DUBLIN (Reuters) - Paddy Power Betfair, touted “huge progress” in the developing U.S. market and a strong first quarter for its established Australian business as revenue rose by 17 percent despite sports results favouring gamblers.
The Dublin-based group merged its U.S. business with fantasy sports company FanDuel last year to target a market set to open up in the coming years.
On Thursday said that had resulted in a 47 percent jump in U.S. revenue for the three months to March 31, accounting for just over 15 percent of group sales.
Its Australian Sportsbet brand delivered revenue growth of 20 percent as the group’s decision to increase investment in response to tax increases paid off.
More modest growth of 4 percent in its main European business was driven exclusively by its recent acquisition of Georgian gaming company Adjarabet.
“In the U.S., FanDuel Group is making huge progress,” Chief Executive Peter Jackson said in a statement noting a New Jersey sports betting market share of 50 percent.
“FanDuel remains well positioned to generate good returns on ongoing sports betting investment and for the rest of the Group we remain on track to meet our full year profit expectations despite the adverse sports results in Q1,” he said.
Shares in the group were up 0.5 percent in Dublin at 0810 GMT but down almost 5 percent in London.
That was as a result of the Irish stock exchange being closed for May Day on Wednesday, meaning the stock could only be traded on Britain’s FTSE 100, where it rallied by almost 5 percent in advance of the trading update.
Davy Stockbrokers estimated that the unfavourable soccer and horse racing results would have impacted first quarter profits by about 14 million pounds before any recycling of winnings but that the underlying momentum appeared better than anticipated.
“As each long-anticipated regulatory change is implemented, the Paddy Power Betfair (PPB) investment thesis is becoming more straightforward,” analysts at Davy wrote in a note, referring to the increasing cost of regulation in established markets.
“The group and sector are not out of the woods. Yet, for the first period in some time, performance appears more balanced between those divisions reflecting the group’s underlying growth prospects (in the U.S. and increasingly Australia) and those still hampered by either external and/or internal challenges (Europe and retail).”
Reporting by Padraic Halpin; Editing by Jason Neely/Keith Weir