Paddy Power maintained its mobile lead over its closest UK competitors during the first half of this year, growing net revenues from the channel by 100% to €104m to account for 43% of its online business.
“That’s more than double the rate of our quoted competitors”, CEO Patrick Kennedy told analysts today, as its core online business drove a 22% increase in group net revenue to €380m and a 11% uplift in operating profit to €75.4m.
Online, which delivered €57.5m or 76% of the Irish bookie’s profitability during the six months to the end of June, grew revenues by 29% to €243m and operating profit by 19%, underpinned by a stellar performance from its Australian Sportsbet and IASBet brands, which together achieved their fastest top-line growth rate since Paddy Power entered the market back in 2009. “We’ve built I think a great position over the last four years in Australia, with average annual growth in excess of 30%, in active customers, revenue and profit”, said the Paddy Power boss.
The shine was however taken off a strong set of numbers by heavy losses in Italy - with this excluded online operating profit would have grown by 28% instead of 19% - and gloomy analyst projections over the impact of the UK point-of-consumption (POC) tax set to come into force in December 2014, which would have cost the Irish operator an extra €20m had it been in force during H1 2013 at the 15% GPT rate.
On Italy, where it lost €9.6m and expected that to reach €15m-€16m for the full year, Kennedy stressed the “vision we had for Italy of a disruptive, innovative, engaging, online-only brand, is working”, pointing to an estimated 9% share of the online sports betting market during the last three months, set to be boosted by the introduction of the Palinsesto Supplementare. “We will increase the number of live tennis and live football matches we offer markets on by eight to ten fold”, said Kennedy, with more product roll-outs planned during the next 12 months.
“As in other markets, we have built positions of leadership in mobile and social. Mobile accounted for 40% of our sportsbook stakes in June in Italy, compared to an estimated industry average of up to 20%, so we therefore believe we have close to 20% of the Italian mobile sports betting market”, said Kennedy.
On the POC tax, the company said that while it would focus on mitigating its impact through lower marketing costs and offering lower revenue share as well as by taking market share from weaker operators, it was important not be distracted from its plan of building the business for the longer term by “smart investment” in product, technology and people. “There are easy levers to pull, and I think some operators in the market are pulling the easy lever, and television media is a big part of that.” Kennedy also emphasised that the UK market would continue to grow post-POC, and suggested any potential market share gains would come in gaming, rather than betting.
“There’s greater concentration in sports betting and there’s greater fragmentation, relatively speaking, in egaming, and I think there may be greater fallout there.”
Article written by Stephen Carter
