Flutter Entertainment Plc · NYSE:FLUT
Flutter Entertainment — H1 2020 Earnings Presentation
39 slides from Flutter Entertainment's earnings presentation, Aug 27, 2020
Slide 1: Flutter Entertainment Plc Interim Results 2020
Flutter Entertainment Plc Interim Results 2020 27 August 2020 1
Slide 2: Introduction
Introduction Peter Jackson, Group CEO 2
Slide 3: Agenda
Agenda • Highlights • Merger update • Operational review • Financial review • Investment opportunities • Conclusion 3
Slide 4: Highlights
Highlights • Covid-19 pandemic highly unusual backdrop for completion of merger • Integration progressing well • Momentum maintained with excellent H1 performance • Strong start to H2 with return of sports and re-opening of retail 4
Slide 5: Merger update: Diversification benefits evident in H1
Merger update: Diversification benefits evident in H1 Global leader in sports betting and gaming Flutter Flutter pro forma standalone 2019 H1 2020 Other 5% Retail 3% Other 10% Diversified Retail Poker 15% Sports product 19% Betting offering Gaming Sports Betting 43% • Merger completed May 5 57% 18%
Slide 6: Merger update: Organisation design and divisional team in place
Merger update: Organisation design and divisional team in place UK & Ireland International Australia US CEO CEO CEO CEO Executive Dan Taylor Barni Evans Matt King Conor Grant Chairman Ian Proctor 6
Slide 7: Merger update: Further key progress made
Merger update: Further key progress made • Review of brand strategy complete; single Sportsbet brand Australia • BetEasy customer migration imminent • PPB proprietary sports betting technology selected as future Group platform Technology • Review of other in-house technology platforms underway; gami
Slide 8: UK & Ireland: Strong gaming growth during sports disruption
UK & Ireland: Strong gaming growth during sports disruption Contrast in performance during disrupted period Encouraging customer engagement UK&I 2020 weekly online sportsbook stakes1 (£) Cheltenham Return of sport • Similar trends experienced at SBG and PPB Sports events cancelled • Strong performan
Slide 9: PokerStars: Increase in recreational gaming customers
PokerStars: Increase in recreational gaming customers Growth driven by recreational customers during lockdown drawn to social aspects to poker PokerStars customers average weekly spend £10.40 £9.90 Peak of global lockdown Week 1 Week 32 2019 2020 • >50% of customers joined on recommendation of a fri
Slide 10: Australia: Excellent performance during H1
Australia: Excellent performance during H1 Exceptional racing growth during lockdown Drove acceleration in revenue growth Average daily actives1 (YoY %) • Pre disrupted period aided by favourable sports margin and underlying customer growth 100.0% • Post disruption saw customer activity shift to rac
Slide 11: US: Number 1 racing wagering and iGaming operator
US: Number 1 racing wagering and iGaming operator TVG outperforming competitors iGaming: Number 1 operator TVG and FanDuel racing share of total racing iGaming market share1 27% market (retail + online) 20% c.14% c.12% 10% 11% c.10% c.7% H1 2019 H2 2019 H1 2020 Flutter Sugarhouse BetMGM Draftkings G
Slide 12: US: Maintaining leadership position in sports
US: Maintaining leadership position in sports Sportsbook: Number 1 operator Customer engagement strong FanDuel NJ online staking Jan - August Flutter H1 2020 online sportsbook market share1 • FanDuel daily fantasy sports business kept customers engaged with innovative Return of sport 44% content c.3
Slide 13: Customer protection measures enhanced during H1
Customer protection measures enhanced during H1 Enhanced safer gambling measures Average staking levels declined during disrupted period Safer gambling interactions SBG - Average weekly stats 2019 (disrupted period) 2020 PPB Sportsbet +52% Gaming Sportsbook +66% +67% -45% -8% -6% Actives Stakes per
Slide 14: Financial Review
Financial Review Jonathan Hill, Group CFO 14
Slide 15: Key financial highlights
Key financial highlights H1 H1 YOY Pro forma1 2020 2019 CC Sports revenue £1,199m £1,117m +8% • Strong first half performance Revenue Gaming revenue £1,190m £858m +40% • Adjusted EBITDA growth in excess of Total revenue £2,389m £1,975m +22% revenue uplift, benefitting from operating leverage Adjuste
Slide 16: Statutory Group P&L summary
Statutory Group P&L summary £’m, Reported H1 2020 H1 2019 YOY Revenue 1,522 1,020 +49% • TSG included from May 5 leading to high Gross profit 1,026 719 +43% year-on-year variances Adjusted EBITDA 342 216 +59% • D&A +29%; pro forma +14% due to multi- Depreciation & amortisation (89) (69) +29% year in
Slide 17: Adjusted EBITDA bridge: Reported 2019 to Pro Forma 2020
Adjusted EBITDA bridge: Reported 2019 to Pro Forma 2020 £’m 153 (8) (4) 684 • H1 2020 pro forma EBITDA 56 growth of +35% (29) 73 • Performance reflects benefit (15) Online of enhanced product and 336 (47) Retail geographic diversification (47) • Incorporates adjustments to align TSG accounting polic
Slide 18: Adjusted EBITDA by division highlights diversification
Adjusted EBITDA by division highlights diversification Adjusted EBITDA £m, H1 H1 YOY • H1 performance reflects underlying growth, the benefit of Pro forma 2020 2019 CC sports results in Q1 and the impact of the disrupted period PPB 85 179 -52% Online 95 142 -33% • Retail reflects shop closures for 2
Slide 19: H1 performance reflects multiple one offs
H1 performance reflects multiple one offs Gaming performance Net revenue margins boosted by sports results • PokerStars experienced biggest increase in • Group sports revenue +8% in H1 (despite a decline in stakes to gaming customers £9.0bn) due to increase in net revenue margin • Pre March 15 gamin
Slide 20: Cash flow
Cash flow Pro forma £m H1 2020 • Excellent cash generation in the half Adjusted EBITDA 684 • Capex reflects pro forma increase of £12m Capex (118) compared with H1 2019 relating to investment in: Working capital 105 Corporation tax (63) − Group-wide product and technology Adjusted free cash flow 608
Slide 21: Debt overview: Potential for further savings
Debt overview: Potential for further savings As at 30 June Underlying £m • Leverage of 2.3x at 30 June 2020 currency Term Loan A (GBP) 950 941 • Equity raise and cash generative nature of business helping Term Loan B (USD) 1,762 1,392 delever ahead of expectations toward target of 1-2x Term Loan B (
Slide 22: 2020: Technical guidance
2020: Technical guidance Compliance • Combined annualised impact of measures to improve PokerStars’ compliance/safer gambling measures and RG expected to be c. £65m; changes being implemented throughout H2 2020 Group ex-US marketing • Additional year-on-year marketing investment expected to be c. £5
Slide 23: 2020: Outlook
2020: Outlook Current • Positive trends since return of sports; gaming trends moderating trading • Pro forma Group ex-US EBITDA of between £1,175m and £1,325m, assuming: 2020 Group ex-US − Normalised net revenue margins for remainder of year EBITDA − No further material disruption to sporting calend
Slide 24: Investment opportunities
Investment opportunities Peter Jackson, Group CEO 24
Slide 25: Group: Acceleration of online migration presents opportunity
Group: Acceleration of online migration presents opportunity UK shop closures accelerate Covid accelerating long-term trend GB retail shop numbers1 Retail GGR as a % of Estimated 2019 Quarterly Australian total market GGR2 Gambling GGR (A$’bn)3 8,559 8,320 -20% in 44% Retail c.2 years based gambling
Slide 26: PokerStars: Investing for future sustainable growth
PokerStars: Investing for future sustainable growth Historical underinvestment … creates opportunity to leverage brand long-term P&L breakdown as % of net revenue • Level of historic investment disproportionate to scale − Particularly sales and marketing and generosity spend 21% Cost of sales 31% −
Slide 27: US: Competitive advantages key to future success
US: Competitive advantages key to future success Flutter’s unique customer ecosystem … driving long-term investment returns • Flutter acquiring customers in all states; >350k customers in H1 FanDuel Daily Fantasy 41 • Further disciplined investment in customer acquisition planned: Sports and FoxBet
Slide 28: Conclusion
Conclusion • Momentum maintained: excellent first half performance despite sports disruption • Employee and customer welfare prioritised • Considerable progress made on TSG integration • Compelling opportunities for further investment 28
Slide 29: Appendix: Divisional performance slides
Appendix 1 Divisional performance slides 29
Slide 30: PPB
PPB ONLINE RETAIL H1 H1 H1 H1 Pro forma (£m) YOY YOY Online: 2020 2019 2020 2019 Sportsbook stakes 1,839 2,688 -32% 383 907 -58% • Strong performance pre-disruption with Sportsbook net revenue margin 10.2% 7.7% +250bps 14.6% 12.5% +210bps sports up 19% and gaming up 9% Sports revenue 264 335 -21% 56
Slide 31: SBG
SBG H1 H1 Pro forma (£m) YOY 2020 2019 Sportsbook stakes 1,639 2,339 -30% • Strong performance across the half Sportsbook net revenue margin 14.8% 7.4% +740bps • Sportsbook margin doubled Sports revenue 253 185 +36% − Sports results +590bps, football particularly favourable Gaming revenue 186 146 +2
Slide 32: PokerStars
PokerStars H1 H1 Pro forma £m YOY YOY CC 2020 2019 • xx • Gaming revenues -3% in pre disrupted Sportsbook stakes 308 389 -21% -19% period Sportsbook net revenue margin 8.6% 7.6% +100bps +100bps Sports revenue 27 30 -10% -9% • Growth in Q2 of +75% Gaming revenue 671 479 +40% +43% • Reduction in cost
Slide 33: Australia
Australia H1 H1 Pro forma £m YOY YOY CC 2020 2019 Sportsbook stakes 3,723 3,312 +12% +18% • Net revenue growth of 16% in Q1 and Sportsbook net revenue margin 11.7% 9.5% +220bps +220bps 70% in Q2 benefitting from temporary closure of retail Revenue 435 314 +39% +45% Cost of sales (200) (140) +43% +50
Slide 34: US
US Pro forma £m H1 H1 YOY YOY CC • Sportsbook Q1 staking growth of 81%, partly 2020 2019 offset by 44% decline in Q2 Sportsbook stakes 1,090 862 +26% +23% Sportsbook net revenue margin 4.9% 4.0% +90bps +90bps • Excellent TVG performance drove overall sports revenue growth of 4% in Q2 Sports revenue
Slide 35: Other appendices
Other appendices =lutter
Slide 36: Appendix 2: Key reporting changes and alignment of accounting policies
Appendix 2: Key reporting changes and alignment of accounting policies H1 2019 FY 2019 EBITDA adjustment by division 1 (£m) (£m) TSG International (TSGi) +6 +29 • FoxBet removed from TSGi; Move TSG’s US TSG Corporate +2 +1 − Revenue and costs removed from operations out TSGi and Corporate of Interna
Slide 37: Appendix 3: Pro forma results reconciliation and accounting policy alignment
Appendix 3: Pro forma results reconciliation and accounting policy alignment 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) poli
Slide 38: Appendix 4: Separately disclosed items
Appendix 4: Separately disclosed items £m H1 H1 • Amortisation of acquisition intangibles related primarily 2020 2019 to TSG combination Amortisation of acquisition related 128 59 intangible assets • Transaction fees largely professional fees related to Transaction fees and associated costs 26 - TSG
Slide 39: www.flutter.com
=lutter www-flutter.com
Flutter Entertainment — H1 2020 Earnings Presentation on 6ix