The FanDuel brand has been no stranger to acquiring new customers over the years, and Flutter shareholders hope that continued in the second quarter.
Flutter will report its results for the second quarter at 4:30 pm on Aug. 13. Customer growth has been an important key performance indicator for FanDuel, which has not slowed on adding customers as long as they continue to pay back their acquisition costs within two years.
FanDuel reported 18% growth in customers from the second quarter last year and saw customers jump 19% in the first quarter despite a tough comparison period with last year’s launches of Massachusetts and Ohio.
Will FanDuel add surcharge like DraftKings?
Whether Flutter intends to join DraftKings in charging bettors in four states a tax surcharge is what most will be thinking about until the Aug. 13 call.
DraftKings announced the surcharge in its earnings report. It means the company is passing along the cost of taxes above 20% to its bettors in those four states:
“I think we believe this is what’s best for us,” CEO Jason Robins said. “And I would imagine that if that’s our calculus, then others would come to the same conclusion. But we really don’t know and we’ll have to see.”
Flutter’s decision will be big news either way. Joining DraftKings in adding the fee means other sportsbooks may get in on the practice, but not adding the fee will leave DraftKings standing alone and could lead to a share surge for FanDuel.
Recent reports positive
The BetMGM report from Monday could offer a positive read for FanDuel’s second quarter.
BetMGM reported it grew its customer count by 18% in the second quarter compared to just 9% growth in the first quarter. The brand reported ~22% iGaming gross revenue share for the period.
The joint venture between Entain and MGM said it is investing more into iGaming customers than originally expected in the second half of the year, choosing to fund that increase from bank debt.
BetRivers parent Rush Street Interactive also posted a positive second quarter report with US and Canadian gamblers up 24% compared to last year. Those gains came while cutting ad spend by 1`0%.
Will Flutter maintain 2024 guidance?
Flutter did not adjust its guidance after it reported a tough EBITDA drop over the last two weeks of the first quarter. Those weeks cost FanDuel $76 million in EBITDA, but the US segment still reported $26 million in positive EBITDA for the quarter.
Flutter expects $710 million of adjusted EBITDA from $6 billion in revenue for 2024 at the midpoints of each guidance range.
The company expects about 30% of the year’s adjusted EBITDA to be generated in the first half. That equals $213 million at the guidance midpoint, which would mean $187 million in adjusted EBITDA for the quarter.
Will FanDuel parent talk mergers?
No one should expect management to directly address the rumor that Flutter is interested in buying Penn Entertainment‘s digital business.
But management could give an idea of what kind of acquisitions Flutter would consider. The company increased its leverage target, or its target for its ratio of net debt to adjusted EBITDA, to 2X to 2.5X in March.
CEO Peter Jackson did not mention any specifics about transactions that could take place. He did note the board will allow some flexibility on that new leverage range given the company’s expected adjusted EBITDA growth.
