Paddy Power Betfair performing in line in second half of the year

Sports Betting

The second half of the year has started in line with expectations at Paddy Power Betfair plc.

Most of the headline news from this morning’s half-year results was revealed in yesterday’s announcement about the chief executive officer succession, in which the company revealed expectations for the full-year are for underlying earnings (EBITDA) of between £445mln and £465mln, including the impact of the acquisition of daily fantasy sports games operator DRAFT.

Revenue in the first half of the year rose 9% to £827mln from £759mln a year earlier; the comparative figures have been presented on a pro forma basis to take into account acquisitions.

Online revenue rose 10% from a year earlier, when takings were boosted by the Euro 2016 football tournament; stripping out the effects of the footie tournament, the rise would have been 15%.

The Aussie business did well, growing revenue by 16%.

Online gaming revenues – poker et al – eased 3% to £120mln, with the company acknowledging that it needs to invest in its gaming product in order to achieve market growth rates.

EBITDA climbed 21% to £220mln from £181mln, with the EBITDA margin up three percentage points to 27%.

The ability of bookmakers to make money out of nothing has always been a wonder, and Paddy Power demonstrated this with underlying free cash flow of £172mln, which was 13% higher than underlying profit after tax in the reporting period.

“We continue to make substantial investments to position Paddy Power Betfair as a structural winner in a dynamic and highly competitive market. The focus of this investment is to use technology to improve efficiency and minimise the cost of servicing our customers and to further enhance our customer proposition,” said Breon Corcoran, chief executive of Paddy Power Betfair.

The company revealed that, at times, more than 70% of its European technology resources were engaged in integrating the Paddy Power and Betfair platforms.

Corcoran reiterated that the integration is on track for completion by the end of the year, after which the company will be in a position to hit the accelerator pedal in terms of new product development.

“Ahead of that, our customers and shareholders are already seeing benefits from efficiencies and investments. In the first half alone, customers enjoyed approximately £30mln of extra value through better odds, more generous offers and new loyalty benefits,” Corcoran claimed.

The shares opened around 3% lower at 7,335p.