BUSINESS

Betfair revenue slips 4% on grey-market pullouts

TAGs: Betfair, Breon Corcoran

betfair-revenue-slipsBetting exchange Betfair’s revenue dipped 4% to £90.5m in its fiscal third quarter ending Jan. 31, reflecting the company’s pullout from a number of ‘grey’ markets over the past year, including Cyprus, Germany and Greece. The company also cut back on its marketing in Spain, where the merits of legalizing betting exchanges are still being debated. All told, these markets had represented 16% of Betfair’s business. Despite the shortfall, Betfair CEO Breon Corcoran said the company was on track to meet revised full-year revenue targets of between £370m and £385m and earnings between £65m and £70m.

In December, Corcoran unveiled his questionable plan to refocus on Betfair’s “sustainable” home markets in the UK and Ireland, and the UK was one of the few bright spots on the balance sheets, with revenue up 6%. The other positive figure was the company’s new fixed-odds sportsbook, which saw revenue rise 39% to £7.5m thanks in part to a string of favorable footie results. Betfair’s new iPhone app accounted for over 40% of sportsbook revenue in January. Overall mobile revenue doubled and the channel now accounts for over 50% of activations and 20% of exchange commissions.

On the negative side, Betfair’s exchange revenue fell 6% to £56.3m and gaming revenue was off 8% to £18m. Betfair didn’t break out specific numbers for its poker channel, copping only to its ‘weak’ performance. Betfair launched the iPoker network on its dot-com site in January, and will continue to have a presence on the both iPoker and Ongame networks until July, when all customers will be force-marched over to iPoker.

Betfair’s US horseracing division aka the TVG Network, saw handle rise 7% and wagering revenue up 8%, but reported revenue was flat at $8.4m thanks to reduced TV revenues and unfavorable currency exchange rates. Betfair Australia’s revenue was up 13% on higher commission rates, but Betfair provided no dollar figures.

In a statement released with its results, Corcoran alluded to the stiff £20m-over-two-years cost-cutting measures management had determined were necessary to produce “a more focused and leaner organization.” Besides shedding hundreds of staffers, Betfair announced earlier this week that it had reached a mutual agreement with German pro footie squad Bayer Leverkusen to cancel the two-year sponsorship deal signed in June (five days before the German parliament passed legislation imposing a 5% tax on betting turnover. Betfair shares rose 4.58% to 719.5p on Thursday, but Investec Securities restated its ‘sell’ rating, setting a 585p target price.

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