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PokerStars grew 25% in 2020: Flutter Entertainment full-year report

Flutter Entertainment (PokerStars parent company) called 2020 a "transformational year for the group." The merge with The Stars Group (TSG) and the FanDuel buy-out positively impacted its financial results in the last year. The total revenue grew 28%, while PokerStars increased by 23%.

PokerStars grew 25% in 2020: Flutter Entertainment full-year report

Flutter in 2020: +28% Total Revenue

Besides the pandemic, Flutter's results were impacted by The Stars Group's acquisition, including a 673% growth in the interest expense due to its debt. Nevertheless, the company was able to show positive numbers to its investors:

  • Sports Revenue +25% at £3,000m
  • Gaming Revenue +32% at £2,264m 
  • Total Revenue +28% at £5,264m
  • Adjusted EBITDA Group ex-US +23% at £1,401m 

Flutter Entertainment EBITDA grew 23%, driven by the merger with TSG and positively impacted by the fantastic PokerStars results. According to the report, the brand is experiencing excellent momentum and recreational player growth.

PokerStars average monthly players

How about PokerStars

Unlike other gaming holdings, PokerStars is a strong brand in Flutter's results. Overall, PS had a strong 2020:

  • PokerStars Total Revenue +23% at £1,225m
  • PokerStars Adjusted EBITDA +15% at £545

PokerStars revenue increased by 23% in 2020 at £1,225m, about 25% of the total. In terms of EBITDA, PokerStars accounts for almost 45% of Flutter's results.

According to the report, Flutter is investing to revitalize PokerStars; hence the EBITDA margin went from 49% to 45%. The number of average monthly players grew 26%, with an average of 1,5 million users. PokerStars sports revenue keeps growing (+13% in 2020), but it remains a small portion of the business with only £64m. The PS casino revenue grew 37% and the number of players multiplied by 3.

In the PokerStars P&L breakdown, the "promotional generosity" increased from 14% to 28%, while the marketing costs increased from 14% to 24%. Recall that in the last report, Flutter stated that PokerStars had big margins due to underinvestment.

PokerStars PL Breakdown

2021 Guidance and prospects

PokerStars will keep investing in attracting more recreational players and to "correct foundational tech challenges." The company expects to have a £300m Capex budget in 2021.

  • Stabilize tech platform
  • Modernize poker product
  • Simplify customer journeys
  • Improve digital marketing capabilities 

The company has a negative prospect about Germany due to the proposed introduction of a 5.3% turnover tax on online poker and slots from July 1st, 2021, which most likely will make both games unviable for regulated operators. 

2021 has started strongly for Flutter, and their focus will remain on improving the PokerStars offer and conquering the US market.

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Vargoso 06.03.21
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