Online sports betting and gaming operator Paddy Power Betfair published its first set of preliminary results for the financial year that ended December 31, 2016. The report indicated a positive growth in both revenue and net profit for the period, which was a time of great transformation for the combined group, following the merger of Paddy Power and Betfair in February 2016.
The sports betting and online gaming group reported its revenue increased by 18% to reach £1,551 billion, with double-digit growth across all four divisions of Paddy Power Betfair. The group reported profits before interest, tax, depreciation, and amortisation (EBITDA) jumped 35% to £400 million and the EBITDA margin increased from 22% to 26%. In comparison, the revenue and EBITDA for the same period in 2015 stood at £1,318 billion and £296 million, respectively.
The underlying operating profit of the company jumped by 44% and stood at £330 million. Paddy Power Betfair’s earnings per share (EPS) also increased by 44% to reach 331p per share.
The group reported a loss of £5.7 million which was attributed mainly to the expenses related to the merging of the two companies. Also, the statutory results reflected only Betfair’s contribution from the date the merger was completed.
The report showed a sports revenue increase of 14% to £1.98 billion, comprised of 19% jump in sportsbook stakes and a 7% growth in exchange and B2B revenue. The group’s financial results for the period also showed a 14% increase in gaming revenue which stood at £353 million.
The growth in revenue followed the bad hit the sports betting industry took last March when a number of favourites won in what was deemed the “worst Cheltenham festival ever”. Despite the hit, Paddy Power Betfair succeeded in partially offsetting the losses from the horse racing festival thanks to the strong performance at Euro 2016.
Breon Corcoran, Chief Executive of Paddy Power Betfair commented that 2016 was a transformational year for the group. The two companies merged in the beginning of February 2016. Corcoran explained the integration of the two businesses went smoothly and faster than it was expected. The Chief Executive revealed that Paddy Power Betfair customers were already reaping the benefits of the merger, which include an increased number of sports betting markets and better odds.
Corcoran also added that the Group is currently following a dual brand strategy which enables it to serve different parts of the market with bespoke value propositions. According to Corcoran, the merger of the two companies enabled them to perform better than what he called “individual legacy companies” and created a prerequisite for “sustainable, profitable growth”.
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Olivia Cole
