Betfair raises the profit stakes as trading stays strong

Barclays Women in Business Awards (L-R): Alex Pryce, Barlcays; Beth Butterwick, Bonmarche; Victoria Woodings, Principle Holdings; Jennifer McDuff, Brathay Trust; Joanna Robinson, Mansfield Pollard & Co; Debbie Mullen, Barclays.
Barclays Women in Business Awards (L-R): Alex Pryce, Barlcays; Beth Butterwick, Bonmarche; Victoria Woodings, Principle Holdings; Jennifer McDuff, Brathay Trust; Joanna Robinson, Mansfield Pollard & Co; Debbie Mullen, Barclays.
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Online gambling company Betfair hiked its full-year profit forecast range yesterday after trading remained strong following a better-than-expected third-quarter, sending its shares sharply higher.

The company, which runs an exchange that allows gamblers to bet against each other, said revenue jumped 20 per cent in the three months to January 31, as investment in products and marketing helped increase active customer numbers by half in its core markets, with sports and gaming income up strongly.

Third-quarter core earnings rose 17 per cent to £23.6m, 36 per cent ahead of analysts’ average forecast of £17.4m, despite a £7m hit from a new UK tax on profits from bets made by its British-based customers.

Its shares are up 60 per cent in a year.

Betfair said 2014-15 core profit would be between £113m and £118m, up from a previous range of £97m to £103m.

“Betfair achieved a total shareholder return of around 50 per cent in 2014 against the traditional bookmakers, which were all in negative territory.

“We expect this outperformance to continue,” analysts at brokerage Jefferies said, raising their core profit estimate by 15 per cent to £116m.

While traditional bookmakers such as William Hill and Ladbrokes have been hurt by regulatory and gaming machine issues, Betfair’s lack of retail outlets means it is relatively unscathed.

Like all rivals it does have to contend with new online taxes, however.

Betfair said momentum had continued into its fourth quarter, which includes the key Cheltenham horse racing festival, and expected record levels of betting on the General Election.