This story is sponsored by BetfairBetfair today provided the first detail on how its turnaround strategy under boss Breon Corcoran is progressing, as the London-listed business continues to resist a hostile takeover led by private equity firm CVC.
In a full-year trading update issued this morning ahead of a presentation to investors on how the strategic plan unveiled in December was progressing, the betting exchange revealed earnings (EBITDA) for the year ending 30 April 2013 had come in ahead of guidance at £73m, due to stronger-than-expected UK sportsbook revenues in Q4.
CEO Corcoran said: “The strategy is working. We have had early success and shown that the combination of the exchange and sportsbook can deliver a sustainable competitive advantage.”
According to the betting exchange, reported by the Sunday Times to be considering a return of £140m to shareholders disappointed with its dire share price performance since listing in 2010, a restructuring founded on a circa 500 reduction in headcount had been completed “ahead of schedule”, and would deliver increased cost savings of £30m, up from the £20m promised in December, by 30 April 2014.
The operator also achieved record acquisition in its core market of the UK, up 108% since the launch of its conventional sportsbook, with the UK customer base up 18% year-on-year in the last six months. Cost per acquisition had also been driven down 20% in the final quarter, with Games cross-sell also benefitting from the acquisition of traditional sportsbook customers, up 74% since launch.
The company also gave the first clue as to how its core exchange and sportsbook products were performing side-by-side, revealing that 24% of football customers were already using both, which Betfair said provided “evidence that the exchange and sportsbook are complementary.” An increased marketing focus on Games had also resulted in an increase in customer acqusitions of 37% year-on-year.
Margins had also improved in the company’s US-facing TVG business, up from -3% in FY 2012 to +7% in FY2013. Exchange licences were also “expected” in New Jersey and California, said Betfair today.
The Hammersmith-headquartered business also told the market that its withdrawal of marketing spend from dot.com or “grey” markets representing 16% of its business, as part of its renewed focus on regulated jurisdictions such as the UK and Ireland, had also proved “relatively resilient due to the uniqueness of our exchange.”
Corcoran also noted recent “positive regulatory momentum” in Spain, which recently confirmed its intention to regulate betting exchanges and slots, as well as Italy and the US.
The Betfair CEO, who joined last August from Paddy Power, said the progress to date was down to the “dedication and hard work” of its workforce, conceding they had “performed admirably in demanding circumstances.”
The board of the betting exchange rejected a bid of 880p per share from a group of investors led by private equity firm CVC two weeks ago. The group of investors has until 13 May to submit a formal bid.
Article written by Peter Holmes
