Flutter Entertainment (NASDAQ:FLUT) reported second-quarter revenue of $4.33 billion, topping analyst estimates of $4.24 billion by roughly 2 percent.
The result represented 3.3 percent year-on-year sales growth for the global online betting giant, which operates brands including FanDuel, PokerStars, Paddy Power, and Sky Betting and Gaming.
Despite the revenue beat, Flutter’s non-GAAP profit of $0.49 per share fell 11.7 percent short of the analyst consensus estimate of $0.55 per share.
Adjusted EBITDA came in at $508 million, beating analyst estimates of $484.5 million by 4.9 percent, representing an 11.7 percent margin for the quarter.
Operating margin deteriorated significantly, falling to negative 3.3 percent compared to a positive 9.3 percent in the same quarter of the prior year.
The 12.6 percentage point contraction in operating margin signals that Flutter’s expenses grew faster than its revenue during the period, weighing on overall profitability.
Free cash flow came in at $189 million, equivalent to a 4.4 percent margin, which was broadly in line with the comparable period last year.
Flutter’s five-year annualized revenue growth rate stands at 19.3 percent, though its more recent two-year annualized growth of 15.4 percent suggests some deceleration in demand momentum.
Analysts project revenue growth of 10.7 percent over the next 12 months, a further deceleration that points to potential demand challenges ahead for the company’s products and services.
Looking at cash generation, Flutter’s free cash flow margin has averaged 4.9 percent over the last two years, which analysts consider below expectations for a consumer discretionary business of its scale.
Analyst consensus estimates suggest Flutter’s free cash flow margin could improve from 3.8 percent over the trailing 12 months to approximately 6 percent over the coming year.
The company’s operating margin has averaged just 1.1 percent over the last two years, reflecting difficulty passing higher operating costs on to customers across its global betting platforms.
Flutter carries a current market capitalization of $18.21 billion, underscoring the scale of the business even as profitability pressures persist.
Shares fell 7.1 percent to $97.55 immediately following the earnings release, with FLUT trading down approximately 11.48 percent in the broader session.
The mixed quarter leaves investors weighing a solid top-line performance and EBITDA beat against a meaningful earnings miss and deteriorating operating margins.
