FDJ raises 2020 guidance after 9% revenue rise in 2019

13 February 2020

French gaming giant La Française des Jeux (FDJ) has projected 5% growth in both player stakes and revenue for 2020, after a “landmark” 2019 that saw the operator list on the Euronext Paris and net revenue rise to €1.96bn (£1.63bn/$2.13bn).

Total amounts wagered across all products grew 9.0% year-on-year to €17.24bn, aided by a strong performance from FDJ’s core lottery business and complemented by growth in its sports betting offering.

Lottery accounted for the vast majority of player stakes, growing 7.2% to €13.68bn for the year, or 79.4% of all amounts wagered.

This, the operator noted, was the highest growth rate recorded in the past five years, aided by growth across both draw-based and instant win games. For draw-based games, stakes were up 6.4% to €5.48bn, aided by long jackpot cycles for Loto and EuroMillions, which added €136m to full-year amounts wagered.

The relaunch of Loto in November 2019, to offer players a third chance to win significant prizes, also benefitted the operator, resulting in a 10% increase in stakes at points of sale in the final two months of the year.

Instant games, meanwhile, benefitted from eleven new retail launches, and two relaunches, during the year to grow stakes to €8.20bn. The Mots Croisés game series became the sixth game suite to grow stakes to more than €1bn during the year.

Quitte ou Double, a game that links retail and online play, succeeded in driving online sign-ups, with 40% of players registering online via the product. While FDJ did not break out exact figures for digital lottery stakes, it noted these grew by more than 30%, accounting for almost 6% of total amounts wagered on its lottery products.

With the player payout ratio for the year remaining steady at 65.7%, lottery revenue grew by 6.5% to €1.58bn for the year.

Sports betting, meanwhile, saw total amounts wagered grow 16.1% to €3.54bn, accounting for 20.5% of all amounts wagered. Despite 2019 containing fewer high-profile betting events, FDJ noted increased activity around football - namely the Champions League, Europa League, as well as French, English and Spanish football.

This was supported by more betting on tennis, such as the French and US Open and Wimbledon, as well as increased activity on events such as the Africa Cup of Nations, the Women’s World Cup and the Rugby World Cup.

For sports betting, FDJ’s online offering accounted for almost 75% of total sportsbook stakes, with amounts wagered via digital channels up by over 40% in 2019. The player payout ratio increased to 76.1%, though revenue still grew 14.5% year-on-year to €341.0m.

After paying out winnings of €11.70bn - up 9.4% - FDJ’s gross gaming revenue for the year was up 9.4% at €5.54bn. The operator’s contribution to public coffers grew 7.2% to €3.50bn, while a further €127.8m was spent on structural allocations to counterparty funds, and a further €9.7m was generated from sports betting. This left net gaming revenue of €1.92bn, up 8.5% year-on-year.

A further €30.8m was generated from other activities, such as FDJ’s payments and technology businesses, for total net revenue of €1.96bn, an 8.5% advance on FY2018.

Cost of sales for the year increased to €1.19bn, while marketing spend rose to €330.4m, and general and administrative expenses declined marginally to €173.1m. FDJ generated a further €0.6m in other operating income, and paid out €9.7m in other operating expenses. This resulted in a marginal increase in recurring operating profit, to €252.0m.

Earnings before income, tax, deprecation and amortisation - recurring operating profit with depreciation and amortisation costs of €94.0m factored in - grew to €346.0m

However, as a result of its November initial public offering, the business incurred €67.3m in additional expenses. While this was partially offset by €4.0m in other income, operating profit for the year fell 26.5% to €188.7m.

After net financial income of €20.6m, and a €2.0m benefit from its share of joint ventures, pre-tax profit stood at €211.3m, down 17.5% year-on-year. After income taxes of €78.3m, net profit for the year fell 22.0% to €133.0m.

“2019 will be remembered as a landmark year for La Française des Jeux with the great success of its initial public offering to numerous institutional investors, individual shareholders and group employees,” FDJ chair and chief executive Stéphane Pallez commented.

“2019 was also characterised by very strong growth in all our businesses, across all sales channels, both physical and digital, and the Group’s excellent operating and financial performances.”

She said the full-year performance had allowed the business to revise its 2020 forecasts upwards. In the year ahead, it will look to enhance its games portfolio and services, including relaunching EuroMillions this month, as well as rolling out new instant win games such as tie-ins to the Tokyo 2020 Olympics and Paralympics. It will also launch another retail-digital hybrid game to build on the success of Quitte ou Double, and look to use Uefa Euro 2020 to further grow its sportsbook offering.

As a result it now aims to increase stakes by 5% during 2020, having initially projected an increase of between 4% and 5%, while revenue for the year is now excepted to grow by around 5% for lottery, and 6% for sports betting. It will also look to reinvest around €600m in the digital transformation of its business, and expansion of its B2B offering, between 2020 and 2025.