Betfair shares fall 16 percent

[The Buzz]

Seven weeks after online gambling giant Betfair's IPO debuted on the London Stock Exchange, shares fell 16 percent in trading on Tuesday. Betfair shares are now down 24 percent since the company's IPO.

From The Wall Street Journal:

After a strong first quarter buoyed by the World Cup soccer tournament, revenue from Betfair's core betting business rose just 1.6% in the second quarter. Betfair blames the decline in horse racing on bettors switching to other sports, such as soccer. It also blames poor weather conditions.

Meanwhile, Betfair's new Ongame poker platform isn't performing as well as anticipated. The number of active customers rose 9.8% in the second quarter, but it has failed to lure some of the highest rollers, leading to a 16% decline in revenue. That is worrying, given the importance of liquidity in attracting high-spending players.

[Caruso]

When they end up in court opposite the Happy Hour players, it's going to get a sight worse.

Betfair have only themselves to blame for their disastrous management of this affair.

[matthieuescande]

I want to buy Betfair shares. i think that its googd investisment.

Good deal.

[ALEX777]

Not a surprise.

Something wrong with their affiliate program management. Installing banner, than a week latter they changing the code without notice.

Also I noticed very low conversions, I don't understand why it's happening...

[Shaun O'neill]

I would consider buying Betfair shares, no real down side on these if they announce a dividend pretty sure they would fly, plus 3% today still off the all time highs.

Shaun

[casinoeu]

Betfair is doing some bad adv these days + thier aff program has lots of bugs in it .so lots of top running websites dont like to plave betfair on their websites
so thats why they are low in revenue these days

[Shaun O'neill]

I agree the recent ad was pretty bad i actually thought it was an unhappy player ratherthan a promo, but review teh following it is brief summary of Betfair i would say things are not that bad:


RNS Number : 8801X
Betfair Group PLC
14 December 2010
14 December 2010
Betfair Group plc
Half year report for the six months ended 31 October 2010
Betfair delivers continued growth during a period of significant strategic progress
Betfair Group plc (LSE:BET), the world's biggest betting community and one of the world's leading online betting and gaming operators, today announces its unaudited results for the six months ended 31 October 2010.
Group
Reported Underlying H1 H1 H1 H1 FY11 FY10 Change FY11 FY10 Change Unaudited GBPm GBPm % GBPm GBPm % ----------------- ------ ------ ------- ------ ------ ------- Group revenue 213.3 168.0 +27.0% 188.5 168.0 +12.3% Adjusted EBITDA 37.6 25.1 +49.4% 31.2 25.1 +24.0% Profit after tax 6.8 7.8 -12.7% 14.4 9.6 +49.8% Basic earnings per share 6.4p 7.5p -14.7% 13.6p 9.2p +47.8% ----------------- ------ ------ ------- ------ ------ ------- -- Underlying revenue up 12.3% to GBP188.5m (H1 FY10: GBP168.0m) 1
-- Underlying Adjusted EBITDA up 24.0% to GBP31.2m (H1 FY10: GBP25.1m) 1
-- Underlying profit after tax up 49.8% to GBP14.4m (H1 FY10: GBP9.6m) 1
-- Reported profit after tax down 12.7% to GBP6.8m (H1 FY10: GBP7.8m) after net exceptional costs of GBP14.7m primarily associated with the Company's listing
-- Cash position at 31 October 2010 of GBP178.2m with no debt (31 October 2009: GBP136.5m)
-- Customer funds held on deposit in separate ring fenced accounts at 31 October 2010 of GBP288.0m (31 October 2009: GBP259.1m)
Core Betfair
Core Betfair includes Betfair's unique Betting Exchange and its portfolio of other sports betting, games and poker products.
-- Active customers up 31.1% to 654,000 (H1 FY10: 499,000)
-- Revenue growth of 11.3% to GBP167.2m (H1 FY10: GBP150.1m)
-- Strong revenue growth of 22.3% in Q1 driven by World Cup, followed by growth of 1.6% in Q2
-- 25.7% growth in Adjusted EBITDA to GBP35.5m (H1 FY10: GBP28.2m) 2
-- Adjusted EBITDA margin of 21.2% (H1 FY10: 18.8%) 2
Other investments
Other investments comprises Betfair's subsidiaries, Betfair US and LMAX, which are in an investment phase.
-- Revenue growth of 19.9% to GBP21.4m (H1 FY10: GBP17.8m)
-- Adjusted EBITDA loss of GBP4.3m (H1 FY10: loss of GBP3.1m) 2
Key developments in H1
-- Highly successful World Cup campaign
-- Completion of migrations of poker to the Ongame platform and of browser-based casino to Playtech during the period to improve cross-sell offering to customers in Core Betfair
-- Strong revenue growth of more than 70% from mobile channel led by new iPad, iPhone and Android Apps
-- Continued implementation of technology investment programme
-- New legislation for exchange wagering in California
-- Launch of LMAX's exchange platform for online retail financial trading
1 Underlying figures are stated after making a number of adjustments in order to aid comparability between periods. These adjustments involve the exclusion, where relevant, of: the revenue and EBITDA from the High rollers segment; exceptional items; equity settled share-based payments; profit on sale of financial asset; and the associated tax effect of these adjustments. A reconciliation of reported figures to underlying figures is set out in Appendix 2
2 Excluding exceptional items and equity settled share-based payments
Commenting on today's announcement, David Yu, Betfair's Chief Executive Officer, said:
"We are pleased to report our first set of results as a listed company, which cover an exceptionally busy period. We have made significant progress throughout the Group pursuing our five key growth priorities of: building on our leadership in sports betting; continuing to expand our product portfolio and cross-selling these products to Sports customers; taking advantage of the proliferation and convergence of new channels; continuing our geographic expansion; and developing our platform to address new markets and new verticals.
We also completed a listing of Betfair's shares on the London Stock Exchange, an important development which we believe will enable us to grow more quickly than we could do as an unlisted business.
From a trading perspective, we delivered double digit revenue growth in the period driven by a strong performance during the World Cup in the first quarter. Growth in the second quarter was moderated by more challenging conditions, particularly in horse racing and poker, which together offset robust performances in football, other sports and Games. An increase in active customers in the six month period of more than 30% was generated by a disciplined marketing campaign. The increase of over 25% in Core Betfair Adjusted EBITDA demonstrates that our planned margin progression is on track with marketing expenditure in particular returning to historical levels.
Trading in the third quarter began on a stronger overall trend than the second quarter in Sports, again led by football. Recent weather conditions in the UK and Ireland, however, caused a number of race meeting cancellations, moderating overall growth rates in the quarter to date. Games growth has strengthened but poker has continued to show significant year-on-year declines following its migration to the Ongame network. In the second half, we will continue to improve our customer offering and address challenges in racing and poker with a number of product enhancements and initiatives.
We remain confident that our Core Betfair business is on track to deliver Adjusted EBITDA in line with our expectations for the current financial year. Looking further ahead, we believe that Betfair's unique product proposition and well-invested technology platform position the Group strongly for growth in the years to come, together with the potential for significant margin enhancement in Core Betfair."
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Betfair is doing some bad adv these days + thier aff program has lots of bugs in it .so lots of top running websites dont like to plave betfair on their websites
so thats why they are low in revenue these days

[TheGooner]

Betfair's share price is over-inflated - and still seems to be influenced by the high listing price achieved by the private equity group when they sold out to the market. (IPO at 1300 was as high as 1550p is now about 1045p)

Their EBITDA still remains in negative territory, as they aggressively persue growth at the expense of profitablity - so a dividend does not seem likely in the foreseeable future.

That's fine if you think that Betfair will manage to acheive this growth - but given the recent casino bonus fiasco and Betfair's badly managed response - I would not be surprised if Betfair continue to leak customers of the next 12-18 months as a result.

Reneging on a bonus - holding customers to the losses played (after bonuses withdrawn) and reaching into customers bank accounts - it's all the action of a company that has lost touch with it's betting base.

[graham]

Betfair's share price is over-inflated - and still seems to be influenced by the high listing price achieved by the private equity group when they sold out to the market. (IPO at 1300 was as high as 1550p is now about 1045p)

Their EBITDA still remains in negative territory, as they aggressively persue growth at the expense of profitablity - so a dividend does not seem likely in the foreseeable future.

That's fine if you think that Betfair will manage to acheive this growth - but given the recent casino bonus fiasco and Betfair's badly managed response - I would not be surprised if Betfair continue to leak customers of the next 12-18 months as a result.

Reneging on a bonus - holding customers to the losses played (after bonuses withdrawn) and reaching into customers bank accounts - it's all the action of a company that has lost touch with it's betting base.

Well said!

[JoeAdams]

Yeah, they can't blame anyone for their recessing shares because it's not the players nor the poor weather condition. They're on the gambling business but it seems that they doesn't know how to bet on their business. Running a business is like gambling, sometimes you win, sometimes you lose.