Slide 1: Interim Results 2019
Interim Results 2019
Slide 2: Introduction
Introduction Peter Jackson, Group CEO 2
Slide 3: Today's Agenda
Today’s Agenda • Progress year-to-date against four pillar strategy • Financial review • Operating review – PPB – Australian market and Sportsbet (Barni Evans, CEO Sportsbet) – US market and FanDuel 3
Slide 4: Progress YTD on four pillar strategy
Progress YTD on four pillar strategy Growing a more diversified and sustainable business Attain podium Maximise profitable Pursue US Grow Betfair in positions in growth in core opportunity rest of world additional regulated markets rigorously markets 1) UK & Ireland: PP 1) Localisation: 1) Acquisiti
Slide 5: Financial Review
Financial Review Jonathan Hill, CFO 5
Slide 6: Key Financial Highlights
Key Financial Highlights H1 2019 H1 2018 YOY% Revenue Revenue 1,020 867 +18% • Strong revenue increase from organic growth and acquisitions Underlying EBITDA (Pre-IFRS 16) 196 217 -10% Underlying Profit before tax 140 172 -23% • Underlying EBITDA lower Profitability Reported Profit before tax 81 106
Slide 7: EBITDA Bridge – Proforma Group (ex US)
EBITDA Bridge – Proforma Group (ex US) Underlying EBITDA: +£25m / +15% • Underlying EBITDA +15% in H1 2019 1 9 8 – +18% 47 33 adjusting for impact of market switch offs 208 194 169 • Significant impact of tax and regulatory changes 2 H1 2018 EBITDA FX impact Adjarabet 2018 H1 Regulation/tax Adjusted
Slide 8: Group P&L Summary
Group P&L Summary H1 2019 £m H1 2019 Pre-IFRS 16 H1 2018 YOY % Revenue 1,020 1,020 867 +18% • Limited IFRS16 impact on Gross profit 719 719 657 +9% PBT Underlying EBITDA 216 196 217 -10% • D&A increasing with investment in technology and Depreciation & amortisation (69) (51) (43) +18% product improv
Slide 9: Online
Online £m, Pre-IFRS 16 H1 2019 H1 2018 YOY Sportsbook stakes 2,682 2,735 -2% • Stake reduction reflects introduction of sportsbook Sportsbook net revenue % 7.7% 7.5% +20bps country specific pricing in international markets Sports revenue 334 335 Flat • International sportsbook revenues up 30% year-
Slide 10: Australia
Australia £m, Pre-IFRS 16 H1 2019 H1 2018 YOY YOY CC Sportsbook stakes 2,114 1,935 +9% +12% Sportsbook net revenue % 9.8% 9.4% +40bps +40bps • Revenue growth benefits from Revenue 207 182 +14% +16% growing active customers and improvements in net revenue margin Cost of sales (83) (51) +63% +67% Cost
Slide 11: US
US £m, Pre-IFRS 16, Proforma1 H1 2019 H1 20182 YOY US$ YOY Sports revenue 140 94 +49% +40% Gaming revenue 20 9 +116% +103% • Excluding sportsbook; double digit Total revenue 160 103 +55% +46% contribution growth in line with expectations Cost of sales (44) (19) +139% +124% Cost of sales net revenue
Slide 12: Retail
Retail £m, Pre-IFRS 16 H1 2019 H1 2018 YOY Sportsbook stakes 907 875 +4% • 6% revenue growth in Ireland Sportsbook net revenue % 12.5% 12.4% +10bps • UK sportsbook revenue growth of +5% driven by Sports revenue 113 108 +5% increase in stakes Gaming revenue 43 54 -21% Total revenue 156 162 -4% • H1 F
Slide 13: Cash flow (Pre-IFRS 16)
Cash flow (Pre-IFRS 16) £m H1 20191 H1 2018 Underlying EBITDA 196 217 Capex (55) (50) • Capital expenditure increase reflects growth in US investment Working capital 22 (42) Corporation tax (22) (37) • Working capital benefitted from Underlying free cash flow 141 88 – Unwind of material prepayments
Slide 14: Financial guidance
Financial guidance Group outlook Group (ex US) • Full year 2019 (pre-IFRS 16) EBITDA expected to be between £420m and £440m • Expected (pre-IFRS 16) EBITDA loss of around £55m based on investment in customer US acquisition Other Financial guidance • H2 revenue and EBITDA impact of international mark
Slide 15: Operating Review
Operating Review Peter Jackson, Group CEO Barni Evans, CEO Sportsbet 15
Slide 16: Leading by example on Responsible Gambling
Leading by example on Responsible Gambling Core to Group strategy is to grow a more sustainable business by: Protecting customers Collaborating with Collaborating as Taking a company wide through machine industry bodies: operators: approach: learning: Customer Activity Awareness Committed to wor
Slide 17: Paddy Power: Growing recreational customer base
Paddy Power: Growing recreational customer base Continuing to drive customer acquisition and Investment in brand and promotional generosity engagement YoY growth in Paddy Power average daily active customers Pre World 22% Cup period 16% 13% 12% 2% 4% Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 -12% • Innova
Slide 18: Betfair: Enhancing customer experience with product and promotion
Betfair: Enhancing customer experience with product and promotion Improving product Betfair International • Sportsbook country specific pricing • Regulatory changes resulting in market rolled out switch offs • More to come… • Underlying growth demonstrating solid – More languages foundation for futu
Slide 19: Australian and Sportsbet update
Australian and Sportsbet update Barni Evans, CEO Sportsbet 19
Slide 20: What are the drivers of Sportsbet's success?
What are the drivers of Sportsbet’s success? Proven scalable business model built through investment in… Product Value Marketing • Personalisation • Targeting • Brand • New product • Innovation • Marketing technology Underpinned by excellence in execution… • Analytics • Automation • Efficiency 20
Slide 21: A long track record of success…
A long track record of success… Active customers Net revenue H1 2019 (A$’m) CAGR +16% H1 2019 (A$’m) CAGR +15% 379 848 792 325 688 289 616 252 470 216 H1 '15 H1 '16 H1 '17 H1 '18 H1 '19 H1 '15 H1 '16 H1 '17 H1 '18 H1 '19 Spontaneous brand awareness Main mobile account used Source: Brand Tracker Apri
Slide 22: Tax & regulatory update: 2019 a year of significant change
Tax & regulatory update: 2019 a year of significant change Point of consumption tax Other regulatory considerations • Product fee increases • National Consumer Protection Framework: ‒ Prohibition of sign-up offers ‒ All customers offered deposit limits • NSW advertising restrictions Response to date
Slide 23: Market remains attractive for scale players
Market remains attractive for scale players Market growth: Online v Retail (A$’bn) Turnover CAGR +16% 29.1 • Significant opportunity for growth driven 25 by shift from retail to online and traditional 22.1 tote betting to fixed odds 18.3 16.2 • Sector consolidation driven by regulatory 11.9 11.7 11.
Slide 24: Current initiatives – product, value and brand
Current initiatives – product, value and brand Product and Personalisation Value strategy Superior brand proposition • Enhanced personalised • Market leading value proposition • Creating key strategic partnerships experiences • Targeted generosity to customers, • Leveraging marketing technology to •
Slide 25: Current initiatives – product, value and brand
Current initiatives – product, value and brand Product and Personalisation Value strategy Superior brand proposition • Enhanced personalised • Market leading value proposition • Creating key strategic partnerships experiences • Targeted generosity to customers, • Leveraging marketing technology to •
Slide 26: Operating leverage track record gives us confidence for the future
Operating leverage track record gives us confidence for the future P&L breakdown as a % of net revenue1 EBITDA Opex Cost of sales • Cost of Sales as % of revenue has increased 40% 40% from 23% to 40% over last 4 years 27% 27% • Increase due to taxes and product fees 32% 23% 23% 42% 32% • Much of thi
Slide 27: FanDuel is well positioned to succeed in the US
FanDuel is well positioned to succeed in the US • An established sports focused brand with high national awareness • An extensive and growing national customer base with over 8.5 million registered customers • Unique cross sell opportunities across four distinct product verticals • Substantial scale
Slide 28: Proven delivery on brand and leveraging fantasy database in NJ
Proven delivery on brand and leveraging fantasy database in NJ Successful Fantasy 50% market share in NJ in H1 2019 cross-sell National scale Source of Sportsbook customers 65% • National footprint with 55% >8.5m customers 45% • 4 Products for cross-sell Direct Cross-sell 35% • Operating leverage 25
Slide 29: Leading expansion of online sports betting
Leading expansion of online sports betting People & Leading product proposition First app to launch in PA Resources in the Apple store • 800+ employees, c. 300 in • Easy to use app, live in NJ & PA Product Development • First to market with US specific betting methods • Access to Flutter global (e.g
Slide 30: US Casino growth materially accelerated by cross-sell
US Casino growth materially accelerated by cross-sell Casino growth Casino cross-sell Market share 15% Revenue Growth +103% • Continuing to 15% enhance the cross- sell journey 11% • Launch of 10% 10% 11% embedded content which accelerated growth in Europe 7% 2014 2015 2016 2017 2018 H1 2019 H1 2018
Slide 31: Encouraging online regulatory momentum
Encouraging online regulatory momentum Legislation enabling online betting passed in 10 states since PASPA repealed States Online Online Retail Date of online Population as % of US legislated sportsbook casino sportsbook legislation New Jersey Yes Yes Yes Q2 2018 2.8% Pennsylvania Yes Yes Yes Q2 201
Slide 32: Already 2/3 of the way to a 10x NJ market size
Already 2/3 of the way to a 10x NJ market size Here is the illustration we showed you in March… And here is where we are today… $bn Sports Market GGR at 10x New Jersey1 ~6.0 Population Multiple Implied % of US of NJ market size Potential Market Share2 20% $bn Gross Revenue 1.2 Live today 6.7% 2.4x 1
Slide 33: In summary…
In summary… • Very productive first half • Good underlying performance across the business • Focus remains on growing a more diversified and sustainable business • Confident we can make further progress in the second half 33
Slide 34: Q+A
Q+A =lutter
Slide 35: www.flutter.com
=lutter www. flutter.com
Slide 36: Appendix I - IFRS 16 impact on reporting
Appendix I - 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 H1 2019 Impact H1 2019 H1 2019 Impact H1 2019 H1 2019 Impact H1 2019 H1 2019 I