Shares of Flutter Entertainment plc (FLUT), a leading online sports betting and iGaming company, are surging after the company unveiled its bold medium-term guidance for 2027 and authorized a significant share repurchase program.
Flutter is aiming for a whopping $21 billion in revenue by 2027, representing a compound annual growth rate (CAGR) of 14%. This projection is based on the midpoint of the company’s guidance for both the United States and the Rest of the World (ROW).
Beyond revenue, Flutter is also targeting an adjusted EBITDA of over $5 billion, a 700 basis point expansion in adjusted EBITDA margin, and a free cash flow of around $2.5 billion by 2027. These ambitious goals are underpinned by the company’s belief in the vast potential of the regulated gaming market, which is expected to reach $368 billion by 2030 with a global gross gaming revenue (GGR) CAGR of 8%.
In the U.S., Flutter’s flagship brand, FanDuel, is particularly well-positioned to benefit from the growth. The company projects a long-term GGR margin of 16% for U.S. sportsbooks, reaching 15% by 2027, resulting in a 12% net gaming revenue (NGR) margin for FanDuel.
Meanwhile, in the ROW, Flutter anticipates a long-term revenue CAGR of 5%-10%, with 2027 revenue expected to reach approximately $11.5 billion, including contributions from recent acquisitions like Snai and NSX. The company’s existing ROW revenue is currently around $9.5 billion. Additionally, Flutter is implementing cost efficiency programs in the ROW, which are expected to generate savings of approximately $300 million by 2027.
To further demonstrate its confidence in its growth trajectory, Flutter’s Board of Directors has approved a share buyback program of up to $5 billion, which will be implemented over the next three to four years, with a launch expected after the third-quarter earnings report in November 2024.
Flutter’s CEO, Peter Jackson, expressed his optimism about the company’s future, stating that the 2027 U.S. profit growth projection is based on the current regulatory environment, with confidence in offsetting potential tax changes. He also indicated that Flutter is open to acquiring capabilities in the U.S. and pursuing mergers and acquisitions beyond fragmented global opportunities.
Jackson anticipates a yearly increase of about 2 percentage points in the U.S. sportsbook population as new states legalize sports betting. Investors seeking exposure to Flutter can do so through the VanEck Gaming ETF (BJK).
Following the announcement, FLUT shares soared 7.6% to $245.50 at the last check Wednesday. This positive market reaction underscores the confidence investors have in Flutter’s ability to capitalize on the burgeoning global online gambling market.
