Betfair Releases Full Year 2013 Fiscal Results

UK based betting firm Betfair plc has released its full year 2013 financial results which beat their own expectations during a period of transition.

Key financial indicators for the year ending April 30th, 2013:

• Estimated results above the top end of Betfair's guidance range: FY13 estimated revenue of c.£387 million.

• FY13 estimated underlying EBITDA of c.£73 million

• Cash balance at 30 April 2013 of £168 million (2012: £118 million)

• Good progress made on the new strategic plan, with cost savings increased to c.£30 million (from £20 million) 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 player 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%)

• Recent customer acquisition and retention performance indicates that improved product and marketing strategies are working

• Plans to re-invest c.£10 million of the cost savings in further product and marketing investment

• Evidence that the exchange and sportsbook operations are complementary: 24% of football customers are already using both products

• Acquisition of Blue Square helps achieve scale

Speaking about the results, Betfair CEO Breon Corcoran said: “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."

“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.”

Betfair's Management team revealed its strategic plan for the upcoming year, highlights of which are:

• Focus on investment on regulated jurisdictions to increase sustainability of revenues and reduce the regulatory risk

• Investment in product and brand to enhance Betfair's competitive position and drive growth

• Introduction of greater accountability and becoming a leaner and more dynamic business

• Looking to accelerate growth through international opportunities and balance sheet flexibility

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