Football season has been great in terms of customer acquisition for US sportsbooks, but it has really done a number on the bottom line, according to FanDuel parent Flutter.
Nothing from this NFL betting season impacts long-term guidance given at September’s Investor Day, Flutter said in a Wednesday release. But the “highest rate of favorites winning in nearly 20 years” will be felt in the annual report, the company warned.
These customer-friendly results hit adjusted EBITDA by $260 million with revenue down around $390 million. Combined with the poor run of NFL results to start the fourth quarter, US quarterly adjusted EBITDA has been negatively impacted by $360 million with revenue down $550 million.
The full impact on FanDuel operations will be explained when Flutter reports its year-end earnings on March 4. Early trading did not seem to be impacted by the news as FLUT was up more than 1% in the first hour of trading in New York.
FanDuel sees parlays, SGPs bite back
The growth of parlay products through improved technology and more markets has led to some steady growth for US sports betting companies.
But a run of favorites winning tends to mean more parlay tickets cashing. So even with a structural revenue margin of 14.5% for the quarter, boosted by parlays and the stronger seasonal sports calendar, net revenue margin was just 6.6% for the quarter.
Those unfavorable sports results dragged the margin by 3.9 percentage points.
Factor in the one-off cost mitigations FanDuel pulled to help the quarter, and the company’s 2024 adjusted EBITDA is now expected at $505 million, or $205 million lower than the previous guidance midpoint.
International business better
The biggest difference between FanDuel and its top competitor DraftKings is that FanDuel’s parent company has international business to offset any of these seasonal US hits.
The company has seen “good momentum” in its UK-Ireland segment with favorable results in the English Premier League.
That should lead the group ex-US to see revenue up 1% and adjusted EBITDA up 2% from the guidance midpoints provided during the third quarter call.
