DUBLIN (Reuters) - Paddy Power Betfair (I:PPB), (L:PPB) lifted the bottom end of its full year earnings guidance range on Friday as a strong performance in its main online business outweighed a run of unfavourable sports results in the third quarter.
In August, the bookmaker cut its forecast for underlying core earnings or EBITDA to 460-480 million pounds from 470-495 million pounds due to the introduction of additional taxes and losses from its growing U.S. business.
It narrowed that range, which excludes losses at its newly merged U.S. sports betting business, to 465-480 million pounds after third quarter revenue grew by 12 percent and earnings were flat, pushing its shares up 1.8 percent by 0850 GMT.
"Q3 was a good quarter for the group. In Europe, the encouraging momentum that we saw in Q2 accelerated further, with online revenue up 15 percent," Chief Executive Peter Jackson said in a statement, crediting investments in products and marketing.
The group's main European online business had suffered from a lack of product investment, particularly in the fiercely competitive British market, following betting exchange Betfair's tie-up with Paddy Power in 2016.
However, analysts at Goodbody Stockbrokers said the update spelled a turnaround for the online business and that there was a lot to like about the statement, including "some very positive signs" from customer activity in its US business.
Paddy Power Betfair agreed in May to merge its U.S. business with fantasy sports company FanDuel to target a market set to open up in the coming years, and said on Friday that it was encouraged by the demand for regulated sports betting products and 30 percent market share captured by FanDuel.
Jackson added that the group's scale and strong balance sheet positioned it to face the significant regulatory and fiscal headwinds that will apply next year as betting taxes increase in its main markets of Britain, Australia and Ireland.
Paddy Power Betfair estimated that had the changes applied throughout 2018, the gross impact on EBITDA would have been approximately 115 million pounds.