Flutter Entertainment plc Q3 FY2025 earnings call

• Launched FanDuel Predicts in December to capture prediction markets opportunity, offering sports, entertainment, and financial prediction markets. - In the U.S., iGaming showed strong growth, NBA season started positively, and there was a disciplined approach in sportsbook despite competitive dynamics. - International division had growth in Italy, Turkey, and Brazil; SNAI integration progressing; UK market saw successful migration of Sky Bet onto Flutter UK platform. - India regulatory change led to a non-cash impairment charge of $556 million as real money operations ceased there.

U.S. Business: Revenue was 9% higher with exceptional iGaming growth of 44%, offsetting a sportsbook revenue decline of 5%. Adjusted EBITDA was $51 million compared to $58 million in the prior year. International Business: Revenue of $2.4 billion reflected growth of 21%, with acquisitions contributing 18 percentage points. On an organic basis, iGaming performance was strong, particularly in Turkey and Italy, and adjusted EBITDA increased by 10% year over year to $505 million.

• Full-year 2025 adjusted EBITDA reduced by $280 million due to customer-friendly sports results in Q3 and Q4. - Q4 started well but guidance updated to reflect various factors including sports results, investment in U.S. sportsbook, and strategic investment in FanDuel Predicts. - Anticipates $200 to $300 million investment in 2026 for FanDuel Predicts.

• Regulatory changes in India impacting the business. - Intense competition in U.S. sportsbook affecting short-term results. - Potential tax increases in the UK budget affecting the business.

Q: Hey, good afternoon everyone. Thanks for taking our question. Maybe just starting off on the $200 to $300 million planned investment next year for FanDuel Predicts. Peter, could you just maybe talk a little bit more on the return algorithm for this product...

A: Hi, Jeff. Look, we're very excited about FanDuel Predicts. The ability to take their sports product into the half of America that you can't currently avail as the selling products, I think, is something which is tremendously exciting...

Q: Hi, Peter and Rob. Thanks very much for taking the question. And just if you wouldn't mind, would you be able to give us just a little bit more color on trading in September and into Q4 in the U.S., please? And then just secondly on Predictive Markets, on the investment next year...

A: Yes. Hi, Paul. I'll pick up on this. First part of the question. Maybe Peter will pick up on the Predictive Markets investments. So as Peter mentioned, we did see a lot of competitive action at the start of the new NFL season with some very uneconomic offers in the market...

Q: Good evening. My first question is on prediction as well. You've talked in the release about extensive engagement with regulators and tribes...

A: Hi, Ed. Well, let me take the Prediction Markets one, and then Rob can talk a little bit about the NBA. We have obviously been having extensive engagement with stakeholders. As we get close to launching the FanDuel Predicts Markets product...

Q: Good afternoon. Thanks for taking my question. Yet another one on Prediction Markets. I'm just curious from a product perspective, you're viewing the ability to take learnings from Betfair operations overseas versus maybe what you're planning to do differently...

A: Hi, Jason. Yes, look, we were able to get a bunch of the team who've been working on the Betfair exchange for years involved in developing the products we have. We'll be launching in December for FanDuel Predicts. So we can take the learnings and expertise from Betfair...

Q: Hey guys. Nevada just put out a notice saying you've surrendered your gaming license in the state due to FanDuel Predicts. Can you talk about the ramifications here? And are there further risks we should monitor for current or future state gaming licenses now...

A: Sorry, Barry. We, you know, we as I've stated, we have had conversations with different stakeholders over time, and Nevada was amongst that. And we did have a license in Nevada, but we didn't have any retail or B2C operations there...

Q: Maybe for the sake of variety, I'll switch it up and ask a question about iGaming. Your growth accelerated a little bit this quarter, 45% in the U.S. Just curious how you guys think about product differentiation beyond what you've already done with exclusives and the rewards framework...

A: Look, I don't think we should underestimate how important some of those pieces are exclusivity of content and I mean, I think the third installment in the Huff and Puff series was the most successful one we've had to date, and we're very excited about it. The reward programs, which have been key for us in other markets...

Q: Hey, great. Thanks for taking my question. Just as we look out to next year, obviously, with prediction markets, but has anything changed in the underlying earnings power that you see ex-prediction markets over into next year? Anything with promotional velocity, taxes that you just sort of could touch on...

A: Yes. Let me pick up on the 2027 guidance point, Jordan, and then Peter can pick up the second point. So we're obviously not providing any updated guidance for 2027. Building on what Peter said earlier about prediction markets, we're incredibly excited about it. The additional TAM that that's opening up for us...

Q: Hey guys. Nevada just put out a notice saying you've surrendered your gaming license in the state due to FanDuel Predicts. Can you talk about the ramifications here? And are there further risks we should monitor for current or future state gaming licenses now...

A: Sorry, Barry. We, you know, we as I've stated, we have had conversations with different stakeholders over time, and Nevada was amongst that. And we did have a license in Nevada, but we didn't have any retail or B2C operations there...

Q: Afternoon. Thanks for taking my question. Wanted to ask about I guess, the swift, message or decision in India in the seizing of that market? I know you've seen openings and closings in different markets in your time. Does it feel like the parliament is vehemently against this industry? Or are they just looking to better protect the consumer...

A: Chad, I can give you a bit of perspective on this. Look, we're frustrated at the speed with which the bill that emerged came into law. Yeah. And I yeah. I would hope that in that sort of timeframe you talk about, we might get some more sort of legal clarity around the extent to which some of these games of skill may be able to come back...

Q: Hi, good evening. I've got one question on the UK. Please. How do you see the underlying market at the moment? I mean, sportsbook revenue remains negative year on year. Clearly, you're lapping some tough comps there, plus the Euros related comps, but iGaming also slowed quarter to a low single-digit number ex-FX...

A: Yes. Hi, Estelle. I think in summary, we're pleased with the momentum that we've got in the UK. As you said yourself, there's quite a lot of results in the mix because we had a very favorable Euros in Q3 last year. Which is impacting the comps on the sportsbook revenue...

Q: Hi, afternoon. Thank you for taking my question. It was just one on the commentary that you gave in the quarter about the lower than anticipated parlay mix at the start of the NFL season. So, I wonder if you could comment please on sort of what was going on there. As you said, it was transitory in nature. And related to that, how the YourWay product is going?

A: Yeah. Hi, Monique. Let me start on the parlay, next part of the question, maybe Peter can pick up on YourWay and what we're doing around outcome-based pricing. But as we've mentioned on a couple of occasions at the start of the season, there were a lot of quite uneconomic offers in the market of promotional spend...