French national lottery company La Française des Jeux (FDJ) reported first-half group revenue up 10.8% year-on-year to €1.43 billion (£1.21 billion/$1.55 billion), with digital now accounting for 14.8% of total group revenue.
FDJ's total net income in the six months to June 30 was up from 1.29 billion euros in the first half of last year. The group reported growth in its core lottery and sports betting and online gaming divisions, as well as international and payments services.
Gross gaming revenue (GGR) in the first half of the year also increased by 11.1% year-on-year to 3.66 billion euros. After deducting public levies of €2.3 billion, net gaming revenue was €1.36 billion, an increase of 11.3%.
An additional 72 million euros from international operations and payment services pushed group net income to 1.43 billion euros.
Digital Dreams
FDJ's most eye-catching number in the first half was digital revenue growth of 39.8%. FDJ said this growth was driven by the acquisitions of Premier Lotteries Ireland (PLI) and Zeturf last year. All things being equal (assuming PLI and Zeturf were part of FDJ in the first quarter last year), digital revenue still grew 25.1%.
FDJ attributed the increase in digital revenue to increased interest in FDJ's digital products from new players. The share of digital revenue exceeds that of point of sale, currently accounting for 14.8% of total revenue, compared with 11.8% in the first half of 2023.
FDJ reported that there was some growth at the point of sale, albeit at a slower pace, with revenue from such events up 7.5%. In France alone, point-of-sale revenue increased by 2.6%.
Lottery leads the way for FDJ
Breaking down the operator's performance by product, lottery remains FDJ's main source of revenue. In the first half of the year, net revenue from lottery activities for France reached 1.01 billion euros, an increase of 5.0% compared to the previous year.
Revenue from draw games increased 2.1%, driven by increases in EuroDreams games and EuroMillions jackpots. Instant lottery game revenue grew 6.7%, supported by new game launches including January's Ticket d'Or.
FDJ also noted that digitalization is gaining momentum in this area, with 24.4% of lottery revenue generated digitally. This brought the lottery's digital penetration to 13.8% in the first half, compared with 11.6% last year, it added.
FDJ says Euro 2024 will be lower than expected
Sports betting and online poker revenues rose 14.5% to €294 million.
FDJ pointed out that the first quarter of the reporting period was affected by difficult data in the same period last year. The first quarter of 2023 will benefit from the positive impact of the Football World Cup at the end of 2022.
As for the second quarter of 2024, betting on Euro 2024 was lower than expected, but the results of the tournament were operator-friendly, helping revenues.
Online gaming (currently only poker) revenue increased by 28.3% year-on-year. FDJ pointed out the benefits of cross-selling on ParionsSport en ligne, especially its poker products.
International and payment services made a significant contribution, with revenue increasing by 72.9% to 129 million euros. FDJ attributed the growth to the integration of PLI, as it performed particularly well in EuroDreams and instant games.
Net Profit and Profit Growth
On the spending front, the FDJ released only limited data. Cost of sales for the lottery business increased by 1.8% to 536 million euros, while cost of sales for sports betting and online games increased by 1.5% to 125 million euros. The holding company's central costs remained at 128 million euros.
Other operating income and expenses reached 22 million euros, and recurring operating profit was 285 million euros, a year-on-year increase of 19.9%. Growth in profit metrics was stronger than revenue growth as costs remained relatively stable. This was also reflected in recurring earnings before interest, taxes, depreciation and amortization (EBITDA), which increased by 23.5% to €370 million, resulting in a margin of 25.9%.
Other non-recurring operating income and expenses increased to €21 million from €14 million last year. This is mainly related to acquisition costs and the revaluation of the Sporting Group B2B assets that are being sold.
As a result, operating profit in the first half of the year reached 265 million euros, a year-on-year increase of 17.4%. FDJ also recorded net financial income of €23 million, reflecting continued high interest rates, while tax payments totaled €78 million.
This resulted in a consolidated net profit of €213 million, up 17.5% year-on-year.
Adjusted profit reaches €235 million
However, FDJ is now starting to release adjusted net profit figures from the first half of this year. This is intended to reflect actual economic performance and enable it to be monitored and compared with competitors.
This excludes certain items, including depreciation and amortization of intangible and tangible assets that are recognized or revalued when allocating the purchase price for a business combination. It also excludes the non-cash impact of currency hedging related to the acquisition of Kindred Group, as well as changes in deferred tax resulting from these items.
After taking this into account, adjusted net profit for the first half of the year was €235 million, up 28.3% year-on-year.
Stefan Palez, CEO of FDJ, said: “The second quarter confirms the positive trend since the beginning of the year, thanks to the strong momentum in our point-of-sale network and digital gaming, which now accounts for 15% of the group’s revenue. %. This solid performance confirms our annual targets.”
