Cheltenham success (for the bookies) sees operating profits more than double....
Gambling giant Paddy Power Betfair has reported that it enjoyed a 23% increase in revenues to £416 million (€492m) for the three months to the end of March.
When currency translation gains are factored out, like-for-like growth was still a health 15%.
Underlying operating profits rose by a whopping 114% to £91m based partly on better results – from the company’s point of view – at Cheltenham and ongoing synergies arising from the merger of the two companies.
Online revenue increased by 15% to £224m (cc +12%), primarily driven by a 33% increase in sportsbook revenue (cc +30%).
The growth was driven by sports, with sportsbook stakes up 18% (+9%) and margins up 1.3 percentage points.
On the negative side, revenues generally from sports betting are lower than the company anticipated and it says major sports results in April such as The Masters and The Grand National turned more in favour of the punter.
Chief executive Breon Corcoran commented:
“Reversing the trend of the past two years, results at Cheltenham 2017 favoured bookmakers and this contributed to good revenue growth.
"Combined with the annualisation of merger-related cost savings and continued focus on operating efficiency, this resulted in a doubling of operating profits in the first quarter.
"Since then, however, at high profile events such as the Grand National, Premier League football and the US Masters, results favoured customers, and overall gross win margins were weak in April.
"A key strategic focus for 2017 is the integration of our technology platforms," he continued. "This project is on track and we expect both our European brands to be operating on a common platform by the end of the year, at which point customers will start to benefit from increased pace of new product delivery.”
Overall, its a fine start to the year for the recently-merged group, which had already started to see the fruits of the coming together of Paddy Power and Betfair in 2016.
Costs related to the merger may have left the new betting giant with a £5.7 million (€6.6m) loss last year but there are plenty of other signs that it will prove to be a very profitable move in the years ahead.
Underlying earnings before interest, tax, depreciation and amortisation (effectively operating profits) from the combined business was up 35% to £400m (€462m) in the year to December, living up to market expectations.
The group won £1.55 billion (€1.79bn) from its customers in 2016.
In fact, the performance would have been significantly better but for a December run of “customer friendly football results” that could have cost the group up to £24m (€28m) in revenues.
Calling it a "transformational year", Corcoran said of the results when they were published last month:
"We have created a business with considerable scale that is stronger and better able to compete than either of the individual legacy companies. The group is well positioned to deliver sustainable, profitable growth."