Online sports betting and iGaming company Flutter Entertainment plc (NYSE: FLUT) shares are trading higher after the company announced medium-term guidance for 2027 and authorized a share repurchase program.
The company targets revenue of around $21 billion in 2027, representing a compound annual growth rate (CAGR) of 14%, based on the midpoint of U.S. and Rest of World (ROW) 2027 guidance.
Also, Flutter projects an adjusted EBITDA of over $5 billion, adjusted EBITDA margin expansion of 700 basis points, and free cash flow of around $2.5 billion by 2027.
The significant total addressable market (TAM) for regulated gaming is projected to reach $368 billion by 2030, with global gross gaming revenue (GGR) expected to grow at a compound annual growth rate (CAGR) of 8%.
In particular, for the U.S., the long-term gross gaming revenue (GGR) margin for sportsbooks is projected to be 16%, reaching 15% by 2027, resulting in a net gaming revenue (NGR) margin of 12% for FanDuel.
For Rest of the World (ROW), the company anticipates a long-term revenue CAGR of 5%-10%, with 2027 revenue expected to reach approximately $11.5 billion at the midpoint, including Snai and NSX, while existing ROW revenue is around $9.5 billion.
Additionally, ROW cost efficiency programs are anticipated to generate savings of approximately $300 million in 2027.
Apart from this, the Board approved a share buyback program of up to $5 billion, set to be implemented over the next three to four years, with a launch anticipated after the third-quarter earnings report in November 2024.
Flutter's CEO, Peter Jackson, indicated that the 2027 U.S. profit growth projection is based on the current regulatory environment, with confidence in offsetting potential tax changes.
The company is open to acquiring capabilities in the U.S. and pursuing mergers and acquisitions beyond fragmented global opportunities.
Jackson also anticipates a yearly increase of about 2 percentage points in the U.S. sportsbook population as new states come online.
Investors can gain exposure to the stock via VanEck Gaming ETF (NYSE: BJK).
Price Action: FLUT shares are up 7.6% at $245.50 at the last check Wednesday.