FanDuel turned what is expected to be one of the worst streaks of industry sports betting losses into a win, as it reported earnings that showcased more resilience than its competitors and Flutter shares hit an all-time high in New York.
FanDuel parent Flutter announced on Tuesday that revenue grew 27% year over year to $3.25 billion in the third quarter, beating Wall Street estimates by 7%. Adjusted EBITDA grew 75% to $450 million, exceeding analysts’ expectations by 25%.
Flutter’s stock (FLUT) closed Wednesday at $265.52, a new 52-week high. Shares rose 7% the day after earnings with volume 1.5 times its daily average.
FanDuel weathers bad sports run
Investors seemed encouraged by Flutter’s better-than-expected US guidance, despite challenging NFL results for sportsbooks. One sports betting operator reported its “most customer-friendly week ever” during the quarter, while a five-week streak of favorites winning recently prompted FanDuel’s chief competitor to lower year-end guidance by $175 million.
Flutter’s guidance adjustments were far more modest, lowering adjusted EBITDA guidance by $30 million to $710 million at the midpoint — a 4% adjustment. The company raised full-year revenue guidance by 1% and forecasts 22% growth at the midpoint thanks to its performance in other international markets.
“In the US, if it was not for the run of customer-friendly NFL sports results in Q4 to date, we would have been increasing our guidance for the year also,” CFO Rob Coldrake said on an earnings call to investors.
Flutter turns losses to wins
Despite recent unfavorable results, customers winning proved beneficial to FanDuel.
“Our cost of sales for the third quarter of 58.9% as a percentage of revenue was ahead of our expectations, primarily driven by the impact of the positive sports results,” Coldrake said. “In sales and marketing, we delivered strong operating leverage and some phasing benefit into Q4, which drove the cost as a percentage of revenue down by 760 basis points year over year.”
At its recent Investor Day in New York City, Flutter raised its 2027 EBITDA guidance by 50% to more than $5 billion, underscoring a revised and larger estimate for the total addressable US market.
Pricing, parlays drive NFL betting success
FanDuel generated $1.25 billion in quarterly revenue, a 51% year-over-year increase, with $58 million in adjusted EBITDA, a marked improvement over last year’s $55 million Q3 loss.
Handle was up 36% in the quarter, with handle in states that launched sports betting before 2022 up 23% and up 37% in states that launched between 2022 and 2023. That handle increase directly drove a 62% jump in sportsbook revenue and a rise of 1.3 percentage points in hold to 8.2%
“In the US, I’d actually call out our pricing accuracy as something that’s been incredibly important for us,” CEO Peter Jackson said. “We’ve got a very strong parlay mix, which ought to actually make positive results better and negative results potentially worse because a lot of parlays can drive more sort of volatility.
“But our pricing accuracy is absolutely crucial. And I think that’s what’s really driving the material differential that you’re seeing with our business and others.”
Ahead of the NFL season, FanDuel launched a range of new sports betting products that contributed to a 7 percentage point year-over-year increase in parlay penetration during the first four weeks. These new offerings included animated scoreboards, specialized player experience hubs, expanded player prop markets, and NFL markets exclusive to FanDuel.
FanDuel making up for lost ground with NBA?
FanDuel saw its sports betting market share dip quarter over quarter, losing some ground to DraftKings. However, early results suggest it may be recovering in Q4, driven by its NBA product offerings. For Q3, FanDuel achieved a combined 35% online market share in iGaming and 41% of total US sports betting market revenue.
Customer acquisition rose 10% year over year in both new and existing markets, with payback periods remaining around 18 months.
Total average monthly players reached 12.9 million in Q3, a 16% increase year over year, helping drive a modest increase in fiscal year 2024 group revenue and adjusted EBITDA guidance. Average monthly online casino players grew 43% year over year, despite promotional spending as a percentage of gross gaming revenue rising at a significantly lower rate.
Outside the US
Flutter’s 14 other non-US brands generated $2 billion in Q3 revenue, a 15% year-over-year increase boosted by recent acquisitions of Brazil’s NSX and Italy’s Snai brands.
Leveraging Flutter Edge capabilities, Sisal saw its Italian market share rise by 2 percentage points compared to last year. In Australia, performance trends remain encouraging, further contributing to Flutter’s recent full-year revenue guidance increase for 2024.
“Outside of the US, all divisions delivered a strong performance in the quarter as they leveraged the benefits of the Flutter Edge,” Jackson said.
Share buyback
Flutter also announced it will repurchase up to $350 million of its shares on the NYSE, beginning Nov. 14 and running through March 31, 2025.
It marks the first tranche of a broader $5 billion repurchase program authorized by the board.
