Betfair is to complete the switchover of its Tradefair financial trading service to a platform provided by GFT Markets in December.
The betting exchange has notified its long-standing provider London Capital Group that it intends to terminate their white-label contract, with effect from 12 December. Tradefair contributed £0.6m of London-listed LCG’s gross profit of £11.7m in the six months to the end of June 2013.
LCG has provided the trading platform and support to Tradefair Spreads since it first launched back in autumn of 2007. Unlike the white-labelled financial trading services provided by several of its peers in the igamng space, such as Ladbrokes and William Hill, Betfair’s spread betting platform operates under a separate brand and domain at Tradefair.com.
The betting exchange last week unveiled a 13% drop in first-quarter revenues to the end of July, impacted by a strong comparative period last year that included the Euro 2012 football tournament.
Earnings (EBITDA) were however up an impressive 16% to £24.9m, due to cost-cutting and lower marketing spend due to there being no summer football tournament. Boss Breon Corcoran has overseen a reduction in headcount of 500 to a workforce of circa 2,300 since he was headhunted from Paddy Power to head up Betfair last year.
While revenues - particularly gaming which fell 31% - were also hit by the withdrawal of acquisition marketing spend from most unregulated dot.com markets, as well as forced exits from Greece, Germany, Cyprus and Spain due to regulatory shifts, the quality of earnings continued to improve. 77% of revenues came from sustainable markets in the last quarter compared to 73% the previous year.
Management said it was “on track to meet the board’s expectations for the year”, with Corcoran noting in the earnings call that: “August, since the satrt of the soccer season, has been particularly encouraging.” Boosted by the company’s biggest ever TV ad campaign, last month saw the number of active UK customers up by 26%, driving double-digit revenue growth in sustainable markets, including the UK.
Analyst David Jennings of Davy Stockbrokers said it was “difficult not be encouraged by several of the data points” in Betfair’s Q1 release. Peel Hunt’s Nick Batram called it an “encouraging start along the road of creating a meaner and leaner Betfair.”
Article written by Peter Holmes
