Table of Contents
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
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| |
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| (Address of principal executive offices) | (Zip Code) | |||||
| Title of Each Class |
Trading Symbol(s) |
Name of Each Exchange on which Registered | ||
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
| Emerging growth company | ||||||
Table of Contents
TABLE OF CONTENTS
Page
i
Table of Contents
EXPLANATORY NOTE
Flutter Entertainment plc, a public limited company incorporated under the laws of Ireland, qualifies as a foreign private issuer in the United States for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Flutter voluntarily has chosen to file annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K with the United States Securities and Exchange Commission (“SEC”) instead of filing on the reporting forms available to foreign private issuers.
Flutter has moved its operational headquarters to New York. Given changes in the location of its executive leadership and its board of directors, Flutter has ceased to qualify as a foreign private issuer at the end of its second fiscal quarter of 2024 and will be required to file on the reporting forms specified for domestic filers beginning on the first day of its next fiscal year.
CERTAIN TERMS
Unless otherwise specified or the context otherwise requires, the terms “Flutter,” the “Company,” the “Group,” “we,” “us” and “our” each refer to Flutter Entertainment plc and its subsidiaries.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect our current expectations as to future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. These statements include, but are not limited, to statements related to our expectations regarding the performance of our business, our financial results, our operations, our liquidity and capital resources, the conditions in our industry and our growth strategy. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believe(s),” ”expect(s),” “potential,” “continue(s),” “may,” “will,” “should,” “could,” “would,” “seek(s),” “predict(s),” “intend(s),” “trends,” “plan(s),” “estimate(s),” “anticipates,” “projection,” “goal,” “target,” “aspire,” “will likely result,” and or the negative version of these words or other comparable words of a future or forward-looking nature. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Such factors include, among others:
| • | Flutter’s ability to effectively compete in the global entertainment and gaming industries; |
| • | Flutter’s ability to retain existing customers and to successfully acquire new customers; |
| • | Flutter’s ability to develop new product offerings; |
| • | Flutter’s ability to successfully acquire and integrate new businesses; |
| • | Flutter’s ability to maintain relationships with third-parties; |
| • | Flutter’s ability to maintain its reputation; |
| • | Public sentiment towards online betting and iGaming generally; |
| • | The potential impact of general economic conditions, including inflation, rising interest rates and instability in the banking system, on Flutter’s liquidity, operations and personnel; |
| • | Flutter’s ability to obtain and maintain licenses with gaming authorities; |
| • | Adverse changes to the regulation of online betting and iGaming; |
| • | The failure of additional jurisdictions to legalize and regulate online betting and iGaming; |
| • | Flutter’s ability to comply with complex, varied and evolving U.S. and international laws and regulations relating to its business; |
| • | Flutter’s ability to raise financing in the future; |
| • | Flutter’s success in retaining or recruiting officers, key employees or directors; |
| • | Litigation and the ability to adequately protect Flutter’s intellectual property rights; |
ii
Table of Contents
| • | The impact of data security breaches or cyber-attacks on Flutter’s systems; and |
| • | Flutter’s ability to remediate material weaknesses in its internal control over financial reporting. |
Additional factors that could cause the Company’s results to differ materially from those described in the forward-looking statements can be found in Part I, “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 as filed with the SEC on March 26, 2024 and other periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in the Company’s filings with the SEC. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
Website and Social Media Disclosure
We use our website (www.flutter.com) and at times our corporate X account (@FlutterPLC) and LinkedIn (www.linkedin.com/company/flutter-entertainment-plc) as well as other social media channels to distribute company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. The contents of our website and social media channels are not, however, a part of this Quarterly Report on Form 10-Q.
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As of June 30, 2024 |
As of December 31, 2023 | |||||||
| ASSETS |
||||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ | $ | ||||||
| Cash and cash equivalents – restricted |
||||||||
| Player deposits – cash and cash equivalents |
||||||||
| Player deposits – investments |
||||||||
| Accounts receivable, net |
||||||||
| Prepaid expenses and other current assets |
||||||||
| |
|
|
|
|
| |||
| TOTAL CURRENT ASSETS |
||||||||
| Investments |
||||||||
| Property and equipment, net |
||||||||
| Operating lease right-of-use |
||||||||
| Intangible assets, net |
||||||||
| Goodwill |
||||||||
| Deferred tax assets |
||||||||
| Other non-current assets |
||||||||
| |
|
|
|
|
| |||
| TOTAL ASSETS |
$ |
$ |
||||||
| |
|
|
|
|
| |||
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND SHAREHOLDERS’ EQUITY |
||||||||
| CURRENT LIABILITIES: |
||||||||
| Accounts payable |
$ | $ | ||||||
| Player deposit liability |
||||||||
| Operating lease liabilities |
||||||||
| Long-term debt due within one year |
||||||||
| Other current liabilities |
||||||||
| |
|
|
|
|
| |||
| TOTAL CURRENT LIABILITIES |
||||||||
| Operating lease liabilities – non-current |
||||||||
| Long-term debt |
||||||||
| Deferred tax liabilities |
||||||||
| Other non-current liabilities |
||||||||
| |
|
|
|
|
| |||
| TOTAL LIABILITIES |
$ |
$ |
||||||
| |
|
|
|
|
| |||
| COMMITMENTS AND CONTINGENCIES (Note 16) |
||||||||
| REDEEMABLE NON-CONTROLLING INTERESTS |
||||||||
| SHAREHOLDERS’ EQUITY |
||||||||
| Ordinary share (Authorized issued June 30, 2024: |
$ | $ | ||||||
| Shares held by employee benefit trust, at cost June 30, 2024: |
||||||||
| Additional paid-in capital |
||||||||
| Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
| Retained earnings |
||||||||
| |
|
|
|
|
| |||
| Total Flutter Shareholders’ Equity |
||||||||
| Non-controlling interests |
||||||||
| |
|
|
|
|
| |||
| TOTAL SHAREHOLDERS’ EQUITY |
||||||||
| |
|
|
|
|
| |||
| TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTSAND SHAREHOLDERS’ EQUITY |
$ |
$ |
||||||
| |
|
|
|
|
| |||
Three months ended June 30, |
Six months ended June 30, | |||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||
| Revenue |
$ | $ | $ | $ | ||||||||||||
| Cost of Sales |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
| Gross profit |
||||||||||||||||
| Technology, research and development expenses |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Sales and marketing expenses |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| General and administrative expenses |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
| Operating profit |
||||||||||||||||
| Other (expense) income, net |
( |
) | ( |
) | ||||||||||||
| Interest expense, net |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
| Income (loss) before income taxes |
( |
) | ||||||||||||||
| Income tax expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
| Net income (loss) |
( |
) | ||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
| Net income (loss) attributable to non-controlling interests and redeemable non-controlling interests |
( |
) | ||||||||||||||
| Adjustment of redeemable non-controlling interest to redemption value |
( |
) | ( |
) | ||||||||||||
| Net income (loss) attributable to Flutter shareholders |
( |
) | ||||||||||||||
| Earnings (loss) per share |
||||||||||||||||
| Basic |
( |
) | ||||||||||||||
| Diluted |
( |
) | ||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
| Other comprehensive income (loss), before tax: |
||||||||||||||||
| Effective portion of changes in fair value of cash flow hedges |
( |
) | ( |
) | ( |
) | ||||||||||
| Fair value of cash flow hedges transferred to the income statement |
( |
) | ||||||||||||||
| Foreign exchange gain on net investment hedges |
||||||||||||||||
| Foreign exchange (loss) gain on translation of the net assets of foreign currency denominated entities |
( |
) | ( |
) | ||||||||||||
| Fair value movements on available for sale debt instruments |
||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
| Other comprehensive (loss) income |
( |
) |
( |
) |
||||||||||||
| Other comprehensive (loss) income attributable to Flutter shareholders |
( |
) | ( |
) | ||||||||||||
| Other comprehensive (loss) income attributable to non-controlling interest and redeemable non-controlling interest |
( |
) | ( |
) | ||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
| Total comprehensive (loss) income |
$ |
$ |
$ |
( |
) |
$ |
||||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
Ordinary share |
Shares held by employee benefit |
|||||||||||||||||||||||||||||||||||||||||||||||
Redeemable non- controlling interests |
Shares |
Amount |
Shares |
Amount |
Additional paid-in capital |
Accumulated Other Comprehensive Income/(Loss) |
Retained earnings |
Total Flutter Shareholders’ Equity |
Non- controlling interests |
Total Equity |
Net Income (Loss) |
|||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2023 |
$ |
$ |
$ |
$ |
( |
) |
$ |
$ |
$ |
$ |
||||||||||||||||||||||||||||||||||||||
Net income (loss) |
— | — | — | — | — | — | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
Adjustment of redeemable non-controlling interest to fair value |
— | — | — | — | — | — | ( |
) | ( |
) | — | ( |
) | |||||||||||||||||||||||||||||||||||
| Shares issued on exercise of employee share options | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Equity-settled transactions – expense recorded in the income statement | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Acquisition of redeemable non-controlling interests | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Other comprehensive (loss) |
( |
) | — | — | — | — | — | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||
Balance as of March 31, 2024 |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||||||||||||
Net income |
— | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Adjustment of redeemable non-controlling interest to fair value | ( |
) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Shares issued on exercise of employee share options | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Equity-settled transactions – expense recorded in the income statement | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Dividend distributed to non-controlling interests |
— | — | — | — | — | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) |
— | — | — | — | — | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||
Balance as of June 30, 2024 |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||||||||||||
Ordinary share |
Shares held by employee benefit |
|||||||||||||||||||||||||||||||||||||||||||||||
Redeemable non- controlling interests |
Shares |
Amount |
Shares |
Amount |
Additional paid-in capital |
Accumulated Other Comprehensive Income/(Loss) |
Retained earnings |
Total Flutter Shareholders’ Equity |
Non- controlling interests |
Total Equity |
Net Income (Loss) |
|||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2022 |
$ |
$ |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||||||||||
Net (loss) |
( |
) | — | — | — | — | — | — | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
Adjustment of redeemable non-controlling interest to fair value |
— | — | — | — | — | — | ( |
) | ( |
) | — | ( |
) | |||||||||||||||||||||||||||||||||||
| Shares issued on exercise of employee share options | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Equity-settled transactions – expense recorded in the income statement | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Other comprehensive income |
— | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2023 |
$ |
$ |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||||||||||
Net (loss) income |
( |
) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Adjustment of redeemable non-controlling interest to fair value |
— | — | — | — | — | — | ( |
) | ( |
) | — | ( |
) | |||||||||||||||||||||||||||||||||||
| Shares issued on exercise of employee share options | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares of the Company acquired by the Employee Benefit Trust | — | — | — | ( |
) | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||||||||||||
| Equity-settled transactions – expense recorded in the income statement | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Acquisition of redeemable non-controlling interests | ( |
) | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Other comprehensive (loss) income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2023 |
$ |
$ |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||||||||||
Six months ended June 30, | ||||||||
2024 |
2023 |
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
Net income (loss) |
$ |
$ |
( |
) | ||||
Adjustments to reconcile net income (loss) to net cash from operating activities: |
||||||||
Depreciation and amortization |
||||||||
Change in fair value of derivatives |
( |
) |
( |
) | ||||
Non-cash interest expense, net |
( |
) | ||||||
Non-cash operating lease expense |
||||||||
Foreign currency exchange loss (gain) |
( |
) | ||||||
(Gain) loss on disposal |
( |
) |
||||||
Share-based compensation – equity classified |
||||||||
Share-based compensation – liability classified |
||||||||
Other expenses (net) |
||||||||
Deferred taxes |
( |
) |
( |
) | ||||
Loss on extinguishment |
||||||||
Change in contingent consideration |
( |
) |
||||||
Change in operating assets and liabilities: |
||||||||
Player deposits |
( |
) |
( |
) | ||||
Accounts receivable |
||||||||
Other assets |
( |
) | ||||||
Accounts payable |
( |
) |
||||||
Other current liabilities |
( |
) |
||||||
Player deposit liability |
( |
) | ||||||
Operating leases liabilities |
( |
) | ( |
) | ||||
Net cash provided by (used in) operating activities |
( |
) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
Purchases of property and equipment |
( |
) |
( |
) | ||||
Purchases of intangible assets |
( |
) |
( |
) | ||||
Capitalized software |
( |
) |
( |
) | ||||
Acquisitions, net of cash acquired |
( |
) |
||||||
Net cash used in investing activities |
( |
) |
( |
) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
Proceeds from issue of common stock upon exercise of options |
||||||||
Proceeds from issuance of long-term debt (net of transactions costs) |
||||||||
Repayment of long-term debt |
( |
) |
( |
) | ||||
Dividend distributed to non-controlling interests |
( |
) |
||||||
Repurchase of common stock |
( |
) | ||||||
Net cash used in financing activities |
( |
) |
( |
) | ||||
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
( |
) |
( |
) | ||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period |
||||||||
Foreign currency exchange (loss) gain on cash and cash equivalents |
( |
) |
||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period: |
||||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH comprise of: |
||||||||
Cash and cash equivalents |
$ |
$ |
||||||
Cash and cash equivalents - restricted |
||||||||
Player deposits - cash & cash equivalents |
||||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period: |
$ |
$ |
||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
||||||||
Interest paid |
||||||||
Income taxes paid |
||||||||
Operating cash flows from operating leases |
||||||||
NON-CASH INVESTING AND FINANCING ACTIVITIES: |
||||||||
Right of use assets obtained in exchange for new operating lease liabilities |
||||||||
Adjustments to lease balances as a result of remeasurement |
( |
) |
||||||
Business acquisitions (including contingent consideration) |
$ |
$ |
||||||
| • | U.S.; |
| • | UK & Ireland (“UKI”); |
| • | International; and |
| • | Australia |
Three months ended June 30, |
Six months ended June 30, | |||||||||||||||
($ in millions) |
2024 |
2023 |
2024 |
2023 |
||||||||||||
| Revenue |
||||||||||||||||
| U.S. |
||||||||||||||||
| Sportsbook |
$ | $ | $ | $ | ||||||||||||
| iGaming |
||||||||||||||||
| Other |
||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
| U.S. segment revenue |
||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
| UKI |
||||||||||||||||
| Sportsbook |
||||||||||||||||
| iGaming |
||||||||||||||||
| Other |
||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
| UKI segment revenue |
||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
| International |
||||||||||||||||
| Sportsbook |
||||||||||||||||
| iGaming |
||||||||||||||||
| Other |
||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
| International segment revenue |
||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
| Australia |
||||||||||||||||
| Sportsbook |
||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
| Australia segment revenue |
||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
| Total reportable segment revenue |
$ |
$ |
$ |
$ |
||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
Three months ended June 30, |
Six months ended June 30, | |||||||||||||||
($ in millions) |
2024 |
2023 |
2024 |
2023 |
||||||||||||
| U.S |
$ | $ | $ | $ | ||||||||||||
| UK |
||||||||||||||||
| Ireland |
||||||||||||||||
| Australia |
||||||||||||||||
| Italy |
||||||||||||||||
| Rest of the world |
||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
| Total revenue |
$ |
$ |
$ |
$ |
||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
Three months ended June 30, |
Six months ended June 30, | |||||||||||||||
($ in millions) |
2024 |
2023 |
2024 |
2023 |
||||||||||||
| UKI |
$ | $ | $ | $ | ||||||||||||
| U.S. |
||||||||||||||||
| International |
||||||||||||||||
| Australia |
||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
| Reportable segment adjusted EBITDA |
||||||||||||||||
| Unallocated corporate overhead 1 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Depreciation and amortization |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Share-based compensation expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Transaction fees and associated costs 2 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Restructuring and integration costs 3 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other (expense) income, net |
( |
) | ( |
) | ||||||||||||
| Interest expense, net |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
| Income (loss) before income taxes |
$ |
$ |
$ |
$ |
( |
) | ||||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
1. |
Unallocated corporate overhead includes shared technology, research and development, sales and marketing, and general and administrative expenses that are not allocated to specific segments. |
2. |
Comprises advisory fees related to implementation of internal controls, information system changes and other strategic advisory related to the change in the primary listing of the Group for the three and six months ended June 30, 2024 respectively. For the three and six months ended June 30, 2023 transaction fees and associated costs comprised advisory fees related to the proposed listing of Flutter’s ordinary shares in the U.S.. |
3. |
During the three and six months ended June 30, 2024, costs of $ |
Three months ended June 30, |
Six months ended June 30, | |||||||||||||||
($ in millions) |
2024 |
2023 |
2024 |
2023 |
||||||||||||
| Foreign exchange (loss) gain |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
| Fair value gain on derivative instruments |
||||||||||||||||
| Fair value gain on contingent consideration |
||||||||||||||||
| Loss on settlement of long-term debt |
( |
) | ( |
) | ||||||||||||
| Gain (loss) on disposal |
( |
) | ( |
) | ||||||||||||
| Fair value (loss) gain on Fox liability |
( |
) | ( |
) | ( |
) | ||||||||||
| Fair value loss on investment |
( |
) | ||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
| Total other (expense) income, net |
$ |
$ |
$ |
( |
) |
$ |
( |
) | ||||||||
| |
|
|
|
|
|
|
|
|
|
|
| |||||
Three months ended June 30, |
Six months ended June 30, | |||||||||||||||
($ in millions) |
2024 |
2023 |
2024 |
2023 |
||||||||||||
| Interest and amortization of debt discount and expense on long-term debt, bank guarantees | $ | $ | $ | $ | ||||||||||||
Other interest expense |
( |
) | ( |
) | ||||||||||||
Interest income |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Interest expense, net |
$ |
$ |
$ |
$ |
||||||||||||
Three months ended June 30, |
Six months ended June 30, | |||||||||||||||
($ in millions except share and per share amounts) |
2024 |
2023 |
2024 |
2023 |
||||||||||||
Numerator |
||||||||||||||||
Net income (loss) |
( |
) | ||||||||||||||
Net income (loss) attributable to non-controlling interests and redeemable non-controlling interests |
( |
) | ||||||||||||||
Adjustment of redeemable non-controlling interest to redemption value |
( |
) | ( |
) | ||||||||||||
Net income (loss) attributable to Flutter shareholder – basic and diluted |
|
|
|
( |
) | |||||||||||
Denominator |
||||||||||||||||
Basic weighted average outstanding shares |
||||||||||||||||
Effective of dilutive stock awards |
||||||||||||||||
Diluted weighted average outstanding shares |
|
|||||||||||||||
Earnings (Loss) per share |
||||||||||||||||
Basic |
( |
) | ||||||||||||||
Diluted |
( |
) | ||||||||||||||
($ in millions) |
Gains and loss on Cash Flow Hedges |
Unrealized Gains and Losses on Available- for- SaleDebt securities |
Foreign Currency Translation, net of Net Investment Hedges |
Total | ||||||||||||
Balance as of March 31, 2024 |
$ |
$ ( |
) |
$ ( |
) |
$ ( |
) | |||||||||
Other comprehensive income (loss) before reclassifications |
( |
) | ( |
) | ( |
) | ||||||||||
Amounts reclassified from accumulated other comprehensive loss |
||||||||||||||||
Net current period other comprehensive income (loss) |
( |
) | ( |
) | ||||||||||||
Balance as of June 30, 2024 |
$ |
$ ( |
) |
$ ( |
) |
$ ( |
) | |||||||||
($ in millions) |
Gains and loss on Cash Flow Hedges |
Unrealized Gains and Losses on Available- for- Sale Debt securities |
Foreign Currency Translation, net of Net Investment Hedges |
Total | ||||||||||||
Balance as of December 31, 2023 |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
Other comprehensive income (loss) before reclassifications |
( |
) | ( |
) | ||||||||||||
Amounts reclassified from accumulated other comprehensive loss |
( |
) | ( |
) | ||||||||||||
Net current period other comprehensive income (loss) |
( |
) | ( |
) | ||||||||||||
Balance as of June 30, 2024 |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||||
($ in millions) |
Gains and loss on Cash Flow Hedges |
Unrealized Gains and Losses on Available- for- Sale Debt securities |
Foreign Currency Translation, net of Net Investment Hedges |
Total | ||||||||||||
Balance as of March 31, 2023 |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||||
Other comprehensive income (loss) before reclassifications |
( |
) | ||||||||||||||
Amounts reclassified from accumulated other comprehensive loss |
||||||||||||||||
Net current period other comprehensive income |
||||||||||||||||
Balance as of June 30, 2023 |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||||
($ in millions) |
Gains and loss on Cash Flow Hedges |
Unrealized Gains and Losses on Available- for- Sale Debt securities |
Foreign Currency Translation, net of Net Investment Hedges |
Total | ||||||||||||
Balance as of December 31, 2022 |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||||
Other comprehensive income (loss) before reclassifications |
( |
) | ||||||||||||||
Amounts reclassified from accumulated other comprehensive loss |
||||||||||||||||
Net current period other comprehensive income |
||||||||||||||||
Balance as of June 30, 2023 |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||||
($ in millions) |
As of June 30, 2024 |
As of December 31, 2023 | ||||||
Prepayments and accrued income |
$ | |
$ | |
||||
Derivative financial assets |
||||||||
Current tax receivable |
||||||||
Inventory |
||||||||
Other receivables |
||||||||
Total prepaid expenses and other current assets |
$ |
$ |
||||||
($ in millions) |
As of June 30, 2024 |
As of December 31, 2023 | ||||||
Accrued expenses |
$ | |
$ | |
||||
Betting duty, data rights, and product and racefield fees |
||||||||
Employee benefits |
||||||||
Sports betting open positions |
||||||||
Derivative financial liabilities |
||||||||
Current tax payables |
||||||||
Loss contingencies |
||||||||
Indirect and payroll taxes |
||||||||
Deferred consideration |
||||||||
Contingent consideration |
||||||||
Total other current liabilities |
$ |
$ |
||||||
Six months ended June 30, | ||||
($ in millions) |
2024 | |||
Contract liability, beginning of the period |
||||
Contract liability, end of the period |
||||
As of June 30, 2024 |
As of December 31, 2023 | |||||||||||||||
Principal outstanding balance in currency of borrowing Local currency (in millions) |
Outstanding Balance ($ in millions) |
Principal outstanding balance in currency of borrowing Local currency (in millions) |
Outstanding Balance ($ in millions) | |||||||||||||
Term Loan B Agreement |
||||||||||||||||
USD First Lien Term Loan B due |
$ | $ | ||||||||||||||
EUR First Lien Term Loan B due |
€ | € | ||||||||||||||
TLA/TLB/RCF Agreement |
||||||||||||||||
GBP First Lien Term Loan A due |
£ | £ | ||||||||||||||
EUR First Lien Term Loan A due |
€ | € | ||||||||||||||
USD First Lien Term Loan A due |
$ | $ | ||||||||||||||
USD First Lien Term Loan B due |
$ | $ | ||||||||||||||
GBP Revolving Credit Facility due |
£ | £ | |
|||||||||||||
Senior secured notes |
||||||||||||||||
EUR Senior Secured Notes due |
€ | € | ||||||||||||||
USD Senior Secured Notes due |
$ | |
$ | |||||||||||||
Total debt principal including accrued interest |
||||||||||||||||
Less: unamortized debt issuance costs |
( |
) | ( |
) | ||||||||||||
Total debt |
||||||||||||||||
Less: current portion of long-term debt |
( |
) | ( |
) | ||||||||||||
Total long-term debt |
$ |
$ |
||||||||||||||
($ in millions) |
||||
2024 |
$ | |||
2025 |
||||
2026 |
||||
2027 |
||||
2028 |
||||
Thereafter |
||||
Total |
||||
($ in millions) |
Derivative Assets |
Derivative Liabilities | ||||||||||||||||||||||
June-24 |
December-23 |
June-24 |
December-23 | |||||||||||||||||||||
Balance sheet location |
Fair value |
Balance sheet location |
Fair value |
Balance sheet location |
Fair value |
Balance sheet location |
Fair value | |||||||||||||||||
Derivatives designated as cash flow hedges: |
||||||||||||||||||||||||
Cross-currency interest rate swaps |
Prepaid expenses and other current assets |
$ | |
Prepaid expenses and other current assets |
$ | Other current liabilities |
$ | ( |
Other current liabilities |
$ | ( |
) | ||||||||||||
Cross-currency interest rate swaps |
Other non-current assets |
Other non-current assets |
Other non-current liabilities |
( |
) | Other non-current liabilities |
( |
) | ||||||||||||||||
Interest rate swaps |
Prepaid expenses and other current assets |
$ | Prepaid expenses and other current assets |
Other non-current liabilities |
Other non-current liabilities |
|||||||||||||||||||
Total derivatives designated as cash flow hedges |
$ |
$ |
$ |
( |
$ |
( |
) | |||||||||||||||||
Derivatives designated as net investment hedges: |
||||||||||||||||||||||||
Cross-currency interest rate swaps |
Prepaid expenses and other current assets |
$ | Prepaid expenses and other current assets |
$ | Other current liabilities |
$ | Other non-current liabilities |
$ | ( |
) | ||||||||||||||
Total derivatives designated as hedging instruments |
$ |
$ |
$ |
$ |
( |
) | ||||||||||||||||||
Derivatives not designated as hedging instruments: |
||||||||||||||||||||||||
Cross-currency interest rate swaps |
Prepaid expenses and other current assets |
$ | Prepaid expenses and other current assets |
$ | Other current liabilities |
$ | ( |
) | Other current liabilities |
$ | ( |
) | ||||||||||||
Total derivatives not designated as hedging instruments |
$ |
$ |
$ |
( |
) |
$ |
( |
) | ||||||||||||||||
Total derivatives |
$ |
$ |
$ |
( |
$ |
( |
) | |||||||||||||||||
As of June 30, 2024 | ||||||||||||||||||||
($ in millions) |
Level 1 |
Level 2 |
Level 3 |
Total | ||||||||||||||||
Financial assets measured at fair value: |
||||||||||||||||||||
Available for sale – Player deposits – investments |
$ | $ | $ | $ | ||||||||||||||||
Equity securities - Investments |
||||||||||||||||||||
Derivative financial assets |
||||||||||||||||||||
Total |
||||||||||||||||||||
Financial liabilities measured at fair value: |
||||||||||||||||||||
Derivative financial liabilities |
|
|||||||||||||||||||
Fox Option liability |
|
|||||||||||||||||||
Contingent consideration |
||||||||||||||||||||
Total |
||||||||||||||||||||
Redeemable non-controlling interests at fair value |
$ |
$ |
$ |
$ |
||||||||||||||||
As of December 31, 2023 | ||||||||||||||||
($ in millions) |
Level 1 |
Level 2 |
Level 3 |
Total | ||||||||||||
Financial assets measured at fair value: |
||||||||||||||||
Available for sale – Player deposits – investments |
$ | $ | $ | $ | ||||||||||||
Equity securities - Investments |
||||||||||||||||
Total |
||||||||||||||||
Financial liabilities measured at fair value: |
||||||||||||||||
Derivative financial liabilities |
||||||||||||||||
Fox Option liability |
||||||||||||||||
Contingent consideration |
||||||||||||||||
Total |
||||||||||||||||
Redeemable non-controlling interests at fair value |
$ |
$ |
$ |
$ |
||||||||||||
PokerStars trademark held and used 1 |
$ |
$ |
$ |
$ |
||||||||||||
Total nonrecurring fair value measurement |
$ |
$ |
||||||||||||||
($ in millions) |
Contingent consideration |
Equity securities |
Fox option liability |
Total |
Redeemable non- controlling interest at fair value | |||||||||||||||||||
Balance as of March 31, 2024 |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||||||||||
Total gains or losses for the period: |
||||||||||||||||||||||||
Included in earnings |
||||||||||||||||||||||||
Included in other comprehensive income |
( |
) | ( |
) | ||||||||||||||||||||
Attribution of net loss and other comprehensive income: |
||||||||||||||||||||||||
Net income attributable to redeemable non-controlling interest |
( |
) | ||||||||||||||||||||||
Other comprehensive income attributable to redeemable non-controlling interest |
||||||||||||||||||||||||
Acquisitions and settlements: |
||||||||||||||||||||||||
Adjustment of redeemable non-controlling interest at redemption at fair value |
||||||||||||||||||||||||
Balance as of June 30, 2024 |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||
Change in unrealized gains or losses for the period included in earnings |
||||||||||||||||||||||||
Change in unrealized gains or losses for the period included in other comprehensive income |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
|||||||||||||||
($ in millions) |
Contingent consideration |
Equity securities |
Fox option liability |
Total |
Redeemable non- controlling interest at fair value | |||||||||||||||||||
Balance as of December 31, 2023 |
$ |
( |
$ |
$ |
( |
$ |
( |
$ |
( |
) | ||||||||||||||
Total gains or losses for the period: |
||||||||||||||||||||||||
Included in earnings |
( |
( |
( |
|||||||||||||||||||||
Included in other comprehensive income |
||||||||||||||||||||||||
Attribution of net loss and other comprehensive income: |
||||||||||||||||||||||||
Net income attributable to redeemable non-controlling interest |
( |
|||||||||||||||||||||||
Other comprehensive loss attributable to redeemable non-controlling interest |
||||||||||||||||||||||||
Acquisitions and settlements: |
||||||||||||||||||||||||
Adjustment of redeemable non-controlling interest at redemption at fair value |
( |
|||||||||||||||||||||||
Balance as of June 30, 2024 |
( |
( |
( |
( |
||||||||||||||||||||
Change in unrealized gains or losses for the period included in earnings |
( |
( |
( |
|||||||||||||||||||||
Change in unrealized gains or losses for the period included in other comprehensive income |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||
($ in millions) |
Contingent consideration |
Equity securities |
Fox option liability |
Total |
Redeemable non- controlling interest at fair value | |||||||||||||||||||
Balance as of March 31, 2023 |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||||||||||
Total gains or losses for the period: |
||||||||||||||||||||||||
Included in earnings |
( |
) | ( |
) | ||||||||||||||||||||
Included in other comprehensive income |
( |
) | ( |
) | ||||||||||||||||||||
Attribution of net loss and other comprehensive income: |
||||||||||||||||||||||||
Net loss attributable to redeemable non-controlling interest |
||||||||||||||||||||||||
Other comprehensive income attributable to redeemable non-controlling interest |
( |
) | ||||||||||||||||||||||
Acquisitions and settlements: |
||||||||||||||||||||||||
Adjustment of redeemable non-controlling interest at redemption at fair value |
( |
) | ||||||||||||||||||||||
Balance as of June 30, 2023 |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||
Change in unrealized gains or losses for the period included in earnings |
( |
) |
( |
) |
||||||||||||||||||||
Change in unrealized gains or losses for the period included in other comprehensive income |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
|||||||||||||||
($ in millions) |
Contingent consideration |
Equity securities |
Fox option liability |
Total |
Redeemable non- controlling interest at fair value | |||||||||||||||||||
Balance as of December 31, 2022 |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||||||||||
Total gains or losses for the period: |
||||||||||||||||||||||||
Included in earnings |
( |
( |
||||||||||||||||||||||
Included in other comprehensive income |
( |
( |
||||||||||||||||||||||
Attribution of net loss and other comprehensive income: |
||||||||||||||||||||||||
Net loss attributable to redeemable non-controlling interest |
||||||||||||||||||||||||
Other comprehensive income attributable to redeemable non-controlling interest |
( |
|||||||||||||||||||||||
Acquisitions and settlements: |
||||||||||||||||||||||||
Adjustment of redeemable non-controlling interest at redemption at fair value |
( |
|||||||||||||||||||||||
Balance as of June 30, 2023 |
( |
( |
( |
( |
||||||||||||||||||||
Change in unrealized gains or losses for the period included in earnings |
( |
( |
||||||||||||||||||||||
Change in unrealized gains or losses for the period included in other comprehensive income |
$ |
$ |
$ |
( |
$ |
( |
$ |
|||||||||||||||||
($ in millions) |
As of June 30, 2024 | |||
From June 30, 2024 to December 31, 2024 |
$ | |||
2025 |
||||
2026 |
||||
2027 |
||||
2028 |
||||
Thereafter |
||||
$ |
||||
| 1. | not to subject the goods or services to tax, or |
| 2. | to subject the goods or services to a lower tax rate than what is now being suggested by the DGGI. |
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of the financial condition and results of operations of Flutter Entertainment plc and its consolidated subsidiaries in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties about our business and operations. Our actual results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those we describe under Part I, “Item 1A. Risk Factors” in our 2023 Annual Report.
Our Business
Flutter is the world’s leading online sports betting and iGaming operator based on revenue. Our ambition is to change our industry for the better and deliver long-term growth while also achieving a positive, sustainable future for all our stakeholders. We are well-placed to do so through the global competitive advantages of the Flutter Edge, which provides our brands with access to group-wide benefits to stay ahead of the competition, while maintaining a clear vision for sustainability through our Positive Impact Plan.
We believe that we are well-positioned to capitalize on the future long-term growth of the markets we operate in.
Our financial growth engine is built on sustainable revenue growth, margin benefits, significant cashflow generation and disciplined capital allocation.
Our strategy involves expanding our Group’s player base and growing player value through product innovation and efficient player incentive spend, while also increasing the efficiency of our marketing investment and operating leverage to deliver high net income margins and Adjusted EBITDA Margins.
Despite increased borrowing from recent acquisitions, we anticipate reducing our leverage ratio over time due to the scalability of our technology platforms and positive working capital from our growing business.
We aim to create long-term value through disciplined capital allocation, including investing in player growth and retention and acquiring top-performing local brands in high-growth markets. Although we do not currently have specific plans to pay dividends or engage in significant share repurchases, once we have optimized our leverage, we intend to return to shareholders capital that cannot be effectively deployed through our disciplined capital allocation strategy.
The combination of margin benefits, cashflow generation and disciplined capital allocation is expected to drive earnings per share growth and long-term value creation.
Our Products and Geographies
Our principal products include sportsbook, iGaming and other products, such as exchange betting, pari- mutuel wagering and daily fantasy sports (“DFS”). In each market that we operate in, we typically offer sports betting, iGaming, or both, depending on the regulatory conditions of that market.
We operate a divisional management and operating structure across our geographic markets. Each division has an empowered management team responsible for maintaining the momentum and growth in their respective geographic markets. Our divisions are: (i) U.S., (ii) UKI, (iii) International and (iv) Australia, which align with our four reportable segments.
Effective January 1, 2024, subsequent to our decision to close the sports betting platform FOX Bet, we reorganized how the PokerStars (U.S.) business is managed which resulted in a change in operating segment composition. From January 1, 2024, PokerStars (U.S.) is included in the International segment as opposed to the U.S. segment.
Beginning January 1, 2024, the Group revised its definition of Adjusted EBITDA, which is the segment measure used to evaluate performance and allocate resources. The definition of Adjusted EBITDA now excludes share-based compensation as management believes inclusion of share-based
28
Table of Contents
compensation can obscure underlying business trends as share-based compensation could vary widely among companies due to different plans in place resulting in companies using share-based compensation awards differently, both in type and quantity of awards granted.
Segment results for the three and six months ended June 30, 2023, have been revised to reflect the change in operating segment measurement and change in operating segment composition.
Non-GAAP Measures
We report our financial results in this quarterly report in accordance with U.S. GAAP; however, management believes that certain non-GAAP financial measures provide investors with useful information to supplement our financial operating performance in accordance with U.S. GAAP. We believe Adjusted EBITDA and Adjusted EBITDA Margin, both on a Group-wide basis, provide visibility to the performance of our business by excluding the impact of certain income or gains and expenses or losses. Additionally, we believe these metrics are widely used by investors, securities analysts, ratings agencies and others in our industry in evaluating performance.
Adjusted EBITDA is not a liquidity measure and should not be considered as discretionary cash available to us to reinvest in the growth of our business, or to distribute to shareholders, or as a measure of cash that will be available to us to meet our obligations.
Our non-GAAP financial measures may not be comparable to similarly-titled measures used by other companies, have limitations as analytical tools and should not be considered in isolation. Additionally, we do not consider our non-GAAP financial measures as superior to, or a substitute for, the equivalent measures calculated and presented in accordance with U.S. GAAP.
To evaluate our business properly and prudently, we encourage you to review the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report, and not rely on a single financial measure to evaluate our business. We also strongly urge you to review the reconciliations between our most directly comparable financial measures calculated in accordance with U.S. GAAP measures and our non-GAAP measures set forth in “—Supplemental Disclosure of Non-GAAP Measures.”
Key Operational Metrics
Average Monthly Players (“AMPs”) is defined as the average over the applicable reporting period of the total number of players who have placed and/or wagered a stake and/or contributed to rake or tournament fees during the month. This measure does not include individuals who have only used new player or player retention incentives, and this measure is for online players only and excludes retail player activity. We present AMPs for each of our product categories, for each of our divisions and for the consolidated Group as a whole as we believe this provides useful information for assessing underlying trends. At the product category level, a player is generally counted as one AMP for each product category they use. In circumstances where a player uses multiple product categories within one brand, we are generally able to identify that it is the same player who is using multiple product categories and therefore count this player as only one AMP at each of the division and Group levels while also counting this player as one AMP for each separate product category that the player is using.
Notwithstanding the methodology described in the immediately preceding paragraph, our AMPs information is based on player data collected by each of our brands, which generally each employ their own unique data platform, and reflects a level of duplication that arises from individuals who use multiple brands. More specifically, we are generally unable to identify when the same individual player is using multiple brands and therefore count this player multiple times. In addition to the duplication that arises when the same individual player is using multiple brands, we do not eliminate from the AMPs information presented for the Group as a whole duplication of individual players who use our product offerings in multiple divisions. For example, a player who uses Betfair Casino in the iGaming product category within the UKI division and Betfair Exchange in the other product category within the International division would appropriately count as one AMP for each of the iGaming product category and the other product category and would appropriately count as one AMP for each of the UKI division and the International division; however, this player would count as two AMPs (rather than one AMP) for the Group as a whole.
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We are unable to quantify the level of duplication that arises as a result of these circumstances, but do not believe it to be material and note that players must demonstrate residency within the geography covered by a division to sign up for an account, and accordingly such duplication could only arise in the circumstance of an individual player having multiple residences across different divisions. For a further description of the duplication that can arise in the way we count AMPs, see Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2023 Annual Report. We do not believe that the existence of player duplication undercuts the meaningfulness of the AMPs data that we present for assessing underlying trends in our business, and our management uses this AMPs data for this purpose.
Stakes represent the total amount our players wagered in sportsbook and is a key volume indicator for our sportsbook products. The variability of sporting outcomes can result in an impact to sportsbook revenue that may obscure underlying trends in the sportsbook business relating to growth in amounts wagered and, accordingly, staking data can provide additional useful information. We do not utilize staking information to track performance of our iGaming products. Because our iGaming business is not subject to the same variability in outcomes, management is able to assess trends in our iGaming business by analyzing AMPs and revenue changes, without the need to collect or analyze stakes and believes that collecting and analyzing stakes data in our iGaming business would not provide meaningful incremental information regarding trends in such business that is not already provided by collecting and analyzing our iGaming AMPs and revenue data.
Sportsbook net revenue margin is defined as sportsbook revenue as a percentage of the amount staked. This is a key indicator for measuring the combined impact of our overall margin on sportsbook products and levels of bonusing.
Acquisitions
In January 2024, we acquired an initial 51% controlling stake in MaxBet, a leading omni-channel sports betting and gaming operator in Serbia. The purchase comprised of a cash consideration of $144 million (€132 million). The share purchase agreement also includes call and put options to acquire the remaining 49% stake in 2029.
We intend to continue to make similar investments in the future in attractive, fast-growing markets where growing our business organically is typically slower or more difficult to achieve. Acquisitions can involve significant investments to integrate the business of the acquired company with our business, and such costs may vary significantly from period to period. Accordingly, the impact of significant acquisitions may result in our financial information for such periods being less comparable to prior financial periods, or not being comparable at all, to prior financial periods.
Business Environment
The global online betting and gaming market is currently expected to grow at a compound annual growth rate (“CAGR”) of 10.9% between 2024 and 2028, primarily driven by further migration to online channels and the increase in the number of regulated markets across the world. The expected regulation in the next two years of markets such as Canada, as well as additional states in the United States, have the potential to increase the international addressable market. The performance of our four reportable segments can be materially affected by these industrial trends and regulatory changes in the global online sports betting and iGaming market.
U.S.
Our US segment is considered to be the largest growth opportunity for the Group. Since 2018 when the key gambling legislation was overturned by the U.S. Supreme Court, a number of states have moved to legalize and regulate gambling at the state level. As of June 30, 2024, FanDuel is active in 23 states that have legalized and regulated for a competitive online sports betting market and 5 states that have legalized and regulated iGaming. Effective from July 1, 2024, the state of Illinois increased its tax rates on online sports betting which we estimate equates to a $50 million U.S. Adjusted EBITDA impact for the six months ending December 31, 2024 before any mitigating actions which involves optimization of player incentives and media spend, which are expected to have an approximate $10 million impact, resulting in a net U.S. Adjusted EBITDA of $40 million for the 6 months ending December 31, 2024. We would anticipate that ongoing mitigation efforts can reduce the U.S. Adjusted EBITDA impact of the tax increase by approximately 50% in 2025. No other states have advanced similar legislation.
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UKI
While more mature and developed than many other European markets, the United Kingdom and Ireland online gaming and betting markets have continued to exhibit good levels of growth despite the introduction of safer gambling initiatives by operators in those markets and regulatory changes in Great Britain.
In recent years, regulatory changes and the introduction of safer gambling initiatives by operators in the United Kingdom have led to slightly slower market growth. On February 23, 2024, the UK government announced plans to introduce a statutory maximum stake limit for online slot games of £5 per spin for adults aged 25 and over (with effect from September 2024) and £2 per spin for young adults aged 18 to 24 (with effect from six weeks after the £5 per spin limit is implemented). On May 1, 2024, the Gambling Commission of Great Britain published the outcome of a number of consultations arising from the UK Government’s white paper reviewing gambling legislation from April 2023, including in respect of financial vulnerability checks, financial risk assessments, and direct marketing to consumers. On April 27, 2023, the Group announced it estimated that the incremental revenue impact from the proposed measures announced in the white paper could be between £50 million and £100 million from our UKI business per annum.
International
Our International division operates in over 100 different countries in both regulated and unregulated markets with select markets discussed below.
Italy is the largest regulated gambling market in the European Union, with its online penetration expected to stand at 23.0% based on GGR in 2024, which represents an opportunity for Italian online betting and gaming to further grow given the under-penetration in this market.
In recent years, the regulatory framework in Italy has tightened with an online advertising ban issued in 2019 as well as a temporary (2 years) increase in taxes on gross winnings for sports betting to finance Italian sport during the Covid pandemic. In August 2023, the Italian government approved the terms of a new decree to reorganize the entire gambling sector with the primary objective of improving player protection, combating illegal gambling and increasing tax revenue through a new licensing framework. The first operational step was the approval of a decree in March 2024 to initiate the reorganization of the online sector through the issuing of a new tender, for fifty expected new online gaming licenses to be awarded by the first quarter of 2025. Theses licenses will have a nine year validity and cover all the games that are not subject to exclusive licenses, such as online scratch cards. Groups, such as Flutter can hold a maximum of five licenses. The Group does not currently expect a significant impact from these regulatory changes due to its reduced dependence on online advertising, its scale advantage, and its retail presence in Italy.
Among the international markets in which we operate, Turkey, India, Georgia, Serbia and Spain are our five largest markets after Italy. For the period between 2016 and 2023, the market grew at a CAGR of 27.2%, 22.9% and 21.5% in Turkey, India, and Georgia, respectively, driven by the fast-growing online channel. While the market grew at a CAGR of 2.5% in Spain for the same period, the online segment grew at a CAGR of 10.9%.
Australia
The Australian betting and gaming market is regulated with online betting and gaming accounting for 26% of the market in 2023. In recent years, the Australian market has benefitted from customer migration to online channels, accelerated by COVID-19 related restrictions in 2020 and 2021. However, the market has experienced a softer racing market due to the softened consumer demand post COVID-19, which is expected to continue in the near term, while the sports segment of the market has shown continued growth.
The regulatory environment in Australia has also evolved significantly in recent years, especially after the introduction of point of consumption tax in 2019. Queensland, New South Wales and the Australian Capital Territory have since increased point of consumption tax, and finally, Victoria announced an increase in the point of consumption tax rate from 10% to 15%, effective from July 1, 2024. The higher tax environment underlines the importance of scale in the Australian market and favors large operators, as increasing regulatory and tax hurdles can drive out smaller operators and support market share expansion for scale operators.
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Operating Results
Operational and Financial Metrics for the Group
Three months ended June 30, 2024 compared to three months ended June 30, 2023:
The following table presents our AMPs for the Group, by total Group and by product category for the interim periods indicated:
| Three months ended June 30, | ||||||||
| AMPs (Amounts in thousands) | 2024 | 2023 | ||||||
| Total Group AMPs 1 |
14,344 | 12,222 | ||||||
| Group AMPs by Product Category 1 |
||||||||
| Sportsbook |
8,312 | 7,194 | ||||||
| iGaming |
6,487 | 5,504 | ||||||
| Other |
2,135 | 1,746 | ||||||
1. In circumstances where a player uses multiple product categories within one brand, we are generally able to identify that it is the same player who is using multiple product categories and therefore count this player as only one AMP at the Group level while also counting this player as one AMP for each separate product category that the player is using. As a result, the sum of the AMPs presented at the product category level presented above is greater than the total AMPs presented at the Group level. AMPs presented above reflects a level of duplication that arises from individuals who use multiple brands or use product offerings in multiple divisions. See “—Key Operational Metrics” above for additional information regarding how we calculate AMPs data, including a discussion regarding duplication of players that exists in such data.
The following table presents a summary of our financial results for the periods indicated and is derived from our condensed consolidated financial statements for the interim periods indicated.
| Three months ended June 30, |
||||||||
| (Amounts in $ millions, except percentages) | 2024 | 2023 | ||||||
| Revenue |
$ | 3,611 | $ | 3,001 | ||||
| Cost of Sales |
(1,835) | (1,491) | ||||||
|
|
|
|
|
|||||
| Gross profit |
$ | 1,776 | $ | 1,510 | ||||
| Technology, research and development expenses |
(216) | (176) | ||||||
| Sales and marketing expenses |
(746) | (667) | ||||||
| General and administrative expenses |
(445) | (445) | ||||||
|
|
|
|
|
|||||
| Operating profit |
$ | 369 | $ | 222 | ||||
| Other income, net |
89 | 10 | ||||||
| Interest expense, net |
(108) | (82) | ||||||
|
|
|
|
|
|||||
| Profit before income taxes |
$ | 350 | $ | 150 | ||||
| Income tax expense |
(53) | (86) | ||||||
|
|
|
|
|
|||||
| Net income |
$ | 297 | $ | 64 | ||||
|
|
|
|
|
|||||
| Net profit margin 1 |
8.2 % | 2.1 % | ||||||
|
|
|
|
|
|||||
| Adjusted EBITDA 2 |
$ | 738 | $ | 633 | ||||
|
|
|
|
|
|||||
| Adjusted EBITDA Margin 2 |
20.4 % | 21.1 % | ||||||
|
|
|
|
|
|||||
1. Net profit margin is net profit divided by revenue.
2. Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures. See “—Supplemental Disclosure of Non-GAAP Measures” for additional information about these measures and reconciliations to the most directly comparable financial measures calculated in accordance with U.S. GAAP.
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Our revenue increased by 20%, to $3,611 million for the three months ended June 30, 2024, from $3,001 million for the three months ended June 30, 2023 and our AMPs grew 17% period on period to 14.3 million. The key drivers of Group revenue growth were (i) continued expansion of our US segment, with revenue 39% higher period on period, (ii) strong UKI iGaming and sportsbook growth following a positive European Football Championships (‘Euros’) and the benefit of positive sports results and finally (iii) a strong International performance particularly in Italy. The addition of MaxBet in the International segment in the three months ended June 30, 2024 also added 1% to total Group revenue. The impact of sports results which is calculated as the difference between our expected net revenue margin for the period and our actual net revenue margin had an approximately 7% positive impact on total revenue growth for the three months ended June 30, 2024.
Cost of sales increased by 23%, to $1,835 million for the three months ended June 30, 2024, from $1,491 million for the three months ended June 30, 2023, in line with the increase in revenue. Cost of sales as a percentage of revenue remained consistent period on period at 51% for the three months ended June 30, 2024 compared with 50% for the three months ended June 30, 2023.
Technology, research and development expenses increased by 23%, to $216 million for the three months ended June 30, 2024, from $176 million for the three months ended June 30, 2023, primarily reflecting increased labor costs as we scale our business in the U.S. and invest in product development to enhance the customer proposition of our brands across the Group.
Sales and marketing expenses increased by 12%, to $746 million for the three months ended June 30, 2024, from $667 million for the three months ended June 30, 2023, primarily due to increased sales and marketing costs driven by investment in US customer acquisition and the Euros. Sales and marketing expenses as a percentage of revenue was 21% for the three months ended June 30, 2024, a decrease of 150 basis points from 22% for the three months ended June 30, 2023. This decrease was driven by (i) significant economies of scales achieved in existing states with continued disciplined player acquisition investment in the United States partly offset by new state launches, and (ii) increasingly targeted investment in the “Consolidate and Invest” markets which include Italy, Spain, Georgia, Armenia, Brazil, India, Turkey, Morocco, Bosnia & Herzegovina, Serbia and the United States, to support the growth in these markets, as well as the closure of FOX Bet in August 2023.
General and administrative expense remained consistent period on period at $445 million for the three months ended June 30, 2024, compared with $445 million for the three months ended June 30, 2023.
Operating profit increased by $147 million to $369 million for the three months ended June 30, 2024, from $222 million for the three months ended June 30, 2023, as a result of the factors above.
Other income increased by $79 million, to $89 million for the three months ended June 30, 2024, from $10 million for the three months ended June 30, 2023. This increase was primarily driven by the fair value gain of $91 million on the Fox Option liability for the three months ended June 30, 2024, as compared to a fair value loss of $53 million for the three months ended June 30, 2023. This increase in other income was partially offset by (i) a foreign exchange loss of $8 million for the three months ended June 30, 2024 as compared to a foreign exchange gain of $35 million for the three months ended June 30, 2023 and (ii) a fair value gain on derivative instruments of $7 million for the three months ended June 30, 2024 as compared to $29 million for the three months ended June 30, 2023.
Interest expense, net increased by $26 million, to $108 million for the three months ended June 30, 2024, from $82 million for the three months ended June 30, 2023, primarily as a result of an increase in interest rates due to maturity of derivatives used to hedge interest rate risk in the three months ended June 30, 2023 and entering into new derivatives with higher fixed interest rates.
Income tax expense decreased by $33 million, to $53 million for the three months ended June 30, 2024, from $86 million for the three months ended June 30, 2023. The movement is primarily due to the change in amount and jurisdictional mix of profits in which the Group has a taxable presence, as well as the tax impact of discrete adjustments.
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Net income increased by $233 million, or 364%, to $297 million for the three months ended June 30, 2024, from $64 million for the three months ended June 30, 2023 and net profit margin increased to 8.2% from 2.1%, as a result of the factors above.
Adjusted EBITDA increased by 17%, to $738 million for the three months ended June 30, 2024, from $633 million for the three months ended June 30, 2023. Adjusted EBITDA Margin decreased by 70 basis points from 21.1% to 20.4% reflecting the revenue performance and expenses trend outlined above.
Operational and Financial Metrics by Segment
U.S.
The following table presents a summary of our operational metrics for the U.S. segment for the interim periods indicated.
| Three months ended June 30, |
||||||||
| AMPs (Amounts in thousands) | 2024 | 2023 | ||||||
| Total U.S. AMPs 1 |
3,466 | 2,731 | ||||||
| U.S. AMPs by Product Category 1 |
||||||||
| Sportsbook |
2,806 | 2,153 | ||||||
| iGaming |
689 | 528 | ||||||
| Other |
584 | 600 | ||||||
| Stakes (amounts in $ millions) |
$ | 10,976 | $ | 8,158 | ||||
| Sportsbook net revenue margin |
10.0 % | 9.6 % | ||||||
1. Total U.S. AMPs is not a sum total of the AMPs for each product category because in circumstances where a player uses multiple product categories within one brand, we are generally able to identify that it is the same player who is using multiple product categories and therefore count this player as only one AMP at the U.S. division level while also counting this player as one AMP for each separate product category that the player is using. As a result, the sum of the AMPs presented at the product category level presented above is greater than the total AMPs presented at the U.S. division level. AMPs presented above reflects a level of duplication that arises from individuals who use multiple brands or use product offerings in multiple divisions. See “—Key Operational Metrics” above for additional information regarding how we calculate AMPs data, including a discussion regarding duplication of players that exists in such data.
The following table presents our revenue, Adjusted EBITDA and Adjusted EBITDA Margin for the U.S. segment for the interim periods indicated.
| Three months ended June 30, |
||||||||
| (Amounts in $ millions, except percentages) | 2024 | 2023 | ||||||
| U.S. |
||||||||
| Sportsbook |
$ | 1,099 | $ | 781 | ||||
| iGaming |
$ | 357 | $ | 243 | ||||
| Other |
$ | 71 | $ | 73 | ||||
|
|
|
|
|
|||||
| Total U.S. revenue |
$ | 1,527 | $ | 1,097 | ||||
|
|
|
|
|
|||||
| Adjusted EBITDA |
$ | 260 | $ | 172 | ||||
| Adjusted EBITDA Margin |
17.0 % | 15.7 % | ||||||
Total revenue for our U.S. segment increased by 39% to $1,527 million for the three months ended June 30, 2024, from $1,097 million for the three months ended June 30, 2023, reflecting AMPs growth of 27%. Sportsbook revenue increased by 41%, with amounts staked up 35% to $10,976 million and AMPs 30% higher at 2.8 million due to our strong growth across both new and existing states. Sportsbook net revenue margin increased to 10.0% for the three months ended June 30, 2024 compared to 9.6% for the three months ended June 30, 2023. This reflected continued expansion of our expected sportsbook net revenue margin, driven by our market leading product offering and pricing capabilities, partly offset by a 50 basis points adverse impact from less favorable sports results compared with the prior period (sports results for the three months ended June 30, 2024: 110 basis points favorable; for the three months ended June 30, 2023:160 basis points favorable).
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iGaming revenue for the three months ended June 30, 2024 increased by 47% driven by our focuses on improving customer experiences and product innovation including the launch of exclusive new titles such as Fort Knox Cats and the addition of new FanDuel Reward Machine features. As a result AMPs increased by 30% period on period to 0.7 million for the three months ended June 30, 2023.
Other revenue for the three months ended June 30, 2024 decreased by 3% period on period driven by a decline in DFS where a portion of our DFS player base has migrated some or all of their play to our sportsbook product.
Adjusted EBITDA for the U.S. was $260 million for the three months ended June 30, 2024, a $88 million increase compared to $172 million for the three months ended June 30, 2023. Adjusted EBITDA Margin increased to 17.0% for the three months ended June 30, 2024 from 15.7% for the three months ended June 30, 2023. These improvements were driven by (i) an increase in revenue as a result of the factors above; and (ii) significant economies of scales achieved in sales and marketing expenses through continued disciplined player acquisition investment in existing states. These improvements were partially offset by an increase in technology, research and development costs, primarily reflecting increased headcount costs as we continue to invest in scaling our business in the US.
UKI
The following table presents a summary of our operational metrics for the UKI segment for the interim periods indicated.
| Three months ended June 30, |
||||||||
| AMPs (Amounts in thousands) | 2024 | 2023 | ||||||
| Total UKI AMPs 1 |
4,407 | 4,108 | ||||||
| UKI AMPs by Product Category 1 |
||||||||
| Sportsbook |
3,294 | 3,000 | ||||||
| iGaming |
2,322 | 2,033 | ||||||
| Other |
144 | 145 | ||||||
| Stakes (amounts in $ millions) |
$ | 3,221 | $ | 3,266 | ||||
| Sportsbook net revenue margin |
14.0 % | 12.3 % | ||||||
1. Total UKI AMPs is not a sum total of the AMPs for each product category because in circumstances where a player uses multiple product categories within one brand, we are generally able to identify that it is the same player who is using multiple product categories and therefore count this player as only one AMP at the UKI division level while also counting this player as one AMP for each separate product category that the player is using. As a result, the sum of the AMPs presented at the product category level presented above is greater than the total AMPs presented at the UKI division level. AMPs presented above reflects a level of duplication that arises from individuals who use multiple brands or use product offerings in multiple divisions. See “—Key Operational Metrics” above for additional information regarding how we calculate AMPs data, including a discussion regarding duplication of players that exists in such data.
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The following table presents our revenue, Adjusted EBITDA and Adjusted EBITDA Margin for the UKI segment for the interim periods indicated.
| Three months ended June 30, |
||||||||
| (Amounts in $ millions, except percentages) | 2024 | 2023 | ||||||
| UKI |
||||||||
| Sportsbook |
$ | 451 | $ | 401 | ||||
| iGaming |
$ | 423 | $ | 339 | ||||
| Other |
$ | 54 | $ | 49 | ||||
|
|
|
|
|
|||||
| Total UKI revenue |
$ | 928 | $ | 789 | ||||
|
|
|
|
|
|||||
| Adjusted EBITDA |
$ | 293 | $ | 249 | ||||
| Adjusted EBITDA Margin |
31.6 % | 31.6 % | ||||||
Total revenue for our UKI segment increased by 18% to $928 million for the three months ended June 30, 2024 from $789 million for the three months ended June 30, 2023. AMPs increased by 7% to 4.4 million for the three months ended June 30, 2024 from 4.1 million for the three months ended June 30, 2023, largely benefitted from the Euros.
Sportsbook revenue increased by 12% to $451 million for the three months ended June 30, 2024 from $401 million for the three months ended June 30, 2023, mainly driven by the Euros and a 170 basis points increase in our sportsbook net revenue margin to 14.0%. This was driven by the continued expansion of our expected net revenue margin due to greater same game parlay adoption, which is a higher margin bet type. We also benefited from 110 basis points of favorable sports results period on period (sports results for the three months ended June 30, 2024: 190 basis points favorable; for the three months ended June 30, 2023: 80 basis points favorable).
iGaming revenue increased 25%, to $423 million for the three months ended June 30, 2024, from $339 million for the three months ended June 30, 2023. This was driven by AMP growth of 14% and increased engagement through consistent delivery of product improvements which drove strong cross-sell rates.
Other revenue increased by 10%, to $54 million for the three months ended June 30, 2024 from $49 million for the three months ended June 30, 2023 driven by the Betfair Exchange.
Adjusted EBITDA for UKI was $293 million for the three months ended June 30, 2024, a $44 million increase from $249 million for the three months ended June 30, 2023. Adjusted EBITDA Margin remained consistent period on period at 31.6% for the three months ended June 30, 2024 and 2023. This was due to the increase in revenue as a result of the factors above, offset by the increase in sales and marketing expenses related to the Euros.
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International
The following table presents a summary of our operational metrics for the International segment for the interim periods indicated.
| Three months ended June 30, |
||||||||
| AMPs (Amounts in thousands) | 2024 | 2023 | ||||||
| Total International AMPs 1 |
5,273 | 4,243 | ||||||
| International AMPs by Product Category 1 |
||||||||
| Sportsbook |
1,012 | 902 | ||||||
| iGaming |
3,476 | 2,943 | ||||||
| Other |
1,407 | 1,001 | ||||||
| Stakes (amounts in $ millions) |
$ | 1,475 | $ | 1,197 | ||||
| Sportsbook net revenue margin |
13.4 % | 12.9 % | ||||||
1. Total International AMPs is not a sum total of the AMPs for each product category because in circumstances where a player uses multiple product categories within one brand, we are generally able to identify that it is the same player who is using multiple product categories and therefore count this player as only one AMP at the International division level while also counting this player as one AMP for each separate product category that the player is using. As a result, the sum of the AMPs presented at the product category level presented above is greater than the total AMPs presented at the International division level. AMPs presented above reflects a level of duplication that arises from individuals who use multiple brands or use product offerings in multiple divisions. See “—Key Operational Metrics” above for additional information regarding how we calculate AMPs data, including a discussion regarding duplication of players that exists in such data.
The following table presents our revenue, Adjusted EBITDA and Adjusted EBITDA Margin for the International segment for the interim periods indicated.
| Three months ended June 30, |
||||||||
| (Amounts in $ millions, except percentages) | 2024 | 2023 | ||||||
| International |
||||||||
| Sportsbook |
$ | 197 | $ | 154 | ||||
| iGaming |
$ | 574 | $ | 540 | ||||
| Other |
$ | 36 | $ | 32 | ||||
|
|
|
|
|
|||||
| Total International revenue |
$ | 807 | $ | 726 | ||||
|
|
|
|
|
|||||
| Adjusted EBITDA |
$ | 156 | $ | 145 | ||||
| Adjusted EBITDA Margin |
19.3 % | 20.0 % | ||||||
Total revenue for our International segment increased by 11% to $807 million for the three months ended June 30, 2024 from $726 million for the three months ended June 30, 2023, reflecting a 24% increase in AMPs. Revenue in our “Consolidate and Invest” markets grew 16% reflecting (i) the benefit from the Euros, (ii) the acquisition of MaxBet in January 2024, which contributed $52 million in revenue during the three months ended June 30, 2024 and, (iii) the strong revenue growth in Italy (+11%), Georgia (+12%), Spain (+10%) and Brazil (+6%). This growth helped to mitigate the revenue decline in India (-8%) due to the impact of tax changes introduced in the three months ended December 31, 2023.
Sportsbook revenue increased by 28% to $197 million for the three months ended June 30, 2024 from $154 million for the three months ended June 30, 2023. This was mainly due to the stakes increase of 23% to $1,475 million driven by the Euros and the increase in sportsbook net revenue margin of 50 basis points to 13.4%. The increase in net revenue margin was driven by the 20 basis point impact from favorable sports results period on period (three months ended June 30, 2024: 110 basis points favorable impact; three months ended June 30, 2023: 90 basis points favorable impact).
iGaming revenue increased by 6% to $574 million for the three months ended June 30, 2024 from $540 million for the three months ended June 30, 2023, due to the addition of MaxBet and growth in Italy and Georgia partly offset by tax changes in India.
Other revenue for the three months ended June 30, 2024 increased by 13% driven by the new concession in Morocco.
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Adjusted EBITDA for International was $156 million for the three months ended June 30, 2024, a 8% increase from $145 million for the three months ended June 30, 2023, and Adjusted EBITDA Margin decreased by 70 basis points to 19.3% for the three months ended June 30, 2024. This reflects operating cost savings from the closure of Fox Bet and the optimization of the PokerStars business model being offset by the phasing of general and administration costs in the prior year.
Australia
The following table presents a summary of our operational metrics for the Australia segment for the interim periods indicated.
| Three months ended June 30, |
||||||||
| AMPs (Amounts in thousands) | 2024 | 2023 | ||||||
| Total Australia AMPs 1 |
1,199 | 1,139 | ||||||
| Stakes (amounts in $ millions) |
$ | 2,726 | $ | 2,959 | ||||
| Sportsbook net revenue margin |
12.8 % | 13.1 % | ||||||
1. See “—Key Operational Metrics” above for additional information regarding how we calculate AMPs data, including a discussion regarding duplication of players that exists in such data.
The following table presents our revenue, Adjusted EBITDA and Adjusted EBITDA Margin for the Australia segment for the interim periods indicated.
| Three months ended June 30, |
||||||||
| (Amounts in $ millions, except percentages) | 2024 | 2023 | ||||||
| Australia |
||||||||
| Sportsbook |
$ | 349 | $ | 389 | ||||
|
|
|
|
|
|||||
| Total Australia revenue |
$ | 349 | $ | 389 | ||||
|
|
|
|
|
|||||
| Adjusted EBITDA |
$ | 74 | $ | 108 | ||||
| Adjusted EBITDA Margin |
21.2 % | 27.8 % | ||||||
Australia revenue decreased by 10% to $349 million for the three months ended June 30, 2024 from $389 million for the three months ended June 30, 2023, with AMPs increasing by 5%, to 1.2 million in period, due to strong engagement on key sports events including the Rugby League State of Origin games during the quarter. The decrease in sportsbook revenue was driven by a 8% decrease in amounts staked to $2,726 million in for the three months ended June 30, 2024, due to continued softer racing market environment, in line with expectations, compared to the three months ended June 30, 2023. The sportsbook net revenue margin decreased by 30 basis points to 12.8% in three months ended June 30, 2023 primarily driven by the adverse impact from less favorable sports results. The impact of sports results was 40 and 90 basis points of favorable impact in the three months ended June 30, 2024 and the three months ended June 30, 2023, respectively.
Adjusted EBITDA for Australia was $74 million for the three months ended June 30, 2024, a 31% decrease from $108 million for the three months ended June 30, 2023. Adjusted EBITDA Margin decreased by 660 basis points to 21.2%. The period-on-period movement reflected the decrease in revenue as a result of the factors above.
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Six months ended June 30, 2024 compared to six months ended June 30, 2023:
The following table presents our AMPs for the Group, by total Group and by product category for the interim periods indicated:
| Six months ended June 30, |
||||||||
| AMPs (Amounts in thousands) | 2024 | 2023 | ||||||
| Total Group AMPs 1 |
14,033 | 12,285 | ||||||
| Group AMPs by Product Category 1 |
||||||||
| Sportsbook |
8,326 | 7,426 | ||||||
| iGaming |
6,511 | 5,624 | ||||||
| Other |
1,756 | 1,453 | ||||||
1. In circumstances where a player uses multiple product categories within one brand, we are generally able to identify that it is the same player who is using multiple product categories and therefore count this player as only one AMP at the Group level while also counting this player as one AMP for each separate product category that the player is using. As a result, the sum of the AMPs presented at the product category level presented above is greater than the total AMPs presented at the Group level. AMPs presented above reflects a level of duplication that arises from individuals who use multiple brands or use product offerings in multiple divisions. See “—Key Operational Metrics” above for additional information regarding how we calculate AMPs data, including a discussion regarding duplication of players that exists in such data.
The following table presents a summary of our financial results for the periods indicated and is derived from our consolidated financial statements for the interim periods indicated.
| Six months ended June 30, |
||||||||
| (Amounts in $ millions, except percentages) | 2024 | 2023 | ||||||
| Revenue |
$ | 7,008 | $ | 5,919 | ||||
| Cost of Sales |
(3,628) | (3,032) | ||||||
|
|
|
|
|
|||||
| Gross profit |
$ | 3,380 | $ | 2,887 | ||||
| Technology, research and development expenses |
(406) | (344) | ||||||
| Sales and marketing expenses |
(1,627) | (1,549) | ||||||
| General and administrative expenses |
(854) | (787) | ||||||
|
|
|
|
|
|||||
| Operating profit |
$ | 493 | $ | 207 | ||||
| Other expense, net |
(85) | (35) | ||||||
| Interest expense, net |
(220) | (174) | ||||||
|
|
|
|
|
|||||
| Income (loss) before income taxes |
$ | 188 | $ | (2) | ||||
| Income tax expense |
(68) | (45) | ||||||
|
|
|
|
|
|||||
| Net income (loss) |
$ | 120 | $ | (47) | ||||
|
|
|
|
|
|||||
| Net profit (loss) margin 1 |
1.7 % | (0.8)% | ||||||
|
|
|
|
|
|||||
| Adjusted EBITDA 2 |
$ | 1,252 | $ | 985 | ||||
|
|
|
|
|
|||||
| Adjusted EBITDA Margin 2 |
17.9 % | 16.6 % | ||||||
|
|
|
|
|
|||||
1. Net profit (loss) margin is net profit (loss) divided by revenue.
2. Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures. See “—Supplemental Disclosure of Non-GAAP Measures” for additional information about these measures and reconciliations to the most directly comparable financial measures calculated in accordance with U.S. GAAP.
Our revenue increased by 18%, to $7,008 million for the six months ended June 30, 2024, from $5,919 million for the six months ended June 30, 2023 and our AMPs grew 14% period on period to 14.0 million. The key drivers of Group revenue growth were (i) continued expansion of our US segment, with revenue 35% higher period on period (ii) strong UKI iGaming and sportsbook growth following a positive Euros and the benefit of positive sports results during the three months ended June 30, 2024 and (iii) a strong International performance particularly in Italy. The addition of MaxBet in International segment in the six months ended June 30, 2024 also added 1% to total Group revenue. The impact of sports results which is calculated as the difference between our expected net revenue margin for the period and our actual net revenue margin had an approximately 1% positive impact on total revenue growth for the six months ended June 30, 2024.
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Cost of sales increased by 20%, to $3,628 million for the six months ended June 30, 2024, from $3,032 million for the six months ended June 30, 2023, in line with the increase in revenue. Cost of sales as a percentage of revenue remained consistent period on period at 52% for the six months ended June 30, 2024 compared with 51% for the six months ended June 30, 2023.
Technology, research and development expenses increased by 18%, to $406 million for the six months ended June 30, 2024, from $344 million for the six months ended June 30, 2023, primarily driven by continued investment in product development to enhance the customer proposition of our brands across the Group and increased labor costs as we are scaling our business in the US.
Sales and marketing expenses increased by 5%, to $1,627 million for the six months ended June 30, 2024, from $1,549 million for the six months ended June 30, 2023. Sales and marketing expenses as a percentage of revenue was 23.2% for the six months ended June 30, 2024, a decrease of 300 basis points from 26.2% for the six months ended June 30, 2023. This decrease was driven by (i) significant economies of scales achieved in existing states with continued disciplined player acquisition investment in the United States partly offset by new state launches, (ii) increasingly targeted investment in the “Consolidate and Invest” markets, as well as the closure of FOX Bet in August 2023 and (iii) partly offset by increased investments in the Euros during the three months ended June 30, 2024.
General and administrative expenses increased by 9%, to $854 million for the six months ended June 30, 2024, from $787 million for the six months ended June 30, 2023. The increase was primarily as a result of (i) the continued expansion of our U.S. business and (ii) an increase in corporate overhead due to greater investment in Group resource. The increase also reflects the advisory fees related to activities associated with the change in the primary listing of the Group.
Operating profit increased by $286 million from a profit of $207 million for the six months ended June 30, 2023, to a profit of $493 million for the six months ended June 30, 2024, as a result of the factors above.
Other expense increased by $50 million, to $85 million for the six months ended June 30, 2024, from $35 million for the six months ended June 30, 2023. This increase was primarily driven by a foreign exchange loss of $11 million for the six months ended June 30, 2024 as compared to a foreign exchange gain of $71 million for the six months ended June 30, 2023. This increase in other expense was partially offset by (i) the decrease in the fair value loss of $24 million on the Fox Option liability period on period and, (ii) an increase in the fair value gain on derivative instruments of $10 million period on period.
Interest expense, net increased by $45 million, to $220 million for the six months ended June 30, 2024, from $174 million for the six months ended June 30, 2023, primarily as a result of an increase in interest rates due to maturity of our derivatives used to hedge interest rate risk in the six months ended June 30, 2023 and entering into new derivatives with higher fixed interest rates.
Income tax expense increased by $23 million, to $68 million for the six months ended June 30, 2024, from $45 million for the six months ended June 30, 2023. The movement is primarily due to the change in amount and jurisdictional mix of profits in which the Group has a taxable presence, as well as the tax impact of discrete adjustments.
Net income (loss) increased by $167 million, or 355%, to $120 million net profit for the six months ended June 30, 2024, from $47 million net loss for the six months ended June 30, 2023 and net profit margin increased to 1.7% from 0.8% net loss margin, as a result of the factors above.
Adjusted EBITDA increased by 27%, to $1,252 million for the six months ended June 30, 2024, from $985 million for the six months ended June 30, 2023. Adjusted EBITDA Margin increasing by 130 basis points from 16.6% to 17.9% reflecting the revenue performance and expenses trend outlined above.
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Operational and Financial Metrics by Segment
U.S.
The following table presents a summary of our operational metrics for the U.S. segment for the interim periods indicated.
| Six months ended June 30, |
||||||||
| AMPs (Amounts in thousands) | 2024 | 2023 | ||||||
| Total U.S. AMPs 1 |
3,682 | 3,055 | ||||||
| U.S. AMPs by Product Category 1 |
||||||||
| Sportsbook |
3,071 | 2,481 | ||||||
| iGaming |
730 | 552 | ||||||
| Other |
511 | 554 | ||||||
| Stakes (amounts in $ millions) |
$ | 24,460 | $ | 19,068 | ||||
| Sportsbook net revenue margin |
8.5 % | 8.1 % | ||||||
1. Total U.S. AMPs is not a sum total of the AMPs for each product category because in circumstances where a player uses multiple product categories within one brand, we are generally able to identify that it is the same player who is using multiple product categories and therefore count this player as only one AMP at the U.S. division level while also counting this player as one AMP for each separate product category that the player is using. As a result, the sum of the AMPs presented at the product category level presented above is greater than the total AMPs presented at the U.S. division level. AMPs presented above reflects a level of duplication that arises from individuals who use multiple brands or use product offerings in multiple divisions. See “—Key Operational Metrics” above for additional information regarding how we calculate AMPs data, including a discussion regarding duplication of players that exists in such data.
The following table presents our revenue, Adjusted EBITDA and Adjusted EBITDA Margin for the U.S. segment for the interim periods indicated.
| Six months ended June 30, |
||||||||
| (Amounts in $ millions, except percentages) | 2024 | 2023 | ||||||
| U.S. |
||||||||
| Sportsbook |
2,085 | 1,540 | ||||||
| iGaming |
715 | 484 | ||||||
| Other |
137 | 144 | ||||||
|
|
|
|
|
|||||
| Total U.S. revenue |
2,937 | 2,168 | ||||||
|
|
|
|
|
|||||
| Adjusted EBITDA |
286 | 119 | ||||||
| Adjusted EBITDA Margin |
9.7 % | 5.5 % | ||||||
Total revenue for our U.S. segment increased by 35% to $2,937 million for the six months ended June 30, 2024, from $2,168 million for the six months ended June 30, 2023, reflecting AMPs increasing by 21%. Sportsbook revenue increased by 35%, with amounts staked increased by 28% to $24,460 million and AMPs 24% higher at 3.1 million from strong growth in both new and existing states. Sportsbook net revenue margin increased to 8.5% for the six months ended June 30, 2024 compared to 8.1% for the six months ended June 30, 2023. This reflected continued expansion of our expected sportsbook net revenue margin, driven by our market leading product offering, partly offset by a 100 basis points adverse impact from unfavorable sports results compared with the prior period (sports results for the six months ended June 30, 2024: 20 basis points unfavorable; for the six months ended June 30, 2023: 80 basis points favorable). These unfavorable results were most pronounced in the second half of March 2024 related to the “March Madness” NCAA college basketball tournament.
iGaming revenue for the six months ended June 30, 2024 increased by 48% driven by our focus on improving customer experiences and product innovation including the launch of exclusive new slot games, that led to a 32% increase in AMPs period on period to 0.7 million for the six months ended June 30, 2024.
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Other revenue for the six months ended June 30, 2024 decreased by 5% period on period driven by a decline in DFS where a portion of our DFS player base has migrated some or all of their play to our sportsbook product.
Adjusted EBITDA for the U.S. was $286 million for the six months ended June 30, 2024, a $167 million increase compared to $119 million for the six months ended June 30, 2023. Adjusted EBITDA Margin increased to 9.7% for the six months ended June 30, 2024 from 5.5% for the six months ended June 30, 2023. These improvements were driven by (i) an increase in revenue as a result of the factors above; and (ii) significant economies of scales achieved in sales and marketing expenses through continued disciplined player acquisition investment in existing states, partly offset by new state launches.
UKI
The following table presents a summary of our operational metrics for the UKI segment for the interim periods indicated.
| Six months ended June 30, |
||||||||
| AMPs (Amounts in thousands) | 2024 | 2023 | ||||||
| Total UKI AMPs 1 |
4,251 | 4,066 | ||||||
| UKI AMPs by Product Category 1 |
||||||||
| Sportsbook |
3,154 | 2,982 | ||||||
| iGaming |
2,266 | 2,029 | ||||||
| Other |
138 | 143 | ||||||
| Stakes (amounts in $ millions) |
$ | 6,484 | $ | 6,506 | ||||
| Sportsbook net revenue margin |
13.3 % | 11.9 % | ||||||
1. Total UKI AMPs is not a sum total of the AMPs for each product category because in circumstances where a player uses multiple product categories within one brand, we are generally able to identify that it is the same player who is using multiple product categories and therefore count this player as only one AMP at the UKI division level while also counting this player as one AMP for each separate product category that the player is using. As a result, the sum of the AMPs presented at the product category level presented above is greater than the total AMPs presented at the UKI division level. AMPs presented above reflects a level of duplication that arises from individuals who use multiple brands or use product offerings in multiple divisions. See “—Key Operational Metrics” above for additional information regarding how we calculate AMPs data, including a discussion regarding duplication of players that exists in such data.
The following table presents our revenue, Adjusted EBITDA and Adjusted EBITDA Margin for the UKI segment for the interim periods indicated.
| Six months ended June 30, |
||||||||
| (Amounts in $ millions, except percentages) | 2024 | 2023 | ||||||
| UKI |
||||||||
| Sportsbook |
$ | 862 | $ | 777 | ||||
| iGaming |
$ | 829 | $ | 658 | ||||
| Other |
$ | 98 | $ | 90 | ||||
|
|
|
|
|
|||||
| Total UKI revenue |
$ | 1,789 | $ | 1,525 | ||||
|
|
|
|
|
|||||
| Adjusted EBITDA |
$ | 561 | $ | 455 | ||||
| Adjusted EBITDA Margin |
31.4 % | 29.8 % | ||||||
Total revenue for our UKI segment increased by 17% to $1,789 million for the six months ended June 30, 2024 from $1,525 million for the six months ended June 30, 2023. AMPs increased by 5% to 4.3 million for the six months ended June 30, 2024 from 4.1 million for the six months ended June 30, 2023, largely benefitted from the Euros and strong iGaming AMP growth.
Sportsbook revenue increased 11% to $862 million for the six months ended June 30, 2024 from $777 million for the six months ended June 30, 2023, mainly due to the Euros and an increase in net revenue margin of 140 basis points period on period to 13.3%. This was driven by the continued expansion of our expected net revenue margin due to greater adoption of higher margin same game parlay bet types. We also benefited from 80 basis points of favorable sports results period on period (sports results for the six months ended June 30, 2024: 120 basis points favorable; for the six months ended June 30, 2023: 40 basis points favorable). Sports results were particularly favorable during the Euros.
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iGaming revenue increased 26%, to $829 million for the six months ended June 30, 2024, from $658 million for the six months ended June 30, 2023, driven by AMP growth of 12% through consistent delivery of product improvements which drove strong cross-sell rates.
Other revenue increased by 9%, to $98 million for the six months ended June 30, 2024 from $90 million for the six months ended June 30, 2023 driven by the Betfair Exchange.
Adjusted EBITDA for UKI was $561 million for the six months ended June 30, 2024, a $106 million increase from $455 million for the six months ended June 30, 2023. Adjusted EBITDA Margin increased by 160 basis points to 31.4%. The improvements were driven by (i) increase in revenue as a result of the factors above; and (ii) operating leverage, particularly in general and administrative expenses.
International
The following table presents a summary of our operational metrics for the International segment for the interim periods indicated.
| Six months ended June 30, |
||||||||
| AMPs (Amounts in thousands) | 2024 | 2023 | ||||||
| Total International AMPs 1 |
5,006 | 4,099 | ||||||
| International AMPs by Product Category 1 |
||||||||
| Sportsbook |
1,007 | 897 | ||||||
| iGaming |
3,514 | 3,044 | ||||||
| Other |
1,107 | 756 | ||||||
| Stakes (amounts in $ millions) |
$ | 3,042 | $ | 2,495 | ||||
| Sportsbook net revenue margin |
11.7 % | 13.4 % | ||||||
1. Total International AMPs is not a sum total of the AMPs for each product category because in circumstances where a player uses multiple product categories within one brand, we are generally able to identify that it is the same player who is using multiple product categories and therefore count this player as only one AMP at the International division level while also counting this player as one AMP for each separate product category that the player is using. As a result, the sum of the AMPs presented at the product category level presented above is greater than the total AMPs presented at the International division level. AMPs presented above reflects a level of duplication that arises from individuals who use multiple brands or use product offerings in multiple divisions. See “—Key Operational Metrics” above for additional information regarding how we calculate AMPs data, including a discussion regarding duplication of players that exists in such data.
The following table presents our revenue, Adjusted EBITDA and Adjusted EBITDA Margin for the International segment for the interim periods indicated.
| Six months ended June 30, |
||||||||
| (Amounts in $ millions, except percentages) | 2024 | 2023 | ||||||
| International |
||||||||
| Sportsbook |
$ | 357 | $ | 335 | ||||
| iGaming |
$ | 1,174 | $ | 1,093 | ||||
| Other |
$ | 73 | $ | 58 | ||||
|
|
|
|
|
|||||
| Total International revenue |
$ | 1,604 | $ | 1,486 | ||||
|
|
|
|
|
|||||
| Adjusted EBITDA |
$ | 329 | $ | 294 | ||||
| Adjusted EBITDA Margin |
20.5 % | 19.8 % | ||||||
Total revenue for our International segment increased by 8% to $1,604 million for the six months ended June 30, 2024 from $1,486 million for the six months ended June 30, 2023, reflecting a 22% increase in AMPs. Revenue in our “Consolidate and Invest” markets grew 12% reflecting (i) the acquisition of MaxBet in January 2024 which contributed $99 million in revenue during the six months ended June 30, 2024 and, (ii) the revenue growth in Italy (+4%), Georgia (+14%), Spain (+11%) and Brazil (+7%). This growth helped to mitigate the revenue decline in India (-17%) due to the impact of tax changes introduced in the three months ended December 31, 2023.
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Sportsbook revenue increased by 7% to $357 million for the six months ended June 30, 2024 from $335 million for the six months ended June 30, 2023. This was mainly due to stakes increasing by 22% to $3,042 million partly offset by the decrease in sportsbook net revenue margin of 170 basis points to 11.7%. The unfavorable sports results primarily in Sisal, during the three months ended June 30, 2024, led to 140 basis point unfavorable impact from sports results period on period (the six months ended June 30, 2024: 30 basis points unfavorable impact; six months ended June 30, 2023:110 basis points favorable impact).
iGaming revenue increased by 7% to $1,174 million for the six months ended June 30, 2024 from $1,093 million for the six months ended June 30, 2023, with the addition of MaxBet and strong AMP growth offsetting a challenging prior year comparative due to the record SuperEnalotto jackpot in Italy.
Other revenue for the six months ended June 30, 2024 increased by 26% driven by the new concession in Morocco and Betfair Exchange.
Adjusted EBITDA for International was $329 million for the six months ended June 30, 2024, a $35 million increase from $294 million for the six months ended June 30, 2023, and Adjusted EBITDA Margin increased by 70 basis points to 20.5% for the six months ended June 30, 2024. These increases were primarily driven by (i) the increase in revenue as a result of the factors above and (ii) cost savings from the closure of FOX Bet in August 2023 and the optimization of the PokerStars business model.
Australia
The following table presents a summary of our operational metrics for the Australia segment for the interim periods indicated.
| Six months ended June 30, |
||||||||
| AMPs (Amounts in thousands) | 2024 | 2023 | ||||||
| Total Australia AMPs 1 |
1,095 | 1,066 | ||||||
| Stakes (amounts in $ millions) |
$ | 5,273 | $ | 6,102 | ||||
| Sportsbook net revenue margin |
12.9 % | 12.1 % | ||||||
1. See “—Key Operational Metrics” above for additional information regarding how we calculate AMPs data, including a discussion regarding duplication of players that exists in such data.
The following table presents our revenue, Adjusted EBITDA and Adjusted EBITDA Margin for the Australia segment for the interim periods indicated.
| Six months ended June 30, |
||||||||
| (Amounts in $ millions, except percentages) | 2024 | 2023 | ||||||
| Australia |
||||||||
| Sportsbook |
$ | 678 | $ | 740 | ||||
|
|
|
|
|
|||||
| Total Australia revenue |
$ | 678 | $ | 740 | ||||
|
|
|
|
|
|||||
| Adjusted EBITDA |
$ | 157 | $ | 193 | ||||
| Adjusted EBITDA Margin |
23.2 % | 26.1 % | ||||||
Australia revenue decreased by 8% to $678 million for the six months ended June 30, 2024 from $740 million for the six months ended June 30, 2023, with AMPs increasing by 3%, to 1.1 million in period, due to strong engagement on key sports events including the Rugby League State of Origin games during the three months ended June 30, 2024. The decrease in sportsbook revenue was driven by a 14% decrease in amounts staked to $5,273 million in for the six months ended June 30, 2024, due to continued softer racing market environment, in line with expectations, compared to the six months ended June 30, 2023. The sportsbook net revenue margin increased by 80 basis points to 12.9% in six months ended June 30, 2024 primarily driven by favorable sports results. The impact of sports results was 80 and 30 basis points of favorable impact in the six months ended June 30, 2024 and the six months ended June 30, 2023, respectively.
Adjusted EBITDA for Australia was $157 million for the six months ended June 30, 2024, a 19% decrease from $193 million for the six months ended June 30, 2023. Adjusted EBITDA Margin decreased 290 basis points to 23.2%. The period-on-period movement reflected the decrease in revenue as a result of the factors above.
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Supplemental Disclosure of Non-GAAP Measures
Adjusted EBITDA is defined on a Group basis as income (loss) before income taxes; other (expense) income, net; interest expense, net; depreciation and amortization; transaction fees and associated costs; restructuring and integration costs;; impairment of property and equipment and intangible assets, and share-based compensation charge. Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of revenue.
Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures and should not be viewed as measures of overall operating performance, indicators of our performance, considered in isolation, or construed as alternatives to operating profit (loss) or net income (loss) measures, or as alternatives to cash flows from operating activities, as measures of liquidity, or as alternatives to any other measure determined in accordance with GAAP.
These non-GAAP measures are presented solely as supplemental disclosures to reported GAAP measures because we believe that this non-GAAP supplemental information will be helpful in understanding our ongoing operating results and these measures are widely used by analysts, lenders, financial institutions, and investors as measures of performance. Management has historically used Adjusted EBITDA and Adjusted EBITDA Margin when evaluating operating performance because we believe that they provide additional perspective on the financial performance of our core business.
Beginning January 1, 2024, the Group revised its definition of Adjusted EBITDA, which is the segment measurement used to evaluate performance and allocate resources. The definition of Adjusted EBITDA now excludes share-based compensation as management believes inclusion of share-based compensation can obscure underlying business trends because share-based compensation could vary widely among companies due to different plans in place resulting in companies using share-based compensation awards differently, both in type and quantity of awards granted.
In presenting Adjusted EBITDA and Adjusted EBITDA Margin, the Group excludes certain items as explained below:
• Transaction fees and associated costs and restructuring and integration costs, which include charges for discrete projects or transactions that significantly change our operations, are excluded because they are not part of the ongoing operations of our business, which includes normal levels of reinvestment in the business.
• Other (expense) income, net is excluded because it is not indicative of our core operating performance.
• Share-based compensation expense is excluded as this could vary widely among companies due to different plans in place resulting in companies using share-based compensation awards differently, both in type and quantity of awards granted.
Adjusted EBITDA and Adjusted EBITDA Margin are not measures of performance or liquidity calculated in accordance with GAAP. They are unaudited and should not be considered as alternatives to, or more meaningful than, net income (loss) as indicators of our operating performance. In addition, other companies in the betting and gaming industry that report Adjusted EBITDA may calculate Adjusted EBITDA in a different manner and such differences may be material. The definition of Adjusted EBITDA and Adjusted EBITDA Margin may not be the same as the definitions used in any of our debt agreements.
Adjusted EBITDA and Adjusted EBITDA Margin have further limitations as an analytical tool. Some of these limitations are:
• they do not reflect the Group’s cash expenditures or future requirements for capital expenditure or contractual commitments;
• they do not reflect changes in, or cash requirements for, the Group’s working capital needs;
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• they do not reflect interest expense, or the cash requirements necessary to service interest or principal payments, on the Group’s debt;
• they do not reflect shared-based compensation expense, which is primarily a non-cash charge that is part of our employee compensation;
• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA do not reflect any cash requirements for such replacements;
• they are not adjusted for all non-cash income or expense items that are reflected in the Group’s statements of cash flows; and
• the further adjustments made in calculating Adjusted EBITDA are those that management consider not to be representative of the underlying operations of the Group and therefore are subjective in nature.
The following table reconciles net income (loss), the most comparable GAAP financial measure, to Adjusted EBITDA and Adjusted EBITDA Margin for the fiscal quarters presented:
| Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||
| (Amounts in $ millions, except percentages) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Net income (loss) |
297 | 64 | 120 | (47) | ||||||||||||
| Add back: |
||||||||||||||||
| Income taxes |
53 | 86 | 68 | 45 | ||||||||||||
| Other expense, net |
(89) | (10) | 85 | 35 | ||||||||||||
| Interest expense, net |
108 | 82 | 220 | 174 | ||||||||||||
| Depreciation and amortization |
272 | 304 | 569 | 601 | ||||||||||||
| Share-based compensation expense |
59 | 64 | 100 | 110 | ||||||||||||
| Transaction fees and associated costs 1 |
16 | 17 | 45 | 20 | ||||||||||||
| Restructuring and integration costs 2 |
22 | 26 | 45 | 47 | ||||||||||||
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| Adjusted EBITDA |
$ | 738 | $ | 633 | $ | 1,252 | $ | 985 | ||||||||
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| Revenue |
$ | 3,611 | $ | 3,001 | $ | 7,008 | $ | 5,919 | ||||||||
| Adjusted EBITDA margin |
20.4 % | 21.1 % | 17.9 % | 16.6 % | ||||||||||||
1. Comprises advisory fees related to implementation of internal controls, information system changes and other strategic advisory related to the change in the primary listing of the Group for the three and six months ended June 30, 2024 respectively. For the three and six months ended June 30, 2023 transaction fees and associated costs comprised advisory fees related to the proposed listing of Flutter’s ordinary shares in the U.S..
2. During the three and six months ended June 30, 2024, costs of $22 million and $45 million (three and six months ended June 30, 2023: $27 million and $47 million) primarily relate to various restructuring and other strategic initiatives to drive synergies. These actions include efforts to consolidate and integrate our technology infrastructure, back-office functions and relocate certain operations to lower cost locations. The costs primarily include severance expenses, advisory fees and temporary staffing cost.
Liquidity and Capital Resources
Overview
Our principal sources of liquidity are our cash and cash equivalents, cash generated from operations, and borrowings from various financial institutions and debt investors. We expect to continue to have cash requirements to support working capital needs and capital expenditures, to pay interest and service our long-term debt, and otherwise as described below under “—Other Purchase Obligations.” We believe we have the ability and sufficient capacity to meet these cash requirements in the short term and long term by using available cash, internally generated funds and borrowings under the Group’s £1 billion committed revolving credit facility. As of June 30, 2024, we had $1,526 million of cash and cash equivalents available for corporate use.
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Credit Agreement – First Incremental Assumption Agreement
On March 14, 2024, the Group entered into the First Incremental Assumption Agreement (the “Assumption Agreement”) to the TLA/TLB/RCF Agreement dated as of November 24, 2023 (as amended, the “Credit Agreement”). After giving effect to the Assumption Agreement, the aggregate principal amount of Term B loans outstanding under the Credit Agreement increased by $514 million (the “First Incremental Term B Loans”), which is fungible with the existing Term B loans outstanding under the Credit Agreement. The proceeds of the First Incremental Term B Loans were used to refinance the USD First Lien Term Loan B due 2028.The proceeds of the First Incremental Term B Loans were used to refinance the USD First Lien Term Loan B due 2028. As the terms of First Incremental Term B Loans are not substantially different from those of the original USD First Lien Term Loan B due 2028, the refinance was treated as continuation of the original debt instrument for accounting purposes.
Following repayment of the EUR First Lien Term Loan B due 2026 and the USD First Lien Term Loan B due 2028, the facilities under the Credit Agreement are secured by a first priority security interest (subject to permitted liens) (x) in respect of obligors organized or incorporated outside of the United States, over the shares held by an obligor in another obligor and (y) in respect of obligors organized or incorporated in the United States, substantially all of our assets (subject to certain exceptions), in each case, in accordance with the Agreed Guarantee and Security Principles (as defined in the Credit Agreement).
Senior Secured Notes
On April 29, 2024, the Group issued $525 million aggregate principal amount of USD-denominated 6.375% senior secured notes due 2029 (the “USD Notes”) and €500 million aggregate principal amount of EUR-denominated 5.000% senior secured notes due 2029 (the “EUR Notes” and, together with the USD Notes, the “Notes”), each issued at 100% of their nominal value, by its subsidiary Flutter Treasury DAC. The Group used the proceeds of the notes to repay the EUR First Lien Term Loan B due 2026 under the existing syndicated facility agreement dated July 10, 2018, to repay the borrowings under the existing multi-currency revolving credit facility, and pay certain costs, fees and expenses in connection with the offering of the Notes.
Long-term Debt
As of June 30, 2024, we had an aggregate principal amount of long-term debt of $6.8 billion, with $39 million due within 12 months. In addition we are obligated to make periodic interest payments at variable rates, depending on the terms of the applicable debt agreements. Based on applicable interest rates and scheduled debt maturities as of June 30, 2024, our total interest obligation on long-term debt totaled $470 million payable within 12 months net of hedging. Actual future interest payments may differ from these amounts based on changes in floating interest rates or other factors or events. Excluded from these amounts are other costs related to indebtedness.
Leases
We have lease arrangements primarily for offices, retail stores and data centers. As of June 30, 2024, the Group had operating lease obligations of $497 million with $124 million payable within 12 months.
Other Purchase Obligations
As of June 30, 2024, material cash requirements from known contractual and other obligations relating to sponsorship agreements, marketing agreements and media agreements aggregated $2,744 million, with $508 million payable in the remainder of 2024. Capital expenditure commitments contracted for but not yet incurred as of June 30, 2024, was $41 million.
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Cash Flow Information
The following table summarizes our consolidated cash flow information for the periods presented:
| Six months ended June 30, |
||||||||
| ($ in millions) | 2024 | 2023 | ||||||
| Net cash provided by / (used in): |
||||||||
| Operating activities |
$ | 660 | $ | (8 | ) | |||
| Investing activities |
$ | (436 | ) | $ | (263 | ) | ||
| Financing activities |
$ | (230 | ) | $ | (260) | |||
Six months ended June 30, 2024 compared to six months ended June 30, 2023:
Operating Activities
Net cash generated from operating activities for the six months ended June 30, 2024, increased by $668 million, to $660 million compared to $(8) million cash used in operation for the six months ended June 30, 2023.
The improvement in our cash flow from operating activities was primarily driven by (i) an improvement in our operating profit, (ii) a cash inflow of $14 million from player deposits in the six months ended June 30, 2024 versus a cash outflow of $462 million in the six months ended June 30, 2023 driven largely by payment of lottery winnings by Sisal in the six months ended June 30, 2023 which was at a high point as of December 31, 2022, due to the rollover of the lottery jackpot, (iii) income tax payments of $115 million in the six months ended June 30, 2024 compared to $170 million in the six months ended June 30, 2023 offset by (iii) receipt of $215 million on maturity of derivatives during the six months ended June 30, 2023.
Investing Activities
Net cash used in investing activities increased by $173 million, or 66%, for the six months ended June 30, 2024, to $436 million compared to $263 million for the six months ended June 30, 2023, primarily driven by cash payments of purchase consideration, net of cash acquired, for acquiring MaxBet and BeyondPlay.
Financing Activities
For the six months ended June 30, 2024, net cash used in financing activities was $230 million compared to net cash used in financing activities of $260 million for the six months ended June 30, 2023. The decrease was primarily driven by repurchase of common stock in the six months ended June 30, 2023 and an increase in proceeds from issue of common stock upon exercise of options offset by an increase in net repayment of long-term debt and dividends distributed to non-controlling interests in the six months ended June 30, 2024.
Off-Balance Sheet Arrangements
As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
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Critical Accounting Policies and Estimates
Our unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. Our discussion and analysis of the financial condition and results of operations are based on these unaudited condensed consolidated financial statements. The preparation of these unaudited condensed consolidated financial statements requires the application of accounting policies in addition to certain estimates and judgments by our management. Our estimates and judgments are based on currently available information, historical results and other assumptions we believe are reasonable. Actual results could differ materially from these estimates.
Fox Option Liability
During the six months ended June 30, 2024, there were no changes to the fair value measurement approach for the Fox Option as discussed in the 2023 Annual Report. For the input of subjective assumptions used in the option pricing model, please see Note 15 “Fair Value Measurements” to the unaudited condensed consolidated financial statements included in Part I, “Item 1. Financial Statements” of this Quarterly Report.
Changes in assumptions, each in isolation, may change the fair value of the Fox Option. Generally, a decrease in the equity value of the investor units, volatility and the probability of FOX getting licensed and an increase in DLOM and DLOC may result in a decrease in the fair value of the Fox Option. Due to the inherent uncertainty of determining the fair value of the Fox Option Liability, the fair value of the Fox Option Liability may fluctuate from period to period. Additionally, the fair value of the Fox Option Liability may differ significantly from the value that would have been used had a readily available market existed for FanDuel. In addition, changes in the market environment and other events that may occur over the life of the Fox Option may cause the losses ultimately realized on the Fox Option to be different than the unrealized losses reflected in the valuations currently assigned. The range in fair value as of June 30, 2024, is $168 million to $1,445 million, assuming a 10% increase/decrease in the equity value of the investor units and using the upper and lower end of the ranges of volatility, DLOC and DLOM, as disclosed in Note 15 “Fair Value Measurements” to the unaudited condensed consolidated financial statements included in Part I, “Item 1. Financial Statements” of this Quarterly Report.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
There have been no significant changes in our exposure to market risk during the six months ended June 30, 2024. Refer to Part II, “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in the 2023 Annual Report.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of June 30, 2024. Based on the evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 2024 due to the material weakness in our internal control over financial reporting as previously identified in our 2023 Annual Report that were not remediated as of June 30, 2024.
In light of this fact, our management has performed additional analyses, reconciliations, and other post-closing procedures and has concluded that, notwithstanding the material weakness in our internal control over financial reporting, the unaudited condensed consolidated financial statements for the periods covered by and included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.
Remediation of Material Weaknesses
We continue to implement our remediation plans that address the material weaknesses in our internal controls over financial reporting as previously discussed in Part II, Item 9A of our 2023 Annual Report. The remaining remediation work involves (i) ensuring full segregation of duties, (ii) training of finance and technology colleagues to ensure they fully understand their responsibilities regarding the performance and evidencing of key controls over financial reporting and the escalation of any issues or deficiencies in a timely manner, (iii) the re-designing of key controls and (iv) implementing processes to ensure our reporting is fully compliant with GAAP and SEC reporting requirements. It will also be necessary to further upgrade our processes over user access and change management for key systems that support financial reporting and to employ additional resources to ensure that the re-designed control environment can operate effectively and in a sustainable way. The implementation of our remediation measures will require validation and testing of the design and operating effectiveness of internal controls over sustained period. We will not consider the material weakness remediated until our enhanced controls are operational for a sufficient period of time and tested, enabling management to conclude that the enhanced controls are operating effectively. In addition, we cannot ensure that the measures taken by us to date, and actions that we may take in the future, will be sufficient to remediate these deficiencies or that they will prevent or avoid potential future deficiencies.
Changes in Internal Control over Financial Reporting
We are taking actions to remediate the material weakness relating to our internal control over financial reporting, as described above. Except as otherwise described herein, there were no changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Item 1. Legal |
Proceedings |
Item 1A. Risk |
Factors |
Item 4. Mine |
Safety Disclosures |
Item 5. Other |
Information |
Table of Contents
Item 6. Exhibits
* Filed herewith.
The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves and should not be relied upon for that purpose. In particular, any representations and warranties made by the Company in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: August 13, 2024
| Flutter Entertainment plc | ||
| By: | /s/ Peter Jackson | |
| Name: | Peter Jackson | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| By: | /s/ Rob Coldrake | |
| Name: | Rob Coldrake | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
52
Exhibit 31.1
CERTIFICATION
PURSUANT TO 17 CFR 240.13a-14
PROMULGATED UNDER
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Peter Jackson, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Flutter Entertainment plc; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | [Reserved]; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 13, 2024 | /s/ Peter Jackson | |||||
| Peter Jackson | ||||||
| Chief Executive Officer | ||||||
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION
PURSUANT TO 17 CFR 240.13a-14
PROMULGATED UNDER
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Robert Coldrake, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Flutter Entertainment plc; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | [Reserved]; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 13, 2024 | /s/ Robert Coldrake | |
| Robert Coldrake | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Flutter Entertainment plc (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Peter Jackson, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: August 13, 2024 |
/s/ Peter Jackson | |||
| Peter Jackson | ||||
| Chief Executive Officer | ||||
| (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Flutter Entertainment plc (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert Coldrake, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: August 13, 2024 | /s/ Robert Coldrake | |||||
| Robert Coldrake | ||||||
| Chief Financial Officer | ||||||
| (Principal Financial and Accounting Officer) |