Stock Price Surge Following Impressive Earnings Report
Flutter Entertainment (NYSE: FLUT), the global leader in online sports betting and iGaming, saw its stock rise significantly on Tuesday. The stock closed the trading session up by 1.64% at $191.39, and in after-hours trading, it surged an additional 7.63% to close at $206.00. This robust performance comes in the wake of the company’s Q2 2024 financial results, which exceeded market expectations and led to a raised fiscal year guidance.
Q2 2024 Financial Highlights
Flutter Entertainment’s Q2 2024 financial results reflect a period of strong growth and operational excellence. Here’s a detailed look at the company’s performance for the quarter:
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Net Income
- Net Income: The company reported a net income of $297 million for Q2 2024, a significant increase of $233 million compared to the same period last year. This growth is indicative of strong revenue performance.
- Non-Cash Impacts: The net income includes non-cash items such as a $147 million amortization charge for acquired intangibles and a $91 million fair value gain on the Fox Option liability. For comparison, Q2 2023 saw a $53 million loss related to the Fox Option.
Adjusted EBITDA
- Group Adjusted EBITDA: Flutter’s Group Adjusted EBITDA for the quarter increased by 17% to $738 million, with an Adjusted EBITDA margin of 20.4%.
- US Adjusted EBITDA: Adjusted EBITDA in the US rose by 51% to $260 million, reflecting robust revenue growth and improved operating leverage, with the margin up by 130 basis points.
- Group Ex-US Adjusted EBITDA: Adjusted EBITDA outside the US grew by 4% to $478 million, although the margin decreased by 120 basis points due to expected declines in Australian revenue.
Earnings Per Share
- Diluted EPS: The diluted earnings per share (EPS) increased to $1.08.
- Adjusted EPS: The adjusted EPS rose to $0.94, with a notable impact of $0.519 from the Fox Option, compared to a loss of $0.52 year-to-date.
Cash Flow and Leverage
- Net Cash Provided by Operating Activities: Increased by $282 million to $323 million, demonstrating effective conversion of operational performance into cash.
- Free Cash Flow: The company generated $171 million in free cash flow for Q2 2024, a significant turnaround from a negative $95 million in Q2 2023.
- Leverage Ratio: The leverage ratio improved to 2.6x based on the last 12 months Adjusted EBITDA, down from 3.1x at the end of 2023, moving closer to the company’s medium-term target.
Full Year 2024 Guidance
Following the strong Q2 performance, Flutter has raised its full-year 2024 guidance:
- Group Revenue: Expected to increase by 20% year-over-year.
- Adjusted EBITDA: Forecasted to rise by 34% at the midpoint.
- US Revenue: Anticipated to grow by 3% to $6.2 billion.
- US Adjusted EBITDA: Projected to increase by 4% to $740 million, despite an estimated $50 million gross impact from Illinois gaming tax increases.
- Group Ex-US Revenue and EBITDA: Expected to rise by 2% to $8.0 billion and $1.77 billion, respectively.
Comparative Stock Performance
Year-to-Date (YTD) Performance
- Flutter Entertainment (FLUT): +6.92%
- S&P 500: +13.93%
While Flutter Entertainment has seen a solid year-to-date performance of +6.92%, it has underperformed compared to the S&P 500’s +13.93% gain. However, the recent financial results and raised guidance suggest a positive outlook for Flutter’s stock, as evidenced by the substantial after-hours gain.
Conclusion
Flutter Entertainment’s exceptional Q2 2024 results and the subsequent increase in fiscal year guidance have clearly resonated with investors, driving a significant rise in the company’s stock price. With strong revenue growth, improved profitability, and effective cash flow management, Flutter is well-positioned for continued success in the online sports betting and iGaming sectors. The company’s ability to exceed expectations and raise guidance highlights its robust business model and operational excellence.
