Flutter's shares soar on U.S. margins, market share gains

Fanduel further increases leading U.S. market share

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Hit to Q4 U.S. revenues largely anticipated

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Shares lift Europe's travel and leisure index higher

DUBLIN, Jan 18 (Reuters) - Shares in online betting giant Flutter jumped 12% on Thursday after analysts said fourth-quarter market share gains and stronger-than-expected win margins in the fast growing U.S. market augured well for 2024.

While the world's largest online betting company did not provide full year guidance in its trading statement, the response from the market was in sharp contrast to rival 888 Holdings, whose shares slumped on Wednesday on a weaker than expected 2024 outlook.

Flutter, home to the Paddy Power, Betfair and Sportsbet brands, posted a 15% increase in fourth-quarter revenue, but said growth at its U.S. Fanduel unit was below its expectations due to a series of customer-friendly results.

Bookmakers generally lose money when favourites win and the losing streak was anticipated by analysts, who were instead impressed by a 220 basis point year-on-year jump in Fanduel's expected gross revenue margin and increases in its share of the sports betting and online gaming markets to 43% and 26%.

Analysts at Goldman Sachs said those trends provided reassurance on Flutter's 2024 outlook, while Davy Stockbrokers said the strong underlying momentum in the U.S. business augured well for this year and beyond.

Flutter's shares lifted Europe's travel and leisure index up 3.7%, on track to record its best day in more than three months, if gains hold.

Flutter said the 1.139 billion pounds ($1.45 billion) of fourth quarter net U.S. revenue was 147 million pounds below the guidance provided in November and would have an approximate 35% flow through to adjusted U.S. earnings.

Last year, Flutter became the first online betting operator to turn a profit in the United States since the lifting of a sports betting ban there in 2018. It had forecast full year U.S. core earnings of 140 million pounds in November.

Its full year revenue in the United States was 41% higher year-on-year, driving a 25% increase across the group to 9.5 billion pounds.

That was ahead of the 9.4 billion pounds LSEG SmartEstimate, weighted toward forecasts from analysts who are more consistently accurate.

Fourth quarter revenue growth of 4% in its international division, a 2% dip in Australia and 19% jump in the UK and Ireland, where it won further market share, were in line with guidance, the company said.