Betfair’s Mixed Bag Following Expected Drop in 1st Quarter 2011 Revenue
The world’s largest online betting exchange, Betfair, witnessed an expected first-quarter drop in revenues of 7 percent, though trading in the second quarter has been deemed “encouraging”.
Chief financial officer Stephen Morana provided estimates for the full year of about 346 million pounds ($557 million) revenue from the company's core business (which includes sports betting) and 390 million in total sales.
"Core business revenue of 346 million pounds equates to between 8-10 percent growth for the rest of the year," he added. "We were 12 percent in August and are pretty comfortable that the signs are positive for the rest of the year."
While the revenue numbers for the first quarter were hardly impressive, an optimistic forecast helped boost company shares by 7.8 percent on Tuesday to 677 pence, making Betfair among the top percentage gainers on Britain’s FTSE 250 index.
A traditional bookmaking product, called a “risk sports” product, has been added to the company’s platform this year as a means of stimulating growth.
A steep fall in revenue from risk sports products in May contributed to the lower first quarter sales, but the company said margins in risk products had since May returned to historical levels.
"A couple of other companies have also spoken about May just being a rather odd month where lots of favourites came in," Morana said. "Especially in football - it was the final month of the season across Europe and it seemed to me game after game the favourites kept on winning."
- Aaron Goldstein, Gambling911.com (Reuters News Service was referenced for this report)
