01—Abstract
Summary
Summary of the 10-Q filed May 14, 2024. Cited figures are marked; the original filing is the authoritative source.
Flutter Entertainment plc reported first-quarter 2024 revenue of $3,397 milliona, up 16% from $2,918 million in the prior-year quarter, driven by AMPs growth of 11% to 13.7 million and a 32% rise in U.S. segment revenue.
Operating profit was $124 millionb, compared with an operating loss of $15 million a year earlier. However, the company posted a net loss of $177 million (net loss margin of 5.2%, versus 3.8% a year earlier), and net loss attributable to Flutter shareholders was $196 million, or $(1.10) per share. The main drag below operating profit was a $184 million fair value loss on the Fox Option liability within other expense, net of $174 million.
Adjusted EBITDA, a non-GAAP measure, rose 46% to $514 millionc, and Adjusted EBITDA Margin improved to 15.1% from 12.1%. Cash generation improved, with net cash from operating activities of $337 million versus a $49 million outflow a year earlier. Investing outflows of $259 million included cash consideration for the MaxBet acquisition, and financing activities used $181 million net.
Total debt principal was $6.9 billiond as of March 31, 2024. Subsequent to quarter-end, on April 29, 2024, the company issued $525 million of 6.375% senior secured notes and EUR 500 million of 5.000% senior secured notes, both due 2029, and used the proceeds to repay the EUR First Lien Term Loan B due 2026 and borrowings under its revolving credit facility. The filing states that disclosure controls and procedures were not effective as of March 31, 2024, due to a material weakness in internal control over financial reporting identified in the 2023 Annual Report that had not been remediated.
Management states that the unaudited condensed financial statements nonetheless fairly present the company's financial position and results. The filing also notes that the shareholders approved a primary listing on the NYSE at the May 1, 2024 Annual General Meeting.
02—Key points
Key Highlights
- Revenue rose 16% to $3,397 million, with U.S. segment revenue up 32% to $1,410 million and AMPs up 11% to 13.7 million.
- Operating profit of $124 million compared with an operating loss of $15 million in Q1 2023, while net loss widened to $177 million from $111 million.
- Other expense, net of $174 million was driven primarily by a $184 million fair value loss on the Fox Option liability.
- Adjusted EBITDA increased 46% to $514 million, with Adjusted EBITDA Margin of 15.1% versus 12.1%.
- Net cash from operating activities was $337 million, compared with a $49 million outflow in the prior-year quarter.
- Subsequent to quarter-end, the company issued $525 million 6.375% and EUR 500 million 5.000% senior secured notes due 2029.
- A material weakness in internal control over financial reporting was not remediated as of March 31, 2024, and disclosure controls were concluded to be not effective.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q1 FY2024, Flutter Entertainment lost $0.05.
- Revenue$3.40B100.0%
- Cost of revenue−$1.79B52.8%
- Gross profit$1.60B47.2%
- Operating costs−$1.48B43.6%
- Operating income$124.0M3.7%
- Interest, other & tax−$301.0M8.9%
- Net income−$177.0M5.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed May 14, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $3.40B$2.92B | +16.4% |
| Cost of Revenue | $1.79B$1.54B | +16.4% |
| Gross Profit | $1.60B$1.38B | +16.5% |
| R&D Expenses | $190.00M$168.00M | +13.1% |
| Operating Income | $124.00M-$15.00M | +926.7% |
| Interest Expense | $126.00M— | — |
| Net Income | -$177.00M-$111.00M | −59.5% |
| EPS (Basic) | $-1.10$-0.58 | −89.7% |
| EPS (Diluted) | $-1.10$-0.58 | −89.7% |
| Shares Outstanding (Basic) | 178.00M— | — |
| Shares Outstanding (Diluted) | 178.00M— | — |
05—Questions
Frequently Asked Questions
Why did Flutter report a net loss despite higher operating profit?
Operating profit improved to $124 million from an operating loss of $15 million, but other expense, net of $174 million and interest expense, net of $112 million, together with income tax expense of $15 million, pushed the company to a net loss of $177 million. The filing attributes the increase in other expense mainly to a $184 million fair value loss on the Fox Option liability.
How did the U.S. business perform in the quarter?
U.S. segment revenue grew 32% to $1,410 million, with sportsbook revenue up 30% and iGaming revenue up 49%. U.S. Adjusted EBITDA was $26 million, compared with $(53) million a year earlier, and the filing notes that unfavorable sports results of 130 basis points weighed on sportsbook margin, most pronounced in late March 2024.
What is the company's debt position after the quarter?
As of March 31, 2024, total long-term debt principal was $6.9 billion, with $46 million due within 12 months. On April 29, 2024, the company issued $525 million of 6.375% senior secured notes and EUR 500 million of 5.000% senior secured notes, both due 2029, using the proceeds to repay the EUR First Lien Term Loan B due 2026 and revolving credit borrowings. The company stated it was in compliance with all debt covenants as of March 31, 2024.
What control issues did management disclose?
Management concluded that disclosure controls and procedures were not effective as of March 31, 2024, due to a material weakness in internal control over financial reporting previously identified in the 2023 Annual Report that had not been remediated. Remediation work includes ensuring segregation of duties, training finance and technology staff, redesigning key controls, and upgrading user access and change management processes.
What was the MaxBet acquisition and what is its impact so far?
In January 2024, the company acquired a 51% stake in MaxBet, a Serbian sports betting and gaming operator, for provisional cash consideration of $144 million. The acquisition contributed $47 million of revenue and $3 million of profit after tax from acquisition to March 31, 2024. The share purchase agreement includes call and put options for the remaining 49% stake, exercisable in 2029.
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