Irish betting operator Paddy Power turned party pooper as it revealed poor sporting results over the past four months would reduce full year operating profit by €11m from earlier guidance. Excluding Paddy’s Australian operations, online sportsbook revenue fell 11% despite a 15% gain in betting handle. Retail sports betting revenue fell 3% in the UK and 4% in Ireland despite a 5% rise in handle in both markets. The stock market had a proper freakout over the announcement, pushing Paddy shares down over 8% on the day to close at 57.6p.
Paddy’s online gaming/B2B channels remained buoyant, with revenue up 17%. Mobile continues to boost Paddy’s fortunes, accounting for 47% of total online revenue, with 63% of customers placing a mobile bet in October. Further underscoring the technological shift, Paddy’s telephone wagering revenue fell 18%. Gaming machine revenue at Paddy’s UK betting shops fell 1%, which, when combined with the aforementioned sportsbook woes, resulted in overall retail revenue falling 2%. Paddy has opened 37 new UK shops so far this year, plus a further nine in Ireland.
Paddy’s international operations provided nothing but good news, as the Sportsbet business in Australia saw online handle rise 26% and revenue rise 30%, despite “notably poor results” at the recent Australian Spring Racing Carnival. Betting handle at Paddy’s Italian-facing operation grew 84% thanks to it being the first operator to offer the newly approved fixed-odds betting markets and the company says it’s holding its share of the Italian online market at between 8% and 9%.
Looking forward, Australia is expected to constitute 33% of Paddy’s overall profits in 2014, up from 23% in 2012. The UK online market is becoming increasingly competitive as operators prepare for the introduction next year of the unpopular point of consumption tax, but Paddy says its marketing costs are holding steady at around 20% of online revenue. Better still, Paddy believes its social media strength will give it a marketing advantage over its less socially inclined rivals. Paddy boosted its combined Facebook and Twitter audience by 10% over the past two months to 1.9m, which the company humble-brags is twice the tally of its closest competitor.
