51.5m £22.4m 130% FY16 capex expected to be in line with medium term guidance (c.£25m) 8 1 Excludes £4.3m goodwill
Slide 9: Cash flow
Cash flow FY15 FY14 YoY % Underlying free cash flow £103.8m £70.4m 47% Cash flow from separately disclosed items £0.0m (£12.4m) n/a Free cash flow £103.8m £58.0m 79% Dividends paid (£24.1m) (£15.6m) -54% Return of capital to shareholders, including fees and duty (£200.7m) £0.0m n/a Proceeds from dis
Slide 10: Financial summary
Financial summary Sustainable • Revenue from sustainable markets up 27% in FY15 growth Operating • EBITDA up 32% despite investment and UK POC tax leverage Strong cash • Converted 86% of EBITDA to free cash flow generation • Underlying free cash flow up 47% Return to • £200m cash return to sharehold
Slide 11: Business Review
BUSINESS REVIEW
Slide 12: Delivering our plan
Delivering our plan Plan Objective FY15 progress Focus on sustainable • Sustainable mix up to 82% • Improved quality of earnings revenues • Sustainable revenues up 27% • Larger addressable market • Total actives up 52% Invest in product & • Product differentiation • New “Tap Tap Boom” marketing bran
Slide 13: Strong, efficient customer growth
Strong, efficient customer growth Sales & marketing (£m) Sustainable markets activations Sustainable markets actives (‘000) 9% CAGR 1,456 40% CAGR 64% CAGR +83% 136.1 +70% 124.2 113.0 106.0 +10% 854 +10% +7% 674 +47% 562 +27% +20% +65% FY12 FY13 FY14 FY15 FY12 FY13 FY14 FY15 FY12 FY13 FY14 FY15 Spor
Slide 14: Cross-sell is increasing monetisation
Cross-sell is increasing monetisation Gaming cross-sell from Sports1 Gaming sustainable revenue (£m) 72.6 +100% +46% 49.6 FY14 FY15 FY14 FY15 Key cross-sell drivers: • Filled product portfolio gaps • Emphasis on simplicity to improve customer journey (including single app sign-on, integrated apps) •
Slide 15: Mobile primacy
Mobile primacy Mobile % of Sportsbook revenue Mobile % of Gaming revenue 33% 80% of UK 71% 69% of UK Sportsbook Casino customers 56% customers used mobile used mobile in 21% in May May 24% 6% FY13 FY14 FY15 FY13 FY14 FY15 Mobile actives (‘000) Mobile revenue (£m) 1,058 157.4 +73% +97% 612 +50% 79.9
Slide 16: Sustainable markets revenue
Sustainable markets revenue Sustainable markets YoY revenue growth 34% 30% 27% 23% 18% 11% 12% Ex-WC +17% -7% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY14 FY15 Customer growth + cross-sell = revenue growth 16
Slide 17: Share of UK customers
Share of UK customers Customer category1 Addressing awareness Leading advertiser on key 60% increase in press ad spend1: TV channels in 2015/16: Offline only bettors Online bettors Addressing barriers to trial unaware of Betfair Top 3 reasons cited for not Focus on simplicity: Online bettors selecti
Slide 18: Investing in Product
Investing in Product % In-house development expenditure Number of developers1 562 13% 496 In-house +13% 87% External FY14 FY15 Mobile app releases Sportsbook app rating vs. competitors 4.6 81 4.6 61 +33% 3.8 3.5 3.1 FY14 FY15 3.0 Source: AppAnnie.com 02/05/2015 Our growing in-house development exper
Slide 19: Case study: Cheltenham 2015
Case study: Cheltenham 2015 Product development Promotions Customer care Staffed hours Contacts # +51% +40% ‘14 ‘15 ‘14 ‘15 Chat wait (sec) Email wait (hrs) 82 10 15 0.4 ‘14 ‘15 ‘14 ‘15 Pricing Brand • Early pricing leadership since January 2015 • Activations +82% • Aggressive odds (e.g. best priced
Slide 20: Case study: Political Betting
Case study: Political Betting Scottish Referendum Brand Awareness “Betfair is so confident of a "No" vote in Thursday's Scottish Independence Referendum that it is already paying out” “Betfair… says punters have already bet £2m on the fight between David Cameron and Ed Miliband” “On the Betfair bett
Slide 21: TVG: taking market share
TVG: taking market share Industry handle¹ ($) Driven by mobile / social media leadership TVG 1.1bn • Mobile revenue up 139% • 48% of customers used Mobile Twinspires 1.0bn • Facebook reach of over 400,000 people per day Xpress bet 0.6bn HRTV acquisition • TVG is now the leading operator for online h
Slide 22: New markets: remains early days
New markets: remains early days NJ online casino Italy • Market remains small • Market remains tough • Currently c.16% share of the casino • Still focused on developing a market competitive product • Using Group resources to compete: • Restrained marketing spend until confident of earning a return −
Slide 23: Summary
Summary • 70% increase in customer base in sustainable markets Growing sustainably • 82% of revenue now from sustainable markets • Increased spend on sales & marketing / customer bonuses1 by £28m Investing for further growth • Added over 60 people to our product development teams • Sustainable marke
Slide 24: Thali ey
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