Fan Duel parent Flutter top expectations; Shares surge 11% in after hours

Flutter Entertainment (FLUT), the parent company of FanDuel, reported strong Q2 earnings that significantly exceeded analyst expectations, leading to an upward revision in its full-year guidance. The company posted an adjusted EBITDA of $738 million, a 17% increase year-over-year, and revenue of €3.6 billion, up 20% from the same quarter last year. These results surpassed analyst estimates, which had forecasted revenue of $3.37 billion. The company also reported an increase in average monthly players (AMP) by 17%, reflecting strong customer engagement and growth.

In the U.S. market, Flutter’s performance was particularly impressive, with adjusted EBITDA up 51% year-over-year to $260 million. U.S. revenue grew by 39% to $1.53 billion, driven by a 27% increase in AMP, which reached 3.47 million. Flutter's FanDuel brand continued to dominate the U.S. online gaming market, capturing a 38% market share in gross gaming revenue (GGR), including a 47% share in the sportsbook segment and a 25% share in iGaming. This robust performance highlights FanDuel's strong market position and the growing popularity of online sports betting and gaming in the U.S.

As a result of the strong Q2 performance, Flutter raised its full-year guidance for both its U.S. and global operations. The company now expects U.S. revenue to be between $6.05 billion and $6.35 billion, up from the previous estimate of $5.8 billion to $6.2 billion. Adjusted EBITDA for the U.S. is now expected to range from $680 million to $800 million, compared to the earlier forecast of $635 million to $785 million. For its global operations excluding the U.S., Flutter raised its revenue guidance to $7.85 billion to $8.15 billion, with adjusted EBITDA projected to be between $1.69 billion and $1.85 billion.

Flutter also addressed the recent tax changes in Illinois, which are expected to have a gross impact of $50 million in the second half of the year. The company anticipates mitigating $10 million of this impact, resulting in a net cost of approximately $40 million. Despite this challenge, Flutter's CEO Peter Jackson indicated confidence in the company’s ability to manage these costs effectively. He emphasized that the best response to higher taxes, based on their European experience, is to reduce local marketing or moderate customer offers rather than implementing a surcharge on customer winnings, a strategy recently adopted and then quickly retracted by rival DraftKings.

In terms of market strategy, Flutter continues to see a long runway for growth, particularly in the U.S., where the market is still expanding rapidly. The company’s recent move to list its shares on the New York Stock Exchange and shift its operational headquarters to New York reflects its commitment to the U.S. market, which now represents a significant portion of its overall revenue. Despite this focus, Flutter remains open to international expansion opportunities, as indicated by recent reports of potential acquisitions, including a rumored interest in the Brazilian online betting business Betnacional.

Overall, Flutter’s strong Q2 results and raised guidance have bolstered investor confidence, with shares rising as much as 11% in extended trading. The company’s ability to outperform in a competitive market, manage tax-related challenges, and capitalize on growth opportunities positions it well for continued success in the coming quarters. Investors and analysts will be closely watching how Flutter navigates its strategic priorities, particularly in the rapidly evolving U.S. market, where it remains a leader.