The enlarged business — the subject of a €8bn merger earlier this year — yesterday reported a 25% year-on-year improvement in combined revenues to €404m for the three months to the end of September.
This performance was driven by positive sporting results — the outcome of Euro 2016 brought in around €18m in revenue, alone — and the translation of non-UK revenues due to the weakness of sterling, which benefited the business by around €31m.
Strong double-digit percentage revenue growth was seen, during the quarter, across retail and online and in Australia; while Betfair’s US business saw revenue grow by 4%.
Underlying earnings, for the period, were up by 53% to £113m (€127m), while underlying third-quarter operating profits were ahead by 68% to £95m.
The group now expects to realise £35m worth of merger-related cost savings this year; £5m more than previously anticipated. In August, management upped its full merger savings figure, for the end of 2017, from £50m to £65m.
The group is now anticipating full-year underlying earnings of between £390m and £405m. That guidance is up from a previous one of £365m-£385m.
In its statement, Paddy Power-Betfair said while the betting services industry remains highly competitive, it believes its scale, market positions and capabilities “position us well for sustainable, profitable growth”.
“Work is underway to combine the best of Betfair and Paddy Power’s technology into a multi-brand, multichannel, multi-jurisdictional platform that will start to unlock the full potential of the group’s scale and will lead to increased pace of development and faster roll-out of new products,” group chief executive Breon Corcoran added.
In August, at the time of the group’s interim results, Mr Corcoran said management is open to making more acquisitions; noting that the combination of a highly cash generative business with a strong balance sheet and ambitious management team means further consolidation “is probably inevitable”.
However, he also said further cash returns could be made to shareholders if no M&A or other cash deployment options are identified.
Merrion Stockbrokers yesterday reaffirmed its ‘buy’ rating on the stock, along with a share price target of €115, noting that the company is highly cash flow generative and should generate nearly £400m in free cash flow next year.