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(Alliance News) - Flutter Entertainment PLC on Thursday said revenue in the second quarter has been higher, with Australia and the US showing particular growth, and it is planning to raise equity through an 8.0 million share preemptive placing.
The sports-betting and gaming company said quarter-to-date revenue as at May 17 was up 10%, including a 56% increase in Australian revenue and 61% rise in the US.
While sports revenue has been hurt by sporting calendar disruption, revenue in Australia and its TVG business in the US were helped by the continuation of horse racing and retail staying short. As such, the migration of retail customers to online has accelerated.
Poker and gaming revenue was helped by strong online customer engagement but lifting restrictions have seen this growth start to moderate and this is likely to accelerate as more economies reopen.
By division, TSG International - which operated Flutter's PokerStars brand - experienced 92% revenue growth.
PPB, which operates the Paddy Power, Betfair and Adjarabet brands, experienced a 54% drop in revenue quarter to date including a 41% drop in PPB Online and 100% drop in PPB Retail revenue.
Sky Betting & Gaming revenue was down 28%.
Looking forward, uncertainties remain around when sports will resume and around the prospect of more televised live sport, as well as around the return of retail and whether the migration to online from retail will persist.
"Notwithstanding these current uncertainties we believe that the group is well positioned for future growth, particularly in the rapidly expanding US market," said Flutter.
Separately, Flutter said it is planning an equity raise via a non-preemptive placing of 8.0 million new shares to institutional investors via an accelerated bookbuild. Davy is joint global coordinator and joint corporate broker for the placing, along with Goldman Sachs International.
"The group believes that the current operating environment is likely to result in longer-term changes to the sector landscape which will lead to further opportunities. The placing will better position the group to move quickly to capitalise on such opportunities should they arise, accelerating its four-pillar strategy and consolidating its market leadership positions," Flutter explained.
The firm will use the money to accelerate its US strategy. Flutter predicts that US regulation could accelerate as more US states pursue nee ways to raise additional tax income. Money will also go towards further investment in its newly acquired an reactivated customers and help it de-leverage is balance sheet.
Flutters plans to accelerate is deleveraging strategy towards achieving its target leverage ration of 1.0 times net debt to earnings before interest, tax, depreciation, and amortisation. Based on the current Ebitda consensus estimate of GBP950 million for 2020, a 5.5% placing would help shrink Flutter's year-end leverage by 0.9 times.
Fox Corp has committed to increasing its Flutter investment.
Lachlan Murdoch, executive chair & chief executive of Fox Corp, said:"Fox is bullish about the opportunities in the digital sports wagering market. Fox Bet has shown strong growth since launching last fall, and we look forward to continuing that success with our partner, Flutter. Fox's investment in Flutter underscores our confidence in Flutter's business and its management's ability to continue to drive leadership in the US market."
Shares in Flutter ended 1.9% higher in London on Thursday at 10,600.00 pence per share.
By Anna Farley; annafarley@alliancenews.com
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