Flutter's shares soar on further rapid U.S. growth

© Reuters. FILE PHOTO: Flutter's logo is pictured on a smartphone in front of the stock graph displayed in this illustration taken, December 4, 2021. REUTERS/Dado Ruvic

By Padraic Halpin

DUBLIN (Reuters) -Flutter said on Friday it is seeing no sign of cash-strapped customers betting less and gave another positive update on its rapidly growing U.S. business, sending its shares sharply higher following an expected dip in first-half earnings.

The Paddy Power, Betfair and Fanduel owner was the top gainer on the blue-chip FTSE 100 index, up 11% at 0830 GMT.

The world's largest online betting firm said further U.S. investment, tighter gambling regulations elsewhere and greater spending on initiatives to curb gambling addiction accounted for a 20% fall in earnings to the end of June.

However, unlike Ladbrokes-owner Entain, which last month lowered its revenue forecast due to punters spending less money on gambling, Flutter said it is seeing no "discernible signs" of a slow down from a cost-of-living squeeze.

It also said its Fanduel unit became the first online operator in the recently opened U.S. market to deliver a quarterly profit, putting the division firmly on track to meet a target of delivering full-year profitability in 2023.

"Fanduel's continued expansion is fundamentally reshaping the group as we look at it today. The brand continues to exceed all our expectations," Chief Executive Peter Jackson told reporters.

Flutter's market share in the 15 states Fanduel is live in increased to 51% from 37% at the end of March, cementing its No.1 position. Average monthly players rose by 49% year-on-year and placed more than twice as many bets as they did a year ago.

Half-year revenue grew 50% to 1.1 billion pounds ($1.34 billion) and overtook the main UK and Ireland division for the first time during the second quarter.

Full-year revenue in the U.S., which was the smallest of the group's four divisions two years ago, are expected to come in ahead of expectations at 2.3 billion pounds to 2.5 billion pounds, Flutter said

"There is a lot to like in Flutter's first-half performance," analysts at Davy Stockbrokers wrote in a note. "However, its performance in the US is most eye-catching."

After group adjusted EBITDA fell to 476 million pounds from 597 million pounds a year ago, Flutter said it expected full-year core earnings of between 1.29 billion pounds and 1.39 billion pounds, excluding a U.S. loss of 225 million pounds to 275 million pounds.

It posted core earnings of 1.2 billion pounds in 2021 and a record 1.4 billion pounds a year earlier.

($1 = 0.8205 pounds)