Flutter Entertainment has revised its financial guidance for fiscal year 2026 due to unfavorable sports results and the recent ban on betting in Brazil. The company announced a net loss of $1.15 billion for the third quarter ending September 30, as revealed in its quarterly earnings report released on Wednesday.
Though Flutter's revenue showed a slight increase of 2% to $3.87 billion, this was offset by substantial non-cash impairment charges of $873 million related to its Brazilian operations. This net loss marks a considerable increase from the $789 million loss recorded in the same quarter last year.
The Brazilian market's closure, prompted by President Lula's actions in late September, resulted in a post-tax impairment charge of $537 million linked to Flutter's 56% stake in Flutter Brazil. This business was established last year when the Paddy Power parent company acquired it for $356 million from NSX Group, the owners of Betnacional.
Following the ban, Flutter has discontinued its Betfair operations in Brazil, retaining only the Betnacional brand in that market.
Additionally, adjusted EBITDA for Flutter dropped by 25% during the third quarter, totaling $360 million. As a result of the Brazilian market's shutdown and poor sports performance in its US and International segments, Flutter has cut its full-year revenue guidance midpoint by $300 million to $17.61 billion. The adjusted EBITDA guidance has similarly been reduced by $160 million to $2.495 billion.
In a letter to shareholders, CEO Dan Taylor, who took over from Peter Jackson on October 1, expressed regret over the provisional measure prohibiting betting in Brazil. Taylor stated, "In response, we have acted decisively; our operations are currently closed, and we have paused all discretionary and uncommitted spending."
He remains optimistic about Brazil's potential as a market under proper regulation, stating, "With the right regulation, Brazil still has the opportunity to be an attractive market for us; however, we will remain disciplined in our deployment of capital as the regulatory environment continues to evolve."
Examining the performance of FanDuel in the US, Flutter reported a 6% revenue increase to $1.46 billion, which was bolstered by a 4% rise in sportsbook and an 8% increase in iGaming revenues. However, adjusted EBITDA for FanDuel plummeted by 94% to $3 million, attributed to investments in its prediction market service and the launch in Alberta, Canada.
Taylor noted that previous efforts to enhance the US value proposition, including the introduction of the FanDuel Rewards program, yielded "encouraging returns," helping the company capture market share in sports betting. He asserted, "I strongly believe we have the best assets to capture the significant opportunity in the increasingly competitive North American market."
Prediction markets were highlighted as a strategic growth area, with FanDuel Predicts accumulating an average of 66,000 monthly players during Q3, marking a 39% increase from the previous quarter. Taylor affirmed that the company intends to continue investing in this segment moving forward.
In the UK and Ireland (UK&I), Flutter announced a business restructuring that may affect around 1,400 jobs. The company indicated that the adjusted EBITDA for its International segment decreased by 14%, primarily due to the UK's remote gaming duty nearly doubling from 21% to 40% as of April 1.
Contrarily, Flutter's UK&I revenue grew by 4% to $889 million during Q3, supported by a 12% rise in iGaming revenue, which offset a 6% decline in sportsbook revenue.
Despite the challenges, Flutter managed to gain market share in the UK during this period, and Taylor noted that the restructuring aims to strengthen the company's competitive stance going forward.
Regionally, Flutter’s strongest performance came from Southern Europe and Africa, where revenue grew by 13% to $836 million due to a 17% increase in iGaming revenues. Central and Eastern Europe also saw a revenue increase of 10% to $166 million, aided by market share gains in Georgia, Serbia, and Armenia. This growth helped offset a 4% revenue decline to $349 million in the Asia Pacific region, attributed to the shutdown of the real-money gaming market in India.
Looking ahead, Taylor conveyed that Flutter's upcoming phase would focus on a more streamlined approach to enhance operational scale. The goal is to achieve $500 million in gross operating cost and capital expenditure savings by 2029, facilitated through AI utilization, organizational restructuring, and technological simplification.
Taylor concluded, "Flutter has an exceptional set of assets and opportunities. Realizing their full potential will require hard choices, faster decisions, and strong execution. I know confidence is earned through delivery, and that is what I am focused on."
