Analysis: Five Key Takeaways From FanDuel Q3 Results Call

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FanDuel parent company Flutter posted Q3 results Tuesday, with a recent bad run of NFL results dampening on FY21 profit expectations.

However, the company expressed confidence it remained the market leader in US sports betting.

Here is what we learned from the Q3 earnings report and subsequent analyst call.

1) Numbers go up

US revenues grew 85% to $386 million, with FanDuel accounting for 94% of that total. FanDuel Sportsbook “continued to lead the market” in Q3 with a 42% share of online sports betting and an 18% share of online gaming.

The company admitted it had “more to do” in iGaming and recently launched an in-house promo engine to boost that side of the market.

Full-year guidance net revenue guidance was unchanged ($1.8-$2 billion) but adjusted EBITDA loss increased to $341-$375 million.

That uptick was driven by a $20 million impact from customer-friendly NFL results in October.

2) Competition cooling

Flutter CEO Peter Jackson said the competition around the start of NFL betting was “the most severe that we’ve seen.”

“People are trying to claim their positions in the market. There was a lot of free money flowing around,” Jackson said.

However, he said that competition was now cooling as operators had to reign in spending.

“There’s only so much funding any of these businesses can access and provide free money to people before they eventually run out of it,” Jackson said.

He said FanDuel had been relatively disciplined in spending and remained focused on product.

3) Is FanDuel still leading in product?

Jackson was asked whether FanDuel still leads in product as rivals add key features like same=game parlay (SGP.) He stressed that FanDuel controlled its own SGP tech and pricing, which was a key differentiator.

CFO Jonathan Hill added:

“Just sticking the same game parlay on the side of your app isn’t the way to make that a seamless and great user experience. There are many things that lead to product differentiation rather than just having a product or not having a product.”

Both DraftKings and BetMGM source their SGP product via Genius Sports.

4) Tech talent shortage?

As more US sports betting firms build out their own technology, there is more demand for engineering talent. And it is a problem for even the biggest companies.

“Labor shortages are impacting all businesses around the world,” Jackson said. “We’re seeing the most pressure around the tech and engineering roles where there is a degree of [wage] inflation and there are more people on the move, seeking more flexibility in their work.

“We’re trying hard to make sure we can provide them with a greater employee value proposition and keep them engaged in our business.”

5) New states showing promise for FanDuel

Finally, Jackson said he was particularly pleased with FanDuel’s performance in Arizona sports betting.

“In places like New Jersey and Pennsylvania, it sometimes feels like some of the other operators have given up because we’ve got such a commanding lead,” Jackson said. “And in new states, we see that new operators try really hard to compete with us. So I’m particularly pleased with the way in which we performed in Arizona, where we’ve been growing more quickly than any other market.”

Jackson also explained there was no DFS cross-sell in Arizona. As such, FanDuel’s success was entirely down to its brand, product and marketing.