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07 May 13
09:11
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Date Joined:
17 Sep 02
http://corporate.betfair.com/media/press-releases/2013/07-05-2013.aspx
FY 13 Post Close Trading Update07/05/2013
“Momentum building from early success”
Betfair Group plc (LSE:BET) is today releasing an unaudited trading update following the end of its financial year ended 30 April 2013 (“FY13”) and is providing an update on progress made in delivering its strategy.
Highlights
Estimated results above the top end of our guidance range:
FY13 estimated revenue of c.£387 million1
FY13 estimated underlying EBITDA2 of c.£73 million1
Cash balance at 30 April 2013 of £168 million (2012: £118 million)1
Excellent progress made in the delivery of our plan:
Cost savings increased to c.£30m (from £20m) and full benefit now expected in FY14
Employee numbers reduced by c.500 following restructuring
Record UK customer acquisition (up 108% year on year) since sportsbook launch
Evidence of improved acquisition efficiency (Q4 cost per acquisition down 20%)
74% year on year increase in games cross sell since sportsbook launch
UK customer base up 18% year on year in the last 6 months
75% of Q4 revenue generated in sustainable jurisdictions (Q4 FY12: 66%)
Strong strategic momentum
Recent customer acquisition and retention performance indicates that product and marketing strategies are working
Planning to re-invest c.£10m of the cost savings in further product and marketing investment
Evidence that the exchange and sportsbook are complementary: 24% of football customers are already using both products
Acquisition of Blue Square helps achieve scale
Breon Corcoran, Chief Executive Officer, stated:
“We have achieved much in the five months since we set out our strategy in December.
“The business has gone through significant change. A new management team is in place and a wide ranging restructuring has been completed ahead of schedule, allowing us to increase our cost savings substantially. At the same time, the pace of product delivery has accelerated, including the development and launch of a new sportsbook within three months.
“The strategy is working. We have had early success and shown that the combination of the exchange and sportsbook can deliver a sustainable competitive advantage. In the last couple of months, our sportsbook-led acquisition focus has resulted in improved marketing efficiency and a two fold increase in the number of UK customer activations. We are confident this will enable us to accelerate revenue growth in our most important market and I believe we can grow in-line with the market in the medium term.
“While we are rightly focusing on regulated jurisdictions, primarily the UK and Ireland, I firmly believe there is a significant international opportunity. We have recently seen positive regulatory momentum in Italy, Spain and the USA. In addition, revenue from the countries where we have ceased marketing is proving relatively resilient due to the uniqueness of our exchange.
“We intend to use our strong balance sheet to pursue a strategy of targeted acquisitions to add further domestic scale, achieve geographical expansion and close product gaps.
“Our progress to date is a testament to the dedication and hard work of our people. They have performed admirably in demanding circumstances.
“This is just the beginning, however. In a few short months we have made considerable progress and demonstrated the opportunity that Betfair has ahead of it. I firmly believe that Betfair’s unique technology, customer value proposition, UK scale and strong balance sheet mean it is well placed to compete in an industry facing substantial changes. I am delighted to be leading the business at this exciting time.”
FY13 trading update
We estimate that Group revenue was approximately £387 million (FY12: £388 million), ahead of our guidance3. The outperformance was driven by stronger than expected UK sportsbook revenues, particularly via the mobile channel, and revenue resilience in countries where we have ceased marketing.
We estimate that Group underlying EBITDA was also higher than our guidance3 at approximately £73 million (FY12: £86 million). This was driven primarily by the better revenue performance.
Cost savings
In December, we stated that we needed to become a leaner organisation. At the time, we had identified opportunities to reduce costs over the next two years by approximately £20 million (on an annual run-rate basis). We now expect cost savings to total approximately £30 million and have accelerated the delivery of the savings such that the full impact is now expected to benefit the current financial year (ending 30 April 2014).
Following an extensive restructuring, we have reduced the number of employees in the business by approximately 500. This is expected to reduce costs by approximately £23 million.
Approximately £7 million of further savings are expected to result from reducing spend with suppliers. Much of this is driven by the lower number of employees, such as the consolidation of office space. We have also reviewed existing supplier relationships to achieve efficiencies and are planning to spend less on public affairs and legal resources in some jurisdictions due to our new geographical focus.
We still expect the cost to achieve these savings to be approximately £20 million. These costs will be reported separately and excluded from underlying results to reflect the exceptional nature of these items.
Strategy update
Betfair’s management team is today presenting an update on the delivery of its strategic plan (the “Trading & Strategy Update Presentation”).
Highlights of the Trading & Strategy Update Presentation include how Betfair is:
Focusing investment on regulated jurisdictions to increase sustainability of revenues and reduce the regulatory risk
Investing in product and brand to enhance our competitive position and drive growth
Introducing greater accountability and becoming a leaner and more dynamic business
Looking to accelerate growth through international opportunities and its balance sheet flexibility.
There will be a live audio stream of the Strategy Update Presentation on our corporate website (http://corporate.Betfair.com) at 10am today. The Strategy Update Presentation materials will be made available on the website at around 9.30am today.
Footnotes
Results for both FY13 and F&12 are from continuing operations excluding LMAX
Figures represent underlying results, which exclude, where relevant, separately disclosed items, including redundancy costs. EBITDA is defined as Group operating profit before impairment, depreciation and amortisation.
Revenue guidance range of £370 million to £385 million; underlying EBITDA guidance range of £65 million to £70 million
FY 13 Post Close Trading Update07/05/2013
“Momentum building from early success”
Betfair Group plc (LSE:BET) is today releasing an unaudited trading update following the end of its financial year ended 30 April 2013 (“FY13”) and is providing an update on progress made in delivering its strategy.
Highlights
Estimated results above the top end of our guidance range:
FY13 estimated revenue of c.£387 million1
FY13 estimated underlying EBITDA2 of c.£73 million1
Cash balance at 30 April 2013 of £168 million (2012: £118 million)1
Excellent progress made in the delivery of our plan:
Cost savings increased to c.£30m (from £20m) and full benefit now expected in FY14
Employee numbers reduced by c.500 following restructuring
Record UK customer acquisition (up 108% year on year) since sportsbook launch
Evidence of improved acquisition efficiency (Q4 cost per acquisition down 20%)
74% year on year increase in games cross sell since sportsbook launch
UK customer base up 18% year on year in the last 6 months
75% of Q4 revenue generated in sustainable jurisdictions (Q4 FY12: 66%)
Strong strategic momentum
Recent customer acquisition and retention performance indicates that product and marketing strategies are working
Planning to re-invest c.£10m of the cost savings in further product and marketing investment
Evidence that the exchange and sportsbook are complementary: 24% of football customers are already using both products
Acquisition of Blue Square helps achieve scale
Breon Corcoran, Chief Executive Officer, stated:
“We have achieved much in the five months since we set out our strategy in December.
“The business has gone through significant change. A new management team is in place and a wide ranging restructuring has been completed ahead of schedule, allowing us to increase our cost savings substantially. At the same time, the pace of product delivery has accelerated, including the development and launch of a new sportsbook within three months.
“The strategy is working. We have had early success and shown that the combination of the exchange and sportsbook can deliver a sustainable competitive advantage. In the last couple of months, our sportsbook-led acquisition focus has resulted in improved marketing efficiency and a two fold increase in the number of UK customer activations. We are confident this will enable us to accelerate revenue growth in our most important market and I believe we can grow in-line with the market in the medium term.
“While we are rightly focusing on regulated jurisdictions, primarily the UK and Ireland, I firmly believe there is a significant international opportunity. We have recently seen positive regulatory momentum in Italy, Spain and the USA. In addition, revenue from the countries where we have ceased marketing is proving relatively resilient due to the uniqueness of our exchange.
“We intend to use our strong balance sheet to pursue a strategy of targeted acquisitions to add further domestic scale, achieve geographical expansion and close product gaps.
“Our progress to date is a testament to the dedication and hard work of our people. They have performed admirably in demanding circumstances.
“This is just the beginning, however. In a few short months we have made considerable progress and demonstrated the opportunity that Betfair has ahead of it. I firmly believe that Betfair’s unique technology, customer value proposition, UK scale and strong balance sheet mean it is well placed to compete in an industry facing substantial changes. I am delighted to be leading the business at this exciting time.”
FY13 trading update
We estimate that Group revenue was approximately £387 million (FY12: £388 million), ahead of our guidance3. The outperformance was driven by stronger than expected UK sportsbook revenues, particularly via the mobile channel, and revenue resilience in countries where we have ceased marketing.
We estimate that Group underlying EBITDA was also higher than our guidance3 at approximately £73 million (FY12: £86 million). This was driven primarily by the better revenue performance.
Cost savings
In December, we stated that we needed to become a leaner organisation. At the time, we had identified opportunities to reduce costs over the next two years by approximately £20 million (on an annual run-rate basis). We now expect cost savings to total approximately £30 million and have accelerated the delivery of the savings such that the full impact is now expected to benefit the current financial year (ending 30 April 2014).
Following an extensive restructuring, we have reduced the number of employees in the business by approximately 500. This is expected to reduce costs by approximately £23 million.
Approximately £7 million of further savings are expected to result from reducing spend with suppliers. Much of this is driven by the lower number of employees, such as the consolidation of office space. We have also reviewed existing supplier relationships to achieve efficiencies and are planning to spend less on public affairs and legal resources in some jurisdictions due to our new geographical focus.
We still expect the cost to achieve these savings to be approximately £20 million. These costs will be reported separately and excluded from underlying results to reflect the exceptional nature of these items.
Strategy update
Betfair’s management team is today presenting an update on the delivery of its strategic plan (the “Trading & Strategy Update Presentation”).
Highlights of the Trading & Strategy Update Presentation include how Betfair is:
Focusing investment on regulated jurisdictions to increase sustainability of revenues and reduce the regulatory risk
Investing in product and brand to enhance our competitive position and drive growth
Introducing greater accountability and becoming a leaner and more dynamic business
Looking to accelerate growth through international opportunities and its balance sheet flexibility.
There will be a live audio stream of the Strategy Update Presentation on our corporate website (http://corporate.Betfair.com) at 10am today. The Strategy Update Presentation materials will be made available on the website at around 9.30am today.
Footnotes
Results for both FY13 and F&12 are from continuing operations excluding LMAX
Figures represent underlying results, which exclude, where relevant, separately disclosed items, including redundancy costs. EBITDA is defined as Group operating profit before impairment, depreciation and amortisation.
Revenue guidance range of £370 million to £385 million; underlying EBITDA guidance range of £65 million to £70 million
Show More
More detail can be found here:
http://corporate.betfair.com/~/media/Files/B/Betfair-V2/press-releases/2013/07-05-2013.pdf
http://corporate.betfair.com/~/media/Files/B/Betfair-V2/press-releases/2013/07-05-2013.pdf
The company is in tremendous shape , just ask its customers 
"The Company’s experience in Australia regarding pricing implies a revenue opportunity" - this is interesting, and ties in with recent comm. rises in certain jurisdictions. Probably the clearest indication yet that base rate commission may well increase in the not too distant.
Australian wallet
Commission on this market
6.5% Market Base Rate (minus your discount)
That completely passed me by.
Commission on this market
6.5% Market Base Rate (minus your discount)
That completely passed me by.
Yes, the potential for a rise in commission stood out.
As did them saying exchange licences are expected in New Jersey and California. I was aware of California but not New Jersey. Not having read up on it, I'm assuming there might be some differences to how the exchange operates in the UK.
As did them saying exchange licences are expected in New Jersey and California. I was aware of California but not New Jersey. Not having read up on it, I'm assuming there might be some differences to how the exchange operates in the UK.
http://corporate.betfair.com/~/media/Files/B/Betfair-V2/pdf/Betfair-7-May-13-presentation.pdf#page=21
On page 19, that they forcast a massive increase in the Number of In-play matches/markets they will offer on the Sportsbook over the coming months, whilst they close side markets down on the Exchange :)
On page 19, that they forcast a massive increase in the Number of In-play matches/markets they will offer on the Sportsbook over the coming months, whilst they close side markets down on the Exchange :)
Shirley, where did you see the 6.5%? Isn't that just for the horse racing?
The presentation itself should be here.
http://www.livestream.com/betfair_internal
They might expand on pricing.
http://www.livestream.com/betfair_internal
They might expand on pricing.
May 7, 2013 -- 10:02AM, Templeton Peck wrote:
Shirley, where did you see the 6.5%?
Yes, horse racing only & to cover the NSW levy of 1.5%.
Some basic stuff in this presentation. Astonishing that they mention cost savings in travel and accommodation. What was this organsiation like before?
Thanks.
My favourite part of the presentation so far is the chap saying we should all visit Stevenage as it's a lovely part of London.
My favourite part of the presentation so far is the chap saying we should all visit Stevenage as it's a lovely part of London.
Somebody ought to ask what they are providing in their financial statements for miselling or other penalties when they so blatantly fail to distinguish fully between the exchange and the sportsbook.
You got any mates at that presentation that can ask that question TP?
You got any mates at that presentation that can ask that question TP?
Talking about their 'covenant with the layers' now - sportsbook bets being fed into the exchange to provide best execution is in their plans. "Wouldn't be here without the exchange" Encouraging.
dan33 • May 7, 2013 10:27 AM BST
Talking about their 'covenant with the layers' now - sportsbook bets being fed into the exchange to provide best execution is in their plans. "Wouldn't be here without the exchange" Encouraging.
They have been making a habit of providing clear arb opportunities. I am surprised that they don't have sirens automatically going off on the sportsbook traders desks to highlight each and every opportunity.
Talking about their 'covenant with the layers' now - sportsbook bets being fed into the exchange to provide best execution is in their plans. "Wouldn't be here without the exchange" Encouraging.
They have been making a habit of providing clear arb opportunities. I am surprised that they don't have sirens automatically going off on the sportsbook traders desks to highlight each and every opportunity.
Shirley, afraid I'm not aware of anyone I know being there.
CEO mentions the forum! Looking to make pricing more efficient not necessarily higher. Apparently some countries are being tested with higher pricing and some with lower. I vote for lower.
Morgan Stanley guy going for the throat there with ASA concerns on latest ad campaigns...
Ignores it completely yes - think they're almost certainly aware those ads aren't legit.
Ref to selling sportsbook on the back of perceived value in the exchange .... just to make sure we are talking the same thing.
Yes, that was the question but the CEO ignored/misunderstood it.
It was comforting to hear, ref to flexible pricing, that they do actually look at the forum, that's a positive. A negative is analysts asking a question, not getting an answer and not persevering with their question.
Yep. Plenty of positives in there but that's what you'd expect when not pressed and no more than a trading update.
I wasn't aware the exchange could be back in Spain so soon. Italy too.
Software soon to be implemented that will feed bets from Sportsbook through to the exchange will be an interesting development.
Looking at pricing and acknowledging the bad will they've built up with the current customer base is promising too.
I'm all for the Sportsbook and using it as a gateway for new customers to move to the exchange but I still don't approve of betfair.com being the fixed odds site with new/casual punters having to click on a link to find the exchange.
I wasn't aware the exchange could be back in Spain so soon. Italy too.
Software soon to be implemented that will feed bets from Sportsbook through to the exchange will be an interesting development.
Looking at pricing and acknowledging the bad will they've built up with the current customer base is promising too.
I'm all for the Sportsbook and using it as a gateway for new customers to move to the exchange but I still don't approve of betfair.com being the fixed odds site with new/casual punters having to click on a link to find the exchange.
Also reassuring that they're not aiming on making the Sportsbook a market leader, just the minimum a customer would expect from such a site.
Encouraging news on expansion overseas. That really is key to future of exchanges. It'd be great to get China on board soon too.
What will the proposed takeover offer be now that the company has reported such fantastic progress
If progress is so great why is it so hard to get a bet matched? Or more likely it's all cherry picked nonsense like they write on their customer commitment. Why don't they update everyone on the beta website and loading... please wait message I had for months.
W A N K E R S.
W A N K E R S.
The statement wd not satisfy me if I were a potential investor.
It seems they've had to find 30 mill. of efficiencies to tread water on revenues and lose approx. 18% of retained earnings. I wd have wanted the CEO's statement to have addressed why earnings were particularly good or bad in any one year.
Don't like the sound of efficient / flexible pricing either. If bf gave California 5% basic comm., it wd be so astonishingly better than the totes that the exchange phenomenon wd start up all over again like it did in Australia. If you go on the Aussie forum, you see that bf is held in far higher regard there (or was held in high regard for longer) than it is or was in its core territory.
It seems they've had to find 30 mill. of efficiencies to tread water on revenues and lose approx. 18% of retained earnings. I wd have wanted the CEO's statement to have addressed why earnings were particularly good or bad in any one year.
Don't like the sound of efficient / flexible pricing either. If bf gave California 5% basic comm., it wd be so astonishingly better than the totes that the exchange phenomenon wd start up all over again like it did in Australia. If you go on the Aussie forum, you see that bf is held in far higher regard there (or was held in high regard for longer) than it is or was in its core territory.
I don't like it either... Company was sold as a growth company but they've given up on growth and the strategy is all about monetisation, cost savings... sounds like a mature (low growth) business to me.
Peer to peer businesses are natural monopolies (everyone better off when all customers using same platform)... betfair have about 12% share of UK online betting http://www.slideshare.net/psmcguin/uk-online-gambling-market-intelligence-report-11868167
They should have a 70% share...
Peer to peer businesses are natural monopolies (everyone better off when all customers using same platform)... betfair have about 12% share of UK online betting http://www.slideshare.net/psmcguin/uk-online-gambling-market-intelligence-report-11868167
They should have a 70% share...
J_Livermore
Peer to peer businesses are natural monopolies
in an ideal world, sure... but in the real world, this is offset by monopolies allowing businesses to take the p!ss out of their customers
i'd be happy for a good alternative platform to split the liquidity just to reintroduce some competition into the exchange market.
2 efficient, customer-friendly exchanges with a 35% share each would be vastly preferable to where we are atm imo, and also preferable to a single exchange with a 70% share that can abuse its customers as much as it likes
Peer to peer businesses are natural monopolies
in an ideal world, sure... but in the real world, this is offset by monopolies allowing businesses to take the p!ss out of their customers
i'd be happy for a good alternative platform to split the liquidity just to reintroduce some competition into the exchange market.
2 efficient, customer-friendly exchanges with a 35% share each would be vastly preferable to where we are atm imo, and also preferable to a single exchange with a 70% share that can abuse its customers as much as it likes
I was really talking as an investor...
ideal position for punters is two good sized exchanges. 10 years ago I thought high streets would see bookies pushing their business through betfair, but alas.
Have you seen ebay fees recently!?
ideal position for punters is two good sized exchanges. 10 years ago I thought high streets would see bookies pushing their business through betfair, but alas.
Have you seen ebay fees recently!?
Are Ebay fees good? Didnt Betfair recruit some of the top management from ebay?
the customer acquisition numbers beg a couple of questions:
*do they include the 120,000 bluesq customers BF got for 5 million as reported on april 3?
*what effort if any was made to exclude the duplicate accounts - ie Bsq customers who already had BF accounts?
depending on the answers to those questions, the numbers may not be a very good reflection of the underlying picture.
you'd also want to know what proportion of those accounts were active as opposed to accounts that were opened by MSE-type bonus-tarts then left dormant, and how that's been factored into BF's calculations.
*do they include the 120,000 bluesq customers BF got for 5 million as reported on april 3?
*what effort if any was made to exclude the duplicate accounts - ie Bsq customers who already had BF accounts?
depending on the answers to those questions, the numbers may not be a very good reflection of the underlying picture.
you'd also want to know what proportion of those accounts were active as opposed to accounts that were opened by MSE-type bonus-tarts then left dormant, and how that's been factored into BF's calculations.
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