Paddy Power Betfair’s first joint earnings report shows honeymoon far from over

paddy-power-betfair-joint-earningsThe newly welded-together betting behemoth Paddy Power Betfair demonstrated its fiscal clout in its first joint earnings report since the companies officially joined forces last month.

According to figures released on Tuesday, Paddy Power’s preliminary FY15 results showed revenue improving 24% to €1.094b – the first time the company has topped the €1b mark – while operating profit gained 10% to €180m.

Paddy’s profit would have risen 50% but for €66m in new taxes and product fees, including the UK’s new 15% online point of consumption tax and the increased land-based Machine Games Duty (MGD).

Total online gambling revenue was up 23%, led by a 28% rise in sportsbook and a 10% rise in online gaming, which helped push online operating profit up 11% to €152m. Mobile channels accounted for 68% of all online revenue, as 80% of active customers made at least one mobile transaction.

Australia’s contributions to Paddy’s online performance were particularly notable, with Sportsbet’s betting stakes up 39%, revenue up 43%, and operating profit rising 54% to €80m. By comparison, non-Aussie online operations generated an operating profit of €73m, although the aforementioned new taxes trimmed this figure by €54m.

At the retail level, Paddy’s UK revenue improved 15% while operating profit gained 12% to €23m (before €5m in additional MGD). In Ireland, retail revenue improved 14% while operating profit gained 44% to €20m. Paddy closed out 2015 with 341 UK shops, a net gain of 20 on the year, while its Irish retail presence rose by 14 to 259 shops.

Because of the companies’ different reporting timelines, Betfair’s report covers its fiscal Q3, which ran until Jan. 31, 2016. Revenue gained 21% to £138m thanks to a 51% rise in fixed-odds sports betting stakes, while earnings improved 10% to £26m (would have been up 30% but for £5m in new tax).

Breon Corcoran, erstwhile Betfair CEO and new chief exec of the enlarged group, celebrated the fact that both companies had entered their new marriage “on the back of strong trading momentum.”

Corcoran said the honeymoon was far from over and that the companies’ belief in the wisdom of shacking up “has only been strengthened” despite having had a chance to see each other first thing in the morning without makeup and before brushing their teeth.

Corcoran said Paddy Power Betfair would be saying “a few prayers” that their technology doesn’t fail during the upcoming Cheltenham Festival. Corcoran also suggested that further integration of the two companies’ platforms wouldn’t really ratchet up until August, in order not to jeopardize either brand’s momentum until the Euro 2016 football series is in their rearview mirror.

Betfair was awarded the US market’s first exchange betting license in November and Corcoran revealed that the company would be launching its New Jersey horseracing exchange betting product this summer.