Only a day after the Irish bookmaker Paddy Power Betfair announced that its Chief Executive Officer Breon Corcoran is stepping down, the company published its financial results for the six months ended on June 30th 2017.
The company revealed a 9% increase in its revenue over the period compared to the result posted a year earlier, with the bookmaker’s revenue rising from £759 million in H1 2017 to £827 million over the first six months of 2017. The bookmaker said that its revenue over the period was driven by its stakes growth as well as by the foreign exchange and further explained that increased investments in pricing and promotions partially offset the registered increase.
The positive results of Paddy Power Betfair was considered a result of the strong growth posted by the bookmaker over the first fiscal quarter of 2017. At that time, the results of the company were driven by the favourable effect of Cheltenham Festival’s results. However, the lack of a major sports tournament or event over the second quarter and adverse sports results hit the performance of the bookmaker over the second financial quarter, which led to relatively weak results for Paddy Power Betfair over these three months.
As announced by Paddy Power Betfair, the bookmaker’s underlying EBITDA (earnings before interest, taxes, depreciation and amortisation) rose by 21% from £181 million in the first half of 2016 to £220 million a year later. The operating profit of the company also saw an increase of 22%, which took the bookmaker’s results from £148 million registered in the first half of 2016 to £180 million in the first six months of 2017.
The Chief Executive Officer of the company Breon Corcoran confirmed that the bookmaker remains focused on making substantial investments in order to consolidate its position in a market which is characterised with competitiveness and dynamics. He explained that these investment would be primarily used to improve the company’s efficiency and reduce some servicing costs.
As for the company’s outlook for its full-year performance, Paddy Power Betfair revealed that its underlying EBITDA for the year 2017 was expected to be in the range from £445 million and £465 million.
When speaking of Mr. Corcoran, we cannot miss yesterday’s announcement of his unexpected leave. As mentioned above, the Irish bookmaker revealed on Monday that Mr. Corcoran is to step down from the position of Chief Executive Officer, having spent a lot of time with the company and its predecessors. The fact that CEO Corcoran have played a crucial part in last year’s merger between Paddy Power and the betting exchange provider Betfair made the departure look illogical at a time when the integration of Paddy Power and Betfair has not been fully completed yet.
The fact that the bookmaker and such an important executive are parting ways has already hurt the company’s performance, with the bookmaker’s share price experiencing a sharp decline right after the Corcoran’s departure announcement had been made.
The performance of the UK and Irish bookmaker over the second fiscal quarter may not be brilliant, but the company may face an even more challenging third quarter. Some experts have already shared such an outlook, blaming the upcoming fight between Conor McGregor and Floyd Mayweather. Lately, the bookmakers have shared their concerns that the odds for Mayweather to win the fight have dropped from 8:1 to 4:1. If McGregor wins the fight, as most people believe, Paddy Power Betfair may be forced to pay out a scandalous 8-digit sum, which is expected to seriously hit its performance over the third fiscal quarter.
As Casino Guardian’s readers may recall, the bookmaker suffered a serious financial blow at the beginning of 2017, when Donald Trump’s win in the US presidential elections cost Paddy Power Betfair the massive amount of approximately £5 million, which the bookie was forced to pay out to everyone who have placed their bets in favour of Trump.
In any case, both the CEO Corcoran’s leave and the McGregor-Mayweather’s fight could have a devastating effect on the bookmaker’s performance over the third fiscal quarter, resulting in massive financial losses for the company. It remains to be seen if Paddy Power Betfair would be able to deal with them, or its full-year results would sink even deeper.