By Geoff Percival
Paddy Power-Betfair shares edged higher after the betting and gaming group marginally improved its full-year earnings guidance on the back of a good third quarter performance.
The group said revenue for the three months to the end of September grew by 12%, on a year-on-year basis. That growth was driven by a 15% surge in online revenues, which offered relief from the effect of unfavourable sports results and revenue declines in its retail operations.
Paddy Power’s retail revenues fell by 4%, year-on-year, in the quarter; falling 1% in the UK and 6% across its Irish shop network.
Revenues in the key Australian market — where Paddy Power-Betfair leads the online betting market with its Sportsbet subsidiary — fell by 2%, despite customer betting stake amounts rising by 25%.
Nevertheless, the group has strengthened its earnings guidance for this year, saying it now expects to generate earnings, on an EBITDA basis, of between £465m and £480m (€530m-€547m). It previously estimated £460m as the bottom end of its full-year earnings guidance.
“Overall, we are pleased with the substantial progress we continue to make against our strategic priorities,” said chief executive Peter Jackson.
“Our continued investment in brands and customer proposition means that all our businesses will exit the year with enhanced competitive positioning,” he said.
The group’s shares — down by over 10% in the past 12 months — were up by around 1.6% yesterday.
Goodbody analyst Gavin Kelleher said despite only being a quarterly update, Paddy Power-Betfair’s latest trading update was more meaningful than most.
“Following a good second quarter, the strong performance in online sports and gaming has continued into the third quarter, which suggests share gains are building in the UK,” he said.
“The exchange has returned to growth; which should somewhat alleviate concerns it is losing share to smaller operators; and while early days there are some very positive signs from its US business in terms of activity levels,” he said.