Executive Summary / Key Takeaways

• Flutter Entertainment is executing a clear strategy to leverage its global scale and technological advantages ("Flutter Edge") to drive significant earnings growth, particularly through its market-leading position in the rapidly expanding U.S. online sports betting and iGaming market.
• Recent Q1 2025 results demonstrate this transformation, with Group revenue up 8% and Adjusted EBITDA up 20%, primarily fueled by 18% U.S. revenue growth and significant operating leverage, despite unfavorable U.S. sports results.
• Strategic M&A, including the recent Snai acquisition in Italy and the pending NSX deal in Brazil, alongside a $1 billion share repurchase program in 2025, highlights the company's capital allocation optionality following deleveraging.
• Proprietary technology, such as advanced pricing capabilities and the "Your Way" product, is a key differentiator, driving structural margin expansion and customer engagement, positioning Flutter ahead of competitors.
• While regulatory and tax risks persist in various markets, Flutter's scale and international experience provide mitigation strategies, and the company's 2025 guidance points to continued strong growth, with expected revenue of $17.08 billion and Adjusted EBITDA of $3.18 billion at the midpoint.

The Global Arena: Setting the Scene for a Betting Powerhouse

Flutter Entertainment plc stands as the world's leading online sports betting and iGaming operator, a titan forged through strategic vision and a relentless pursuit of market leadership. Operating a diverse portfolio of globally recognized brands like FanDuel, Sky Betting & Gaming, Sportsbet, PokerStars, Paddy Power, and the recently acquired Sisal and Snai, Flutter serves customers in over 100 countries. The company's ambition is not merely to participate but to "change the industry for the better," aiming for long-term growth underpinned by a positive, sustainable future for its stakeholders.

At the heart of Flutter's strategy lies the "Flutter Edge," a unique competitive advantage derived from leveraging group-wide benefits across its local hero brands. This includes shared technology, operational expertise, and marketing capabilities, enabling each brand to stay ahead in its specific market. The financial engine driving this ambition is built on sustainable revenue growth, margin expansion, significant cash flow generation, and disciplined capital allocation.

Flutter's history is punctuated by transformative acquisitions that have shaped its current global footprint. The pivotal acquisition of FanDuel in the U.S., initiated shortly after the federal sports betting ban was lifted in 2018 and significantly expanded in 2020, marked a decisive entry into what is now the company's largest growth opportunity. Subsequent deals, such as the acquisition of Sisal in Italy and the recent additions of Snai and NSX Group in Italy and Brazil respectively, underscore a strategy of investing in leadership positions in attractive, fast-growing international markets where organic growth might be slower. This blend of organic expansion and strategic M&A, coupled with a move of the primary listing to the New York Stock Exchange in May 2024, positions Flutter firmly on the global stage.

The Technological Edge: Fueling the Moat

A critical differentiator for Flutter, and a core component of the "Flutter Edge," is its proprietary technology. This isn't just about having a functional platform; it's about developing and deploying advanced capabilities that directly translate into competitive advantages and enhanced financial performance.

Central to this is Flutter's sophisticated pricing and risk management technology. This system allows for highly accurate odds setting across a vast array of betting markets, including complex parlay and same game parlay products. The tangible benefit is a higher structural gross revenue margin compared to competitors, as demonstrated by the U.S. Sportsbook net revenue margin expanding to 7.8% in Q1 2025 from 7.3% in Q1 2024, partly driven by increased Same Game Parlay penetration. Management explicitly states that their market-leading pricing and risk capabilities are key drivers of this structural margin improvement. This pricing accuracy also helps mitigate the impact of volatile sports results, as seen in Q4 2024 and Q1 2025, where despite unfavorable outcomes, the underlying business momentum remained strong.

Further technological innovation is evident in the development of the "Your Way" product, an initial manifestation of a revolutionary outcome-based pricing technology. While still in early stages, this technology aims to offer customers an almost infinite number of customizable betting outcomes. The stated goal is to enhance customer engagement and provide a unique product offering not readily available from competitors. While specific quantifiable benefits like targeted margin improvements from "Your Way" are not yet disclosed, the strategic intent is clear: to create a long-term platform for innovation that drives both engagement and potentially further structural margin benefits.

In iGaming, the migration of platforms onto proprietary technology, such as the completion of the FanDuel Casino migration in Q2 2024 and the planned migration of PokerStars Italian customers onto Sisal technology in Q3 2025, is aimed at unlocking benefits like the integration of in-house content and improved platform stability. The launch of exclusive content, like the "Huff n Puff" slot game, and innovative features like site-wide jackpots and the "My Spend" responsible gaming dashboard, are direct results of this technological focus, contributing to strong iGaming AMP growth (up 28% in U.S. Q1 2025) and enhanced customer experience.

The "so what" for investors is significant. This technological leadership is not merely a cost center but a revenue and margin enhancer. It builds a competitive moat by offering products and pricing that rivals struggle to replicate, driving customer acquisition and retention, and ultimately contributing to the "step change in the earnings profile" that management highlights. Continued investment in R&D and platform development is therefore crucial for maintaining this edge and realizing future growth potential.

Performance and Momentum: The Earnings Transformation Takes Hold

Flutter's recent financial performance underscores the impact of its strategic execution and technological advantages. In the first quarter of 2025, the Group delivered robust results, with total revenue increasing by 8% year-over-year to $3,665 million and Adjusted EBITDA climbing an impressive 20% to $616 million. This translated to a significant expansion in the Adjusted EBITDA margin, from 15.1% in Q1 2024 to 16.8% in Q1 2025, demonstrating clear operating leverage. Net income saw a dramatic turnaround, swinging from a loss of $177 million in Q1 2024 to a profit of $335 million in Q1 2025, benefiting significantly from the favorable movement in the fair value of the Fox (FOXA) Option liability.

The U.S. segment remains the primary engine of growth, with revenue surging 18% to $1,666 million in Q1 2025. This growth was broad-based, reflecting the continued scaling of the business and strong performance in existing states. U.S. Sportsbook revenue increased by 15% to $1,134 million, driven by an 8% increase in stakes and an expanded net revenue margin. U.S. iGaming revenue was particularly strong, jumping 32% to $472 million, fueled by a 28% increase in Average Monthly Players (AMPs), reaching 1 million for the first time. This iGaming growth is a direct result of product enhancements like site-wide jackpots and exclusive content, reflecting the benefits of the in-house technology migration. The U.S. segment's Adjusted EBITDA saw a massive increase, rising from $26 million in Q1 2024 to $161 million in Q1 2025, pushing the margin to 9.7%. This dramatic improvement highlights the significant operating leverage being achieved as the U.S. business scales, particularly the sustained efficiency gains in sales and marketing expenses, which decreased by 750 basis points as a percentage of revenue year-over-year in Q1 2025.

The International segment, now encompassing the former UKI, International, and Australia divisions, also demonstrated resilience and the benefits of diversification. Revenue saw a modest 1% increase to $1,999 million in Q1 2025 (3% constant currency growth), with strong iGaming momentum (up 4%) offsetting a slight decrease in Sportsbook revenue (down 2%). Regional performance was varied: Southern Europe and Africa saw robust 14% revenue growth driven by a 25% increase in AMPs, including strong results in Italy (up 9% to $378 million) and Turkey (up 57%). UKI revenue grew 2%, with strong iGaming growth compensating for a dip in Sportsbook. Asia Pacific revenue was down 13%, impacted by the softer Australian racing market and unfavorable sports results, although India's iGaming business showed impressive 45% growth. Central and Eastern Europe grew 15%, while Brazil's revenue was lower due to re-registration friction in the newly regulated market. International Adjusted EBITDA saw a slight decrease to $518 million, with the margin contracting to 25.9%, primarily attributed to tax increases in Central and Eastern Europe.

Overall, the Q1 2025 results paint a picture of a business where the U.S. is rapidly scaling and driving group-level profitability, while the diversified International portfolio provides a stable, profitable base with pockets of strong growth. The performance validates the strategy of investing in product, technology, and customer acquisition, particularly in the U.S., where the operating leverage is becoming increasingly evident.

Liquidity and Capital Allocation: Fueling Growth and Shareholder Returns

Flutter's financial health and capital allocation strategy are key components of its investment thesis. The company maintains a strong liquidity position, with $1,537 million of cash and cash equivalents available for corporate use as of March 31, 2025.

A significant development is the company's deleveraging progress, which brought its leverage ratio to 2.2x (based on LTM Adjusted EBITDA) as of March 31, 2025, consistent with the end of 2024 and within its medium-term target range of 2x to 2.5x. This improved financial flexibility unlocks significant capital optionality.

This optionality is being deployed across three key areas:

• Organic Investment: Continued investment in product development, technology, and customer acquisition, particularly in the high-growth U.S. market, where returns remain compelling.
• Strategic M&A: The company continues to pursue acquisitions that strengthen its market positions. The acquisition of Snaitech in Italy was completed on April 30, 2025, for approximately $2.3 billion cash, funded through existing facilities and a new €2.5 billion bridge credit agreement. This deal significantly enhances Flutter's scale in Italy. The acquisition of NSX Group in Brazil is expected to close in May 2025, establishing a stronger foothold in that market. While these acquisitions will temporarily increase leverage, management is confident in rapid deleveraging due to the expected profitable growth.
• Shareholder Returns: Demonstrating a commitment to returning capital, Flutter initiated a share repurchase program of up to $5 billion in September 2024, expected to be deployed over the next three to four years. As of March 31, 2025, $350 million of shares had been repurchased. The company expects to return approximately $1 billion to shareholders through this program during 2025, with the third tranche of up to $225 million set to commence in July 2025.

As of March 31, 2025, total long-term debt stood at $7 billion, with manageable short-term maturities. The company remains in compliance with all debt covenants. Material purchase obligations totaling $4,477 million, primarily for sponsorship, marketing, and media agreements, are part of the ongoing business operations.

Cash flow from operations in Q1 2025 saw a decrease compared to the prior year, primarily due to timing differences in player deposit liabilities and other liabilities, including bonus payouts and derivative settlements. However, the underlying improvement in operating profit provides a strong foundation for future cash generation. Investing activities saw reduced cash usage due to lower capital expenditures and no significant cash payments for acquisitions in the quarter (MaxBet acquisition cash payment occurred in Q1 2024). Financing activities reflected the impact of share repurchases.

Overall, Flutter's balance sheet is healthy, and its capital allocation strategy is actively supporting both strategic growth initiatives and direct shareholder returns, reflecting confidence in the business's ability to generate substantial future cash flows.

Outlook and Guidance: Charting the Course for Continued Growth

Flutter's management has provided clear guidance for fiscal year 2025, reflecting the strong underlying momentum, the impact of recent M&A, and adjustments for foreign exchange rates and year-to-date sports results.

The updated 2025 guidance projects Group revenue at a midpoint of $17.08 billion and Adjusted EBITDA at a midpoint of $3.18 billion. This represents significant year-over-year growth of 22% for revenue and 35% for Adjusted EBITDA, or 14% and 30% respectively, before including the benefit of the Snai and NSX acquisitions.

Key components of the guidance include:

• U.S. Segment: Existing U.S. states are expected to remain on track with previously guided underlying revenue growth of 22.5% and a 5.4 percentage point expansion in Adjusted EBITDA margin. New state launches (Missouri in Q4 2025 and Alberta, Canada in early 2026) are factored in, expected to result in negative revenue of $40 million and an Adjusted EBITDA cost of $90 million in 2025 due to launch investments. Management anticipates approximately 60% of U.S. Adjusted EBITDA to be generated in the second half of the year, with Q4 being the largest quarter.
• International Segment: Excluding M&A, the International segment is expected to deliver revenue of $8.25 billion and Adjusted EBITDA of $1.85 billion at the midpoint. This reflects continued momentum, although growth in the UKI is expected to moderate from the high levels seen in 2024. The guidance incorporates the initial benefits of the $300 million cost efficiency program, which is expected to run until 2027 and includes initiatives like technology platform consolidation.
• M&A Impact: The guidance includes the contribution from the Snai acquisition from May 1, 2025 (expected revenue $850 million, Adjusted EBITDA $190 million), and the NSX acquisition from mid-May 2025 (expected revenue $220 million, Adjusted EBITDA loss $70 million).
• Other Factors: The guidance also accounts for foreign currency movements ($360 million revenue and $80 million Adjusted EBITDA headwind) and the transitory impact of unfavorable U.S. sports results year-to-date through April ($280 million revenue and $180 million Adjusted EBITDA adverse impact).

Management's confidence in the outlook is rooted in the underlying business momentum, the expected benefits from strategic acquisitions and cost efficiencies, and the continued strength of customer acquisition and product engagement. While acknowledging the potential impact of sports results volatility and regulatory changes, the guidance reflects a belief that the company's scale, technology, and diversified portfolio position it well to navigate these factors and deliver on its growth targets.

Risks and Challenges: Navigating a Dynamic Landscape

Despite its strong position and growth trajectory, Flutter operates in a dynamic environment subject to various risks and challenges that warrant investor attention.

• Regulatory and Tax Changes: The online betting and iGaming industry is heavily regulated, and changes in laws, regulations, and taxation can significantly impact operations and financial results. Recent examples include the Illinois tax increase and ongoing discussions in other U.S. states, as well as regulatory reforms in the UK and Ireland. While Flutter leverages its scale and international experience to mitigate these impacts, advocating for sensible tax rates and adjusting operational strategies (e.g., moderating generosity), adverse changes could still pressure margins and growth. Litigation related to gaming taxes, such as the investigation into India GST rates and the HMRC assessment in the UK, also presents potential financial exposure, although the company is vigorously disputing these claims.
• Sports Results Volatility: As a sports betting operator, Flutter's quarterly results are inherently exposed to the variability of sporting outcomes. Unfavorable results, such as those experienced in Q4 2024 and Q1 2025, can significantly impact revenue and profitability in the short term. While management emphasizes that these impacts are transient over time and their pricing accuracy helps mitigate the effect, investors should be aware of this potential for quarterly fluctuations.
• Competition: The online betting and iGaming market is highly competitive, with major players like DraftKings (DKNG), MGM (MGM) (BetMGM), Caesars Entertainment (CZR), and Entain (GMVHY) vying for market share. While Flutter holds leading positions, particularly in the U.S., maintaining this edge requires continuous investment in product, technology, and marketing. Competitors' strategic moves, such as increased investment in iGaming or new product launches, could intensify the competitive landscape.
• Integration Risks: The successful integration of acquired businesses, such as Snai and NSX, is crucial for realizing expected synergies and financial benefits. Integration efforts can be complex and costly, potentially diverting resources and impacting short-term performance.
• Technology and Cybersecurity Risks: Reliance on complex technology platforms exposes the company to risks of system failures, data security breaches (as seen with the MOVEit incident), and cyber-attacks. While remediation efforts are underway for identified material weaknesses in internal controls, these risks could disrupt operations, damage reputation, and incur significant costs.
• Litigation and Legal Proceedings: The company is involved in various legal proceedings, including player claims in Austria and Germany and regulatory investigations. The outcomes of such matters are uncertain and could result in material losses or necessitate changes to business operations.

These risks highlight the dynamic nature of the industry and the importance of effective risk management and strategic agility for Flutter to sustain its growth trajectory and deliver long-term value.

Competitive Positioning: A Leader's Advantage

Flutter's competitive positioning is defined by its scale, diversified portfolio, technological leadership, and disciplined operational approach. In the highly competitive global online betting and iGaming market, Flutter stands out as a clear leader.

In the crucial U.S. market, FanDuel has established a dominant position, holding leading market shares in both online sports betting (43% GGR, 48% net GGR sportsbook share in Q1 2025) and iGaming (27% GGR in Q1 2025). This leadership is a direct result of its superior product offering, underpinned by proprietary technology, effective marketing, and disciplined customer acquisition. Compared to key U.S. competitors like DraftKings, FanDuel's strength lies not just in market share but also in demonstrating significant operating leverage and a clear path to profitability, contrasting with some competitors who may still be prioritizing top-line growth over near-term earnings. While DraftKings is a formidable competitor, particularly in DFS, Flutter's integrated sportsbook and iGaming offering, coupled with its expanding technological capabilities like "Your Way," provides a strong competitive moat.

In the International segment, Flutter leverages its scale and the "Flutter Edge" to maintain or gain leadership positions in diverse markets. In the UKI, the Group has consistently gained market share, demonstrating the strength of its brands (Sky Bet, Paddy Power, Betfair, tombola) and product innovation. In Italy, the acquisition of Sisal and now Snai solidifies Flutter's gold medal position in Europe's largest regulated market, leveraging an omnichannel presence that is a key advantage in that specific regulatory environment. This contrasts with competitors who may have a weaker or purely online presence in such markets. While markets like Australia face headwinds, Flutter's scale helps it navigate the challenging tax and regulatory landscape better than smaller operators.

Flutter's technological advantages, particularly in pricing and platform capabilities, provide a tangible edge over many competitors. The ability to offer more sophisticated parlay products and manage risk effectively contributes directly to higher margins, a key differentiator in a price-sensitive market. The ongoing investment in in-house iGaming content and platform stability further strengthens its offering against competitors who may rely more heavily on third-party providers.

While competitors like MGM and Caesars benefit from integrated resort operations and loyalty programs that can drive customer acquisition, Flutter's focus on digital product excellence, data-driven marketing, and a broad portfolio of brands allows it to compete effectively across different customer segments and geographies. The strategic acquisitions in Italy and Brazil also demonstrate Flutter's willingness to use M&A to accelerate market entry and build scale in attractive regions, further enhancing its competitive footprint.

In summary, Flutter's competitive positioning is robust, built on market leadership in key regions, a diversified global portfolio, and a technological edge that drives superior product and profitability. While competition remains intense, the company's strategic approach and operational execution position it well to defend and potentially expand its market share.

Conclusion

Flutter Entertainment stands at a pivotal juncture, successfully executing a strategy that is transforming its earnings profile and solidifying its position as the global leader in online betting and iGaming. The narrative is one of leveraging scale, technological innovation, and disciplined capital allocation to capitalize on significant market opportunities, particularly in the burgeoning U.S. market.

The strong performance in Q1 2025, marked by robust revenue growth and impressive Adjusted EBITDA expansion driven by U.S. operating leverage, underscores the effectiveness of this strategy. The company's technological edge, manifested in advanced pricing, innovative products like "Your Way," and proprietary iGaming platforms, provides a crucial competitive moat, driving both structural margin expansion and enhanced customer engagement. Coupled with strategic M&A that expands its footprint in high-growth international markets and a commitment to returning capital through share repurchases, Flutter demonstrates a multi-faceted approach to value creation. While regulatory headwinds, sports results volatility, and intense competition remain inherent risks, Flutter's diversified portfolio, scale, and operational discipline position it favorably to navigate these challenges. The 2025 guidance reflects confidence in continued strong growth, supported by underlying business momentum and the anticipated benefits of recent strategic moves. For investors, Flutter represents an opportunity to participate in the growth of the global online gaming market through a market leader with a proven track record of execution and a clear roadmap for future expansion and profitability.