Analysts have weighed in on Flutter’s 2024 earnings, released this week (5 March), and some have warned that an over-reliance on growth in the US could hinder the group.
In its results, Flutter’s management focused predominantly on its US FanDuel business during the 2024 earnings presentation. It said the 19% revenue growth experienced in 2024 was largely due to growth in US sports betting and icasino.
The US accounted for 41% of the group’s revenue in 2024, but double-digit growth was also reported across its UK, Italy, and RoW segments.
This US focus was picked up by analysts and flagged as a potential risk for the group.
Speaking to iGB, Ed Birkin, managing director for H2, said the over-reliance on organic growth in the US is not sustainable for Flutter in the long-term.
“Organic growth will need to be topped up with good returns on investment of their strong free cash flow – and you’d assume they can get better returns on strategic M&A than they can with share buybacks,” Birkin added.
Regulus Partners said in its note the increasing focus on the US “as the only recognised growth driver for the group” will add to the risk of black-market growth, particularly in Europe.
“A focus only on the operational avoidance black market risk will eventually lead to an over-regulated, sclerotic group which leaves the world for less compliant operators to take share and cause increasing market instability, with an increasingly visible and negative strategic impact,” Regulus warned.
Flutter UK&I segment absorbed into international business
Elsewhere, analysts questioned the group’s decision to absorb its core UK&I segment into the international business, which was announced in November.
“Flutter will soon be retiring the UKI reporting segment as an ‘Old-World’ concept despite the division representing 43% of group EBITDA (pre group overheads); there will now be US and everywhere else,” the Regulus note added.
But this separation could also provide additional clarity, Regulus said, given that UK&I was a business unit rather than an entirely accurate geographical description.
Birkin also acknowledged the threat of tightening regulation in the UK and further afield in Europe. “The UK is going to see further regulatory headwinds, and a lot of other mature European markets are seeing trading conditions get tougher rather than easier.
“It’s easy to see why the focus is on the US/Canada/Brazil – I think they’ll continue to focus on other opportunities away from the traditional European markets,” he said.
Prediction markets: An opportunity or hindrance for Flutter?
Flutter’s management told analysts during its earnings call it saw the emergence of prediction markets as an opportunity for the group. However, it is awaiting clarity from the Commodity Futures Trading Commission (CFTC) on how the model could be regulated in the US.
The outlook for these products is not positive as Nevada’s gambling regulator hit prediction market operator Kalshi with a cease-and-desist letter on 4 March.
The Nevada Gaming Control Board (NGCB) ordered the operator to cease operating in the state by 14 March or be subject to legal action.
Truist Securities analysts said they did not believe current prediction products are competing with regulated sports betting technology, but they do allow for betting in states without regulated gaming.
Mixed response to 2025 guidance
The analysts had mixed responses to Flutter’s 2025 guidance. Flutter said in its earnings presentation it expects to hit revenue targets of $15.48 billion to $16.38 billion and EBITDA targets of $2.94 billion to $3.38 billion this year. This was in line with its previous Investor Day guidance, reported in September.
Growth will once again be largely driven by US gains. Regulus Partners said it suspected the group would beat guidance, but with an under in the US and an over RoW (rest of world).
Morgan Stanley analysts said they expected Flutter to hit the upper end of its revenue target ($16.29 billion) but the lower end of the EBITDA forecast ($2.36 billion).
Meanwhile, Macquarie equity analysts lowered their 2025 EBITDA guidance by 0.25% to $3.25 billion, from $3.26 billion, to “reflect guidance and current trends”.
Truist lowered its 2025 EBITDA guidance by 3%, “entirely on a more conservative ramp of new international M&A”. Although it said this would be partially offset by better US guidance – with upside on positive US trends.
