Number of active users slides at Betfair

Online betting exchange operator Betfair managed to boost revenues through the three months to the end of December, despite the loss of income from its Italian business.

Core revenue was £85.3m during the quarter, a rise of 11% on the same period of 2011. Over the nine months to the end of 2011, the total figure was £255.6m, a gain of 5% on the prior year.

The 11% growth seen in the third quarter was slightly ahead of the forecast made by analysts at Peel Hunt, who had predicted growth of 10%.

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Non-risk sports revenue, which is predominantly commission earned on the online betting exchange, which pits punters against each other instead of the bookie, was up 13% at £59.7m (third quarter fiscal 2011, or Q3 FY11: £52.6m). Betfair says horse racing had a good quarter, helped by the milder weather and improved content.

Mobile sports revenue doubled to £5.8m in the quarter (Q3 FY11: £2.9m), largely driven by the firm's iPhone app. Betfair is keen for punters to start using their mobile devices to place bets, as it sees an uplift in average revenue per user after customers start using the mobile products.

Revenue from Risk sports, which is predominantly from multiples style betting (doubles, accumulators and so on), was higher at £5.4m (Q3 FY11: £3.9m). Margins on multiples improved on the prior year and were broadly in-line with historical averages, despite the well-publicised 'punter friendly' football results in November.

The weakness in the numbers was Games revenue which fell 5% year-on-year primarily due to the temporary suspension of gaming products in Italy. Adjusting for Italy, revenue was up 2% compared with last year. Betfair's gaming offerings include poker and other casino favourites.

Betfair's biggest market is the UK which produced net revenues of £44.2m in the third quarter although with an 11% drop in active users to 214,000. Europe came in at £35.7m, a gain of 8%, although "actives" also dropped by 4% to 193,000. The rest of the world, which excludes the Australian joint venture, saw revenues at £4.6m, a gain of 31%. Active users rose 25% to 11,000.

Betfair has also said that its new Chairman, Gerald Corbett, previously the deputy Chair, has begun work today, replacing the co-founder Edward Wray.

The firm's interim Chief Executive, Stephen Morana said he was optimistic about the firm's end of year prospects, commenting: "Trading has remained encouraging in Q4 [fourth quarter], with Exchange revenue continuing to exhibit double-digit growth rates and overall Core Betfair revenue up 10% in the quarter to date. This leaves us confident that we will meet our expectations for the full year."

BS