DAVY VIEW

Flutter Entertainment’s Q2 print was encouraging with good momentum across the board. The US aEBITDA mid-point has been increased by 4% from $710m to $740m despite the headwind from the Illinois tax increase. aEBITDA guidance for the ex-US business has been upgraded by 2% at the mid-point to $1.77bn. The update and the call showcased Flutter's advantages, including scale, global diversification and product knowledge sharing. Importantly, the strong growth in all US customer cohorts illustrates that management made the correct decisions to invest significantly in customer recruitment at the outset of the year. We believe Flutter's current valuation (12.5x FY25/10x FY26 EV/EBITDA) does not reflect the growth opportunity and strong operational execution. We believe this update will be well received and retain our ‘Outperform’ recommendation.