Paddy Power Betfair was formed in 2016 and is an international, multi-channel sports betting and gaming operator. Our business is now separated into four operating divisions, Online, USA, Retail & Australia.

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StockMarketWire.com
Gambling company Paddy Power Betfair slightly upgraded its annual guidance after a strong sales performance in its new US business in the third quarter offset weakness in UK retail and Australia.

Underlying Ebitda on a reported basis for the three months through September fell 16% to £101m, even as revenue rose 12% to £483m.

However, proforma Ebitda adjusted for US sports betting and tax changes rose 3%, or by 6% on a constant currency basis.

The proforma figure assumed that US business FunDuel, which was acquired on 10 July, had always been part of the group for the reporting period.

Paddy Power Betfair said it now expected annual underlying Ebitda, pre-US sports betting to be between £465m and £480m, upwardly narrowing its previous guidance of between £460m to £480m.

The guidance, however, was given the caveat of 'not withstanding negative sports results in Australia'.

US sports betting Ebitda losses were expected be around £25m in 2018, reflecting marketing and promotional investment in New Jersey.

In the third quarter, proforma US revenue jumped 22%, while online revenue rose 15%.

Retail revenue fell 4%, with UK shops down 1% and Irish shops own 6%, with sports revenues impacted by weaker margin.

Australian revenue fell 2%, impacted by sports results.

'The third quarter was a good quarter for the group,' chief executive Peter Jackson, said.

'In Europe, the encouraging momentum that we saw in the second quarter accelerated further, with online revenue up 15%.;

'This momentum, which was evident in both Paddy Power and Betfair, is driven by enhancements in product and good execution in promotions and marketing.'

In Australia, Jackson said the company continued to see very good scope to target additional market share gains.

'In the US, the exciting potential of the sports betting opportunity and the strength of our strategic positioning has been evidenced by our experience to date in New Jersey.'

'FanDuel recorded a 30% share of the sports-betting market in September, driven by a market-leading customer proposition, our strong brand presence and the ability to cross-sell from our fantasy sports player base.'

'Overall, we are pleased with the substantial progress we continue to make against our strategic priorities.'

'Our continued investment in brands and customer proposition means that all our businesses will exit the year with enhanced competitive positioning.'

'Together with our scale and strong balance sheet this means we are better positioned to face the significant regulatory and fiscal headwinds that apply next year and to capitalise on the long-term industry growth opportunity.'

Peel Hunt today reaffirms its reduce investment rating on Paddy Power Betfair (LON:PPB) and cut its price target to 6000p (from 7500p).

UBS today upgrades its investment rating on Paddy Power Betfair (LON:PPB) to neutral (from sell) and cut its price target to 6950p (from 7130p).