Paddy Power Betfair shares fall on competition
Competition in the gambling industry is Europe is "pretty extreme" at the moment, the CEO of Paddy Power Betfair has warned.
Breon Corcoran told analysts that the group had to remain flexible as the company released first quarter results.
"The competitive nature of this industry right now is pretty extreme," said Mr Corcoran. "What we have to remind our shareholders and indeed our competitors is that we have plenty of appetite to compete."
He was speaking as the company said its first-quarter revenue rose 23pc to £416m (€492.6m) on a reported basis.
That included a £23m benefit from the translation of non-UK revenues due to the weakness of sterling.
On a constant currency basis, revenue was 15pc higher.
Shares in the company tumbled more than 3pc by mid-afternoon yesterday.
Underlying earnings before interest, tax, depreciation and amortisation (ebitda) was 87pc higher at £111m (€131.4m). Operating profit was 114pc was up 114pc to £91m (€107.7m).
But staking trends in the group's European online sportsbook decelerated slightly in March, with net revenue in its group sportsbook lower than expectations.
"It's harder than we thought it was going to be," Mr Corcoran told investors in relation to customer acquisition in its European online business.
"What's not entirely clear is whether we're being rational or whether we're not competing hard enough," Mr Corcoran said.
He added that the company has seen new operators making an appearance in the space.
"We're a little bit behind where we had hoped to be," he said. "We're working through that, including refining what we're offering and what we're not offering."
Mr Corcoran added that in a reversal of the trend over the past two years, results at the Cheltenham racing festival in March favoured bookmakers and this contributed to revenue growth at the group.
At this year's festival, 19 of the 28 races were profitable for the bookmaker compared with just 11 races in 2016.
Mr Corcoran said combined with the annualisation of merger-related cost savings and continued focus on operating efficiency, that resulted in a doubling of operating profits.
"Since then, however, at high-profile events such as the Grand National, Premier League football and the US Masters, results favoured customers, and overall gross win margins were weak in April," he added.
Mr Corcoran said that a key strategic focus for the company for the rest of the year is the integration of its technology platforms.
"This project is on track and we expect both our European brands to be operating on a common platform by the end of the year, at which point customers will start to benefit from increased pace of new product delivery," he said.