Flutter cuts 2024 revenue outlook amid 'customer-friendly' results

Posted: 7 January 2025, 05:22 pm.

Last updated: 7 January 2025, 05:22 PM.

Shares of Flutter Entertainment (NYSE: FLUT) traded about 2% lower in the after-hours session Tuesday after the FanDuel parent downgraded its 2024 earnings and revenue, citing unusually weak results on NFL wagers. Guidance reduced.

The company said it now expects revenue of $5.78 billion in 2024, down from an earlier forecast of $6.05 billion to $6.25 billion. Earnings before interest, taxes, depreciation and amortization (EBITDA) are expected to be $205 million, down from the previously released midpoint of $505 million. For the fourth quarter, the operator expects EBITDA of $161 million on sales of $1.59 billion, which is unfavorable from the October to December period.

According to Flutter, the 2024/2025 NFL season has been the most customer-friendly since the launch of online sports betting, with the favorites winning rates at the highest level in almost 20 years.

The NFL is the most heavily bet on league in America and most recreational bettors tend to bet on the favorites and not the underdogs. According to ESPN data, through December 31, 2024, NFL favorites have won 71.8% of their games this season, good for the highest percentage in nearly 20 years. During Week 17, NFL “chalk” covered the spread at a nearly 54% clip — the highest level since 2017 and seventh-highest in the Super Bowl era, ESPN added.

Implications of Flutter Warning

Flutter updating investors about a tough fourth quarter could be reflected in the gaming equities landscape as it's unlikely the FanDuel owner is the only operator being influenced by NFL favorites winning at customer-friendly rates.

In after-hours trading, DraftKings (NASDAQ: DKNG) — FanDuel's closest competitor — was down about 1%, but other sports betting-related stocks including ESPN Bet parent Penn Entertainment (NASDAQ: PENN) and Rush Street Interactive (NYSE: There was more business. : RSI). Flutter is the first sportsbook operator to update investors on fourth quarter activities. BetMGM is scheduled to release the results on February 4, 2024.

While the fourth quarter update could impact Flutter in the near term, the company has been actively repurchasing its stock, indicating there may be some support for shares despite the lower guidance. The operator is aiming to buy back at least $350 million worth of its shares by the end of the current quarter.

Flutter's long-term outlook is still bright

Flutter noted that the results seen during the 2024 NFL season are “tentative” and do not impact the long-term outlook provided by the company at its investor day last September.

At the time, the Betfair parent said the total addressable market for regulated global gross gaming revenues (GGR) would grow to $368 billion by 2030, representing a compound annual growth rate (CAGR) of 8%. At the midpoint of its 2027 US and Rest of the World (RoW) guidance, Flutter forecasts 2027 revenues of $21 billion, indicating a three-year CAGR of 14%.

Because of its large footprint in Australia and Europe, Flutter sometimes has leeway to mitigate US-induced headwinds, such as an unusual percentage of covering NFL favorites.

“In the Group ex-US, the good momentum continued in the UK/Ireland with favorable sporting results, particularly in the English Premier League, means we now forecast 2024 revenue and adjusted EBITDA to be lower than the mid-points. There will be about 1% and 2% more. Our previous guidance was provided in Q3,” the operator said.