Two years ago Betfair was a company that in many ways was fighting for its life. After years of success the company had hit a rough patch, one that saw a £1 billion takeover on the horizon. Fast forward to 2015 and the company is now investing £100 million into pushing the company to new heights through new acquisitions and new market investment.
The company, which has made a considerable splash on the FTSE 250 since its arrival, posted strong results during Q1 2015. Pre-tax profits climbed by 66% to a little over £101 million, while revenues grew to £476.5 million. The strong showing has peaked plenty of investor’s interest, largely as the company has zero debt and is becoming more and more favourable with regards to dividends. Just recently they returned £200 million to shareholders, but were still left with a lofty £105.1 million in the bank, a £105 million that is being put aside to further the business and “follow-up new strategic routes within a vastly evolving marketplace”. Speaking on the growth of Betfair and how he feels that the business is breaking new ground in 2015, company Chief Executive Breon Corcoran said “[Betfair] wants to have the flexibility to invest as and when we deem necessary or when a smart business opportunity presents itself. For example, just this year we opted to purchase HRTV, the popular horse-racing TV network”. He also said, “We feel that the Betfair growth story is one that is both organic and compelling, and as we’ve said prior to recent successes, if there is a new acquisition available that helps bridge a market gap or accelerate company performance, we like to know that we have the funds to pursue it”.
While Betfair have clearly moved forward leaps and bounds over the past two years, back in 2013 they were facing a much harsher reality, one that could have seen a change in ownership occur. At the time Richard Koch and his private equity group CVC had designs on Betfair and made the company a 950p a share offer in an attempted takeover. The offer would have been undeniably temping at the time, but the move to spurn it has ultimately proved to be a successful one. Just last month, under the guidance of Mr Corcoran, Betfair’s share price reached lofty new heights of £26.98, with many even believing that it could break the £30 barrier. Speaking on the rise of Betfair, a leading Peel Hunt analyst said, “Those who love sports betting love Betfair and it shows, the company could easily raise additional funds should it want to push forward for more acquisitions or increased product development”. He followed up by saying “Investors win, players win, proving that they were right to turn down the offer from CVC” and “Betfair is in very good place right now”.
The company divides its time between UK, US, and Australian markets, doing its best to tread carefully around the legal status of gambling within any particular nation. What’s exciting for players is that new markets and developments are on the way, Mr Corcoran said “The Romanian market, Portuguese market, and Spanish market are all being discussed for launch within the next twelve to eighteen months”. He also spoke on the importance of their mobile market “Mobile use related in 93% of our growth during 2014, so we realise that our customers love the act of betting on the go”.
Positive news seems to be arriving at every angle for Betfair in 2015. So, for customers it could be a case of “watch this space” when it comes to this fast rising online sportsbook provider.