Is Flutter's gross profit growth sustainable in 2024?

Flutter's gross profit growth in 2024 appears to be sustainable for several reasons: 1. **Strong Financial Performance**: Flutter reported a gross margin of 47.71% as of December 31, 2024. Although this is a notable figure, it is important to consider the company's overall financial health and growth rates. |code|Ticker|Name|Date|Gross Profit Margin|Gross Profit Margin YoY|market_code| |---|---|---|---|---|---|---| |FLUT|FLUT.N|Flutter|2024 Q1|47.2181||169| |FLUT|FLUT.N|Flutter|2024 Q2|48.2306|-17.200402404815122|169| |FLUT|FLUT.N|Flutter|2024 Q3|47.5429||169| |FLUT|FLUT.N|Flutter|2024 Q4|47.7079|0.6578600348973971|169| 2. **Revenue and Profit Growth Rates**: The company's total revenue grew by 14.46% year-over-year, reaching $3.79 billion. Despite not meeting revenue expectations, the company's net income grew significantly, with a year-over-year increase of 117.29%, reaching $156 million. This substantial growth in net income indicates a strong bottom line and suggests that the company's gross profit growth is translating into profitability. |code|Ticker|Name|Date|Net Income YoY|Total Revenue YoY|Diluted EPS YoY|market_code| |---|---|---|---|---|---|---|---| |FLUT|FLUT.N|Flutter|2024 Q1|-59.45945945945946|16.415352981494173|-89.65517241379312|169| |FLUT|FLUT.N|Flutter|2024 Q2|364.0625|20.326557814061978|291.89189189189193|169| |FLUT|FLUT.N|Flutter|2024 Q3|56.48854961832062|26.974198592650506|62.58064516129033|169| |FLUT|FLUT.N|Flutter|2024 Q4|117.29490022172948|14.458194989435558||169| 3. **Strategic Initiatives**: Flutter has announced ambitious growth targets, including a revenue target of $21 billion by 2027. The company's focus on strategic mergers and acquisitions, consolidation efforts, and expansion in the U.S. market are expected to drive future growth. These initiatives not only aim to increase revenue but also to improve profitability, which could lead to sustainable gross profit growth. 4. **Market Position and Brand Strength**: Flutter's strong brand portfolio and market leadership in key regions, such as the U.S., the UK, Ireland, and Australia, position it well to maintain and grow its market share. The company's ability to leverage its scale and experience through the "Flutter Edge" is a key strength. 5. **Regulatory Compliance and Market Adaptability**: Flutter's adaptability to regulatory changes and its ability to navigate complex market environments have been evident in its performance despite challenges. The company's focus on product innovation and customer engagement, as seen with FanDuel's success in the U.S., indicates a proactive approach to maintaining and growing its market position. 6. **Credit Ratings and Financial Stability**: Fitch Ratings has affirmed Flutter's Long-Term Issuer Default Rating at 'BBB-', reflecting the company's strongest business profile among online-focused gaming and sports betting operators. This stable outlook is based on expectations of continued improvement in the company's EBITDA and free cash flow, which supports the sustainability of its gross profit growth. In conclusion, while there are factors to consider, such as market competition and regulatory changes, Flutter's strong financial performance, strategic initiatives, and market position suggest that its gross profit growth in 2024 is sustainable. The company's ability to adapt to market conditions, combined with its focus on innovation and expansion, positions it well for continued growth and profitability in the future.