Investing.com -- Shares of Flutter Entertainment (NYSE:FLUT) (LON:FLTRF) traded lower on Wednesday after the company downgraded its U.S. revenue and profit forecasts for 2024, citing an unprecedented string of favorable results for NFL bettors.
The company, which owns FanDuel, reported that the current NFL season has been the most customer-friendly in nearly two decades, with a high rate of favorites winning games.
“Any share price weakness following a short-term margin dip in this structurally improving margin environment would be a buying opportunity, in our view,” said analysts at Jefferies in a note.
The online sports betting and iGaming company in a statement said that Bettors, especially those wagering on parlays, benefited from these favorable outcomes, which led to a$438 million drop in gross gaming revenue for the company during this period.
Gross gaming revenue represents the total amount Flutter earned before accounting for costs and payouts to players.
As a result, Flutter's overall revenue for this period fell by about $390 million, while its Adjusted EBITDA dipped by about $260 million.
Flutter now anticipates U.S. revenue for 2024 to be around $5.78 billion, down from its previous midpoint guidance of $6.05 billion.
Adjusted EBITDA is forecasted at $505 million, a sharp reduction from the earlier range of $670 million to $750 million.
As part of a mix of factors, the company reported a 6.6% net revenue margin for its sportsbook in the fourth quarter.
While FanDuel's structural revenue margins remained strong at 14.5% due to its parlay offerings and higher-margin sports mix, the impact of unfavorable sports results eroded 390 basis points.
Additionally, promotional spending, though reduced year-over-year, accounted for a 4% drag on the margin.
For the fourth quarter, U.S. revenue is now projected to be about $1.59 billion, with Adjusted EBITDA expected to reach $161 million.
Flutter estimates that the total adverse impact of Q4 sports results amounts to $643 million in GGR, $550 million in revenue, and $360 million in Adjusted EBITDA.
“The transitory nature of these results has no impact on the underlying assumptions and guidance expectations communicated at our Investor Day in September, and we remain confident in the growth drivers and long-term growth trajectory set out at the Investor Day,” the company added.
Flutter reported strong momentum in the United Kingdom (TADAWUL:4280) and Ireland, where favorable sports outcomes in the English Premier League contributed to revenue and Adjusted EBITDA exceeding previous guidance by 1% and 2%, respectively.
Shares of rivals DraftKings Inc (NASDAQ:DKNG) were down about 0.6% in pre-open trade, while Entain plc (LON:ENT) saw a decline of 1.2% at 05:54 ET (10:54 GMT).