Flutter Entertainment has revised its financial outlook for 2024 after reporting poor sports betting results in the US for November and December, primarily due to NFL parlay and same-game parlay outcomes.
The updated guidance anticipates a reduction of about $370 million in expected US revenue, bringing the new valuation down to $5.78 billion, and a decrease in adjusted EBITDA by $205 million, now projected at $505 million.
The operator attributes this downturn to the highest win rates in nearly 20 years for popular bets, which is expected to impact the total gaming revenue (GGR) by approximately $438 million.
For the fourth quarter of 2024, US revenue is expected to be $1.59 billion, with adjusted EBITDA projected at $161 million.
Flutter notes that its core structural revenue profit margin remains stable at 14.5%, with a year-over-year increase of 100 basis points, thanks to FanDuel's parlay products and a higher-margin sports portfolio.
However, poor sports event outcomes have led to a profit margin decrease of 390 basis points, compared to 240 basis points in the fourth quarter of 2023. Promotional spending has been reduced by 20 basis points to mitigate the adverse effects.
Despite underperforming in the US market, Flutter's performance in regions outside the US, particularly in the UK and Ireland, has exceeded expectations. Revenue and adjusted EBITDA in these markets are expected to surpass previous forecasts by 1% and 2%, respectively, partly due to favorable Premier League outcomes.
Flutter emphasizes that the impact of US sports event outcomes will not alter its long-term growth expectations, as outlined at its Investor Day in September 2024. The company remains confident in its growth momentum and structural profit margins for 2025.
It is worth noting that the company will provide a more detailed update, including formal guidance for 2025, in its fourth-quarter earnings report on March 4.
This revised outlook follows recent strategic developments, including Flutter's appointment of Kevin Harrington as the CEO of its UK and Ireland division in November 2024. Harrington replaced Ian Brown as CEO, part of a reorganization aimed at consolidating its international business outside the US.
Previously, Flutter had shifted its primary listing location to the New York Stock Exchange, reflecting its focus on growth in the US market, where revenue accounted for 38.5% of its total revenue in the third quarter.
