Shares of Flutter Entertainment (NYSE: FLUT) dropped nearly 2% in Tuesday’s after-hours session after the FanDuel parent lowered its 2024 earnings and revenue guidance, citing unusually favorable results for bettors on NFL wagers.
The company now expects 2024 revenue to reach $5.78 billion, down from the previous forecast of $6.05 billion to $6.25 billion. Earnings before interest, taxes, depreciation, and amortization (EBITDA) are projected to be $205 million lower than the previously issued midpoint of $505 million. For the fourth quarter, the operator anticipates an EBITDA of $161 million on sales of $1.59 billion, facing headwinds during the October to December period.
According to Flutter, the 2024/2025 NFL season has been the most customer-friendly since the advent of online sports betting, with the highest rate of favorites winning in nearly 20 years.
NFL Betting Trends
The NFL is the most wagered-on league in the US, and most recreational bettors tend to bet on favorites rather than underdogs. As of December 31, 2024, NFL favorites had won 71.8% of games this season, the highest percentage in nearly 20 years, according to ESPN data. Through week 17, NFL favorites covered the spread at almost 54%—the highest level since 2017 and the seventh-highest in the Super Bowl era.
Implications for Flutter
Flutter’s update on what could be a challenging fourth quarter may impact the broader gaming equities landscape, as it is unlikely that FanDuel is the only operator affected by the favorable outcomes for bettors.
In their third-quarter earnings reports, sportsbook operators informed analysts and investors that the football season started poorly but anticipated that bettors’ winning streaks would taper off as the season progressed. However, this did not occur, and it is unlikely that Flutter’s situation is isolated.
In after-hours trading, DraftKings (NASDAQ: DKNG)—FanDuel’s closest competitor—dropped almost 1%, while other sports wagering-related stocks, including Penn Entertainment (NASDAQ: PENN) and Rush Street Interactive (NYSE: RSI), traded higher. Flutter is the first sportsbook operator to update investors on fourth-quarter performance, with BetMGM scheduled to report 2024 results on February 4.
Stock Repurchase and Long-Term Outlook
Despite the near-term challenges, Flutter is actively repurchasing its stock, aiming to buy back at least $350 million worth of shares by the end of the current quarter, indicating some support for the shares despite the reduced guidance.
Flutter emphasized that the results seen over the 2024 NFL season are “transitory” and do not affect the long-term outlook provided at its investor day last September. At that time, the Betfair parent forecasted that the total addressable market for regulated global gross gaming revenue (GGR) would swell to $368 billion by 2030, representing a compound annual growth rate (CAGR) of 8%. Flutter projected 2027 revenue of $21 billion, indicating a three-year CAGR of 14%.
Due to its large presence in Australia and Europe, Flutter has avenues for mitigating occasional US-induced headwinds, such as an unusual percentage of NFL favorites covering.
“In the Group Ex-US, continued good momentum in UK/Ireland in particular with favorable sports results in the English Premier League, means we now estimate 2024 revenue and adjusted EBITDA will be approximately 1% and 2% higher than the mid-points of our previous guidance provided at Q3,” added the operator.
