Paddy Power/Betfair Reports Robust Q1 Growth
Published on by Adam
Sportsbook stakes increased by 21%, reaching £2.3 billion, but revenues were
negatively impacted by adverse sports results, notably the Cheltenham Festival, which saw many betting companies suffering as customer winnings were unexpectedly high.
Revenues from the Paddy Power/Betfair online market reached £195m, an increase of 17%, with revenue from regulated markets up 21% and unregulated market revenues falling 14%. The operator’s departure from Portugal in July 2015 is understood to have had the largest impact on the latter.
Sport revenue was bolstered by 17%, driven by a significant increase of 23% in sportsbook stakes and 5% growth in B2B and Exchange revenues.
Gaming revenue reached £60m, up 17%, driven by cross selling from sports and the whopping 43% growth in revenue generated by mobile gaming, contributing 56% of total gambling revenues. Mobile has continued to be a key driver in revenue growth across the board.
Net profits, before tax, increased to £59 million, by 27% (the company made £47 million in pre-tax profit in the same quarter last year). Operating profit increased by 36% to £43 million, up from the £31 million in Q1 2015.
The sales and marketing bill increased by £13m or 22%, and new taxes and fees increased costs by £3 million. At the end of March 2016, the group had a net debt of £54 million.
The group told investors it was confident it would reach the £50 million per year cost savings target, as a result of consolidated duplicated roles and office locations, following the merger between the two companies.
Customers are beginning to see benefits as a result of the merger, including a sharing of Paddy Power proprietary games, produced by its in-house studio, across the Betfair website and mobile apps. The introduction of new markets, such as minute-by-minute football betting on Paddy Power and Gaelic sports on Betfair, have also contributed to the positive results, the group said.
“This sharing of products represents an early opportunity to enhance our customer proposition as a result of bringing our two businesses together,” it said.