Online betting exchange Betfair saw revenues fall 13% to £90.4m in its fiscal Q1, but cost-cutting measures boosted earnings margins, leading the company to proclaim it is back on the path to profit town. Revenue in ‘sustainable’ (regulated) markets fell 7% to £69.9m in the three months ending July 31, while ‘other’ (non-regulated markets in which Betfair has ceased marketing but has yet to completely extricate itself) revenues were off 28% to £20.5m. CEO Breon Corcoran said the Q1 results were “in line with our plan” and the company remained on track to meet its full year expectations. Betfair shares rose 4p on Thursday, closing at 996p.
For Q1 2014, Betfair’s flagship betting exchange vertical saw revenue fall 13% to £60m, while its fledgling fixed-odds offering was up 18% to £4m thanks to a doubling in amounts wagered. Other gaming products were off 31% to £13.7m, resulting in a 16% decline to £77.9m in Betfair’s overall ‘core’ revenue. Betfair US, which focuses on horserace wagering via the TVG Network, saw an 11% boost in revenue to £12.5m, thanks mainly to the advance deposit wagering deal TVG inked in New Jersey this March.
Despite the predominantly downward revenue trend, Betfair’s belt-tightening measures resulted in a 16% earnings gain to £24.9m as margins rose 6.8% year-on-year. Other positives included a 53% gain in mobile revenue and a 10% rise in active customers in regulated markets. The company also said its “biggest ever” TV advertising campaign surrounding the new football season had boosted UK active customers by 26% in the current quarter.
Shortly after taking over Betfair’s reins last year, Corcoran announced the company would refocus its efforts on strictly regulated markets, leading to a £49.9m loss in its FY 2013 results in June. Betfair says the 2012 withdrawals from markets such as Germany, Greece and Cyprus and the lengthy delay in garnering approval of betting exchanges in Spain’s regulated market accounted for £6.5m of Q1’s revenue shortfall. The ‘sustainable’ portion of Betfair’s overall revenue – sums garnered in the UK, Ireland, Denmark, Malta, Gibraltar and the US – increased to 77% from 73% in the same quarter last year.