Paddy Power Betfair profit up more than two-thirds

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UK-listed gambling operator Paddy Power Betfair saw Q3 revenue rise by one-quarter thanks to a strong finish to the Euro 2016 football tournament.

A trading update released Friday showed PPB’s revenue rising 25% year-on-year to £404m in the three months ending September 30, although the results got a significant boost (£28m) via the weakness of the English pound. In constant currency terms, revenue was up a more modest but still impressive 15%.

Regardless, underlying earnings jumped 53% to £113m and profit soared more than two-thirds to £95m as margins rose five points to 28%. The company confidently boosted its full-year earnings guidance to a range between £390m and £405m.

Sportsbook stakes jumped 26% to £2.41b while sports revenue rose 27% to £316m thanks to hold improving 0.4 points to 9.4%. The Q3 portion of Euro 2016 contributed revenue of £16m, bringing the tournament’s total revenue haul to £38m. Gaming revenue was up 16% to £88m.

Online revenue was up one-fifth to £222m, with sports up 26% and exchange betting up 15%, the latter number goosed by increased activity from “high value customers.” Paddy Power retail revenue rose 19% to £76m, with OTC wagering up 8% and machine gaming up 10%.

In Australia, the Sportsbet online brand saw revenue jump 21% as stakes rose 17%. The Bet Live in-play product saw its share of stakes jump from 6% in Q3 2015 to 15% this year. However, the product was withdrawn on October 4 under orders from the Northern Territory Racing Commission.

In the United States, revenue inched up 4%, as Betfair’s TVG racing business was flat thanks to ‘increased competitive intensity” and “the loss of a customer deposit method.” On a more positive note, Betfair’s online casino in New Jersey’s regulated market saw revenue spike 57%.

PPB CEO Breon Corcoran claims the full potential of the combined operations of Paddy Power and Betfair – which began trading as a single entity this February – has yet to be unlocked, but work on perfecting the “multi-brand, multi-channel, multi-jurisdictional platform” is proceeding apace. The company plans to commence trading on a unified platform in Italy in early 2017.

On Friday’s analyst call, Corcoran dismissed concerns about the UK government considering tightened restrictions on gambling operators’ ability to advertise on television. Indeed, Corcoran said he doesn’t believe “a business with strong brands has anything to fear” from a crackdown on “wall-to-wall” TV gambling ads.

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