Betfair paint a confusing picture
It’s the Betfair AGM today, I wont be going this year as I have sold my shares. But I know somebody who is, so I’ll let you know if anything interesting comes out of it. In line with this an interim management statement was issued this morning.
Generally the tone was bullish despite reporting a decline in revenue. Revenue was down 13% year on year but underlying earnings were up. Betfair wrote off a lot of expenses in the last year and cut their workforce, so underlying earnings should be up on just that alone TBH.
Key data in the statement boils down to the following, paragraphs, notes in bold: –
Exchange revenue growth was affected by Euro 2012 falling in the prior year comparative period, as well as the withdrawal of the product from a number of markets in FY13. Adjusting for these factors, Exchange revenue was up 4%. (Elsewhere it is stated that Euro 2012 generated £7.8m in revenue which still leaves the exchange short?)
The volume of bets on our risk sports products doubled in the period, driven by the launch of the new Sportsbook. Despite lower gross win margins, Sports revenue from sustainable markets was up 52%. Lower international revenues, driven by market exits, meant that overall revenue was up 18%. (Sportsbook still appears to only a small part of the business and only grew £600k YOY)
Games revenues were down 31%, driven predominantly by significant declines in international markets as well as weak margins in risk products and a continued poor poker performance. (Gaming has plummeted £6m)
The number of active customers in sustainable markets was up 10% to 396,000, driven by the new Sportsbook. The number of actives in other markets was down 31% at 134,000. (Betfair no longer seem to publish KPI’s, but in Q1 FY11 they reported total actives of 526,000 – Would be nice to see what the sportsbook numbers were vs the exchange)
I’m not sure what to make of this statement – “We have introduced Cash Out to our Sportsbook, enabling customers to lock in profits on singles and accumulators, bringing the first of many Exchange-based features to the product.” Why am I confused? Because we all know now that the ‘cash out’ on the sportsbook has nothing to do with the exchange. So I’m not sure why you would try to position as such? Maybe I mis-read this? Comments welcome!
Anyhow, conference call at 8:15, so I’ll listen in and await news from the AGM.
Category: Betfair, Industry news
Perhaps the description ‘Exchange-based features’ should have been phrased as ‘Exchange-style features’? i.e. ‘cash-out’ is a facility similar to greening up in the exchange(and the latter phrasing wouldn’t imply any actual connection with the exchange during cash-out)?!