Betfair Group Plc lifted its full-year profit guidance on Thursday as the online gambling company reported another strong quarter driven by increased demand.
The company reported a 20% growth in revenue to £114.6 million in the three months ended January 31, marking the fourth straight quarter of double-digit increases. The strong performance came even as the UK imposed new gambling rules, including a 15% tax on all bets made in the UK. The newly introduced “point of consumption tax”, which went into effect on December 1st, forces gambling companies to pay taxes where their customers are located.
Betfair also updated its forecast for the full-year and estimated that its earnings before interest, tax, depreciation and amortization would range between £113 million and £118 million versus its previous guidance of £97 million and £103 million.
The company is betting on its momentum to continue in the “key periods of the sporting calendar” as well. The time frame includes the four-day long Cheltenham horse racing festival, when millions of pounds are bet. Additionally, Betfair expects to hit record levels of political betting during the UK general election period.
The company said it generated 27% more revenue to £92.9 million from sustainable markets, which include the UK, Ireland and the US among others, driven by a 50% increase in the number of active customers. Overall, Betfair expanded its customer base by 35% to bring the total figure up to 760 000.
Revenue from its U.S. operations jumped 25%, excluding currency shifts, as its TVG network posted strong results driven by the acquisition of horse racing channel HRTV and a long-term agreement with Stronach Group, which operates a number of race tracks.
The companys robust results contrast with rivals William Hill and Ladbrokes, who although reported revenue growth it was much smaller, mostly due to the fact that Betfair does not operate any brink-and-mortar facilities and does not have to cope with additional regulatory and maintenance costs.
Betfair also reported a 17% increase in third-quarter EBITDA to £23.6 million despite the £7 million hit it took due to the new POC duty. Excluding the tax, the metric was up 51%.
“This was another strong quarter. Betfair has momentum and is continuing to gain share in its key markets by acquiring and retaining customers,” said Chief Executive Breon Corcoran.
Betfair gained 2.41% on Wednesday and closed at GBX 1 786 in London. On Thursday the stock jumped 16.74% to GBX 2 085 at 15:21 GMT, marking a one-year increase of 61.16%. The company is valued at £1.65 billion.
According to the Financial Times, the 15 analysts offering 12-month price targets for Betfair have a median target of GBX 1 685.71, with a high estimate of GBX 2 000 and a low estimate of GBX 1 350. The median estimate represents a 5.62% decrease from the last closing price.
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