PAddy Power Betfair (LON:PPB) has updated investors on its first-quarter performance this morning.
**Highlights from the company statement:**
Group revenue increased by 16% to £339m. Sportsbook stakes increased by 21% to £2.3 billion but revenues in both periods were impacted by adverse sports results, most notably this year at the Cheltenham Festival where, across the Group, customers’ net winnings totalled over £20m. Revenue from regulated markets represented 95% of total revenues in the period.
Online revenue increased by 17% to £195m. Within this, revenue from regulated markets was up 21% and unregulated revenues fell by 14%, mostly due to the impact of exiting from Portugal in July 2015.
Sports revenue increased by 17% to £135m, driven by a 23% increase in sportsbook stakes and 5% growth in Exchange & B2B revenues. Mobile continues to be the key driver of sportsbook growth and now represents 76% of revenues. Last month we launched an innovative feature, ‘Kicker’, which suggests an additional bet to football customers on the bet slip, giving them the chance to earn an escalating pay-out based on their backed team’s margin of victory.
Gaming revenue was up 17% to £60m driven by increased cross selling from sports and a strong performance in mobile revenues, which grew by 43% to contribute 56% of total gaming revenues.
Profitability and financial position
EBITDA increased by 27% to £59m (Q1 2015: £47m) and operating profit increased by 36% to £43m (Q1 2015: £31m). Within this, sales & marketing spend increased by £13m or 22%, and new taxes and product fees increased costs by £3m, primarily relating to point of consumption tax in Ireland and increased machine gaming duty in the UK.
As at 31 March 2016, the Group had net debt of £54m, excluding customer balances.
The integration of the two businesses is progressing well and we have started to bring together the best attributes of each business to create a stronger combined operation.
Our leadership team has been appointed and the restructuring of their teams, where required, has commenced. This involves the rationalisation of some duplicated roles and the consolidation of our office locations. We remain confident that our target of delivering synergy cost savings of £50m per annum will be achieved.
Customers are starting to benefit as we share products between our brands. Early examples of this include making a number of proprietary games from the Paddy Power in-house development studio (Cayetano) available on the Betfair website and mobile apps, use of Timeform analysis and data in Paddy Power retail shops, and the introduction of new markets such as minute-by-minute football betting on Paddy Power and Gaelic sports on the Betfair sportsbook. This sharing of products represents an early opportunity to enhance our customer proposition as a result of bringing our two businesses together.