Flutter Flies, 888 Sinks After Diverging Q2 Results

By Geoffrey Smith

Investing.com -- Flutter (LON:FLTRF) (OTC:PDYPY) shares jumped 5% to their highest since May after the bookmaking group behind Paddy Power and Betfair reported strong revenue growth in the U.S. in the second quarter and said there was no sign yet of business slowing down.

By contrast, rival 888 (LON:888) saw its stock tumble over 11% to test a two-year low after its results showed it was hurt more than expected by a clampdown on gambling addiction by authorities in the U.K.

Flutter said revenue was up 11% in the first half at 3.39 billion pounds ($4.13 billion), thanks to a 14% rise in average user numbers. Growth was strongest in North America, where the group owns a majority stake in FanDuel.

The group's net loss widened to 112 million pounds, due largely to the amortization of acquisition-related items. However, group underlying earnings before interest, taxes, depreciation, and amortization were in line with expectations at 476 million pounds. Flutter is still investing heavily in scaling FanDuel's operations and expects it to lose around 250 million pounds on an EBITDA level this year, before turning profitable next year.

Flutter said the second half had continued in a similar vein and it sees "no discernible signs of a consumer slow down currently." However, it said it is "closely monitoring key spend indicators given the uncertain macro economic outlook." It sees group EBITDA - excluding the U.S. - in a range of around 1.34 billion pounds for the full year, "assuming normalized sports results."

It was a different story at 888, which is more heavily reliant on a U.K. market that is suffering both from tighter regulation and on an increasingly acute squeeze on disposable income thanks to the surge in energy prices and broader inflation.

Revenue fell 13% to 332 million pounds and pretax profit fell 69% to 14.4 million pounds, thanks to a 25% drop in its U.K. business and the closure of its operations in the Netherlands, where it is reapplying for a local license.

It's also having to play catch-up in North America, having failed to secure an alliance with a major local partner. Its operations in Virginia and Ontario are still in their infancy, and services are scheduled to begin in Michigan in the second half of this year.

By 05:00 AM ET (09:00 GMT), Flutter stock was up 5.0% in London, while 888 stock was down 9.8%.