US merger bet pays off for Paddy Power Betfair
PADDY Power Betfair touted "huge progress" in the developing US market and a strong first quarter for its established Australian business as revenue rose by 17pc despite sports results favouring gamblers.
The group merged its US business with fantasy sports company FanDuel last year to target a market set to open up in the coming years.
Please log in or register with Independent.ie for free access to this article.
Yesterday Paddy Power Betfair said that had resulted in a 47pc jump in US revenue for the three months to March 31, accounting for just over 15pc of group sales.
Total sports-betting stakes in the US during the first three months of the year were $598m (€533m), on which the company generated gross revenue of $33m), more than double the revenue generated in the fourth quarter of 2018.
Its Australian Sportsbet brand delivered revenue growth of 20pc as the group's decision to increase investment in response to tax increases paid off.
Overall, and revenue jumped 17pc to £478m (€556m) in the three months to March 31.
Peter Jackson, chief executive of Paddy Power Betfair, said: "Q1 was a good quarter for the group with revenues up 17pc, notwithstanding customer-friendly sports results in the UK.
"Underlying momentum remains good for Paddy Power with 22pc growth in average daily actives," he added.
"For Betfair, we continue to make good progress on the technology development work to enhance our global customer propositions which will enable us to accelerate international growth."
Elsewhere, revenue from retail was down 2pc to £77m, with its 2pc machine-gaming growth offset by a 5pc decrease in sports revenues.
The group's online revenue increased by 4pc in the three month period.
Davy Stockbrokers estimated that the unfavourable soccer and horse racing results would have impacted first-quarter profits by about £14m before any recycling of winnings, but that the underlying momentum appeared better than anticipated. "As each long-anticipated regulatory change is implemented, the Paddy Power Betfair investment thesis is becoming more straightforward," analysts at Davy wrote in a note, referring to the increasing cost of regulation in established markets.
"The group and sector are not out of the woods," Davy added.
"Yet, for the first period in some time, performance appears more balanced between those divisions reflecting the group's underlying growth prospects (in the US and increasingly Australia) and those still hampered by either external and/or internal challenges (Europe and retail)."
Yesterday, shares in the group, which no longer reports earnings on a quarterly basis, were down over 5pc in London.
Additional reporting Reuters