Mobile Adoption And Regulatory Easing Will Unlock Online Lottery Markets

Key Takeaways

• Accelerated digital growth, platform integration, and new products are set to drive revenue and margin upside beyond analyst expectations.
  
• Regulatory stability, international expansion, and a shift away from low-margin segments support long-term earnings growth and higher operating leverage.
  
• Slow digital transition, regulatory pressures, and rising competition threaten FDJ United's revenue, margins, and market share as digital platforms gain traction and compliance costs increase.

Catalysts

Engages in the gaming operation and distribution business in France and internationally.

• Analyst consensus anticipates mid-single digit organic revenue growth and margin expansion as Kindred integration delivers IT and product synergies, but this likely understates the upside-early migration wins and accelerated digital rollout could bring forward margin uplift and drive revenue CAGR comfortably above 5% from 2026, with EBITDA margins rebounding rapidly towards 28 percent as platform integration is completed.
  
• Analysts broadly agree the shift to digital and mobile lottery offers a multi-year efficiency and growth opportunity, yet the recent surge to 6 million online lottery players, combined with the company's enhanced digital product pipeline and omnichannel expansion, could turbocharge both top-line growth and digital margins well ahead of consensus, as consumer adoption accelerates and operating leverage scales.
  
• The normalization of regulatory headwinds in key markets like the UK and Netherlands, together with minimal new regulatory risk in the near term, positions FDJ United to regain growth momentum and recapture market share, which could reignite both revenue and earnings growth above current expectations beginning as soon as late 2025.
  
• The structural shift toward experience-based leisure spending, coupled with FDJ United's continual investment in new instant games, exclusive partnerships, and innovative entertainment formats, significantly increases the capacity for rising ARPU and sustained user growth-creating long-term upside for both revenue and operating leverage.
  
• The broadening of the international footprint and the exit from low-margin B2B activities are likely to produce sustained lifts to group EBITDA and net income, while cost discipline, digitization, and high employee ownership will further enhance productivity and create a virtuous cycle of margin and earnings expansion.

FDJ United Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on FDJ United compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming FDJ United's revenue will grow by 7.3% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 9.2% today to 16.1% in 3 years time.
• The bullish analysts expect earnings to reach €698.3 million (and earnings per share of €3.79) by about September 2028, up from €321.8 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 14.7x on those 2028 earnings, down from 16.2x today. This future PE is lower than the current PE for the FR Hospitality industry at 16.1x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.11%, as per the Simply Wall St company report.

FDJ United Future Earnings Per Share Growth

Risks

• FDJ United continues to face heightened regulatory scrutiny and frequent regulatory changes, particularly in the U.K. and Netherlands, which have already caused significant revenue decline in international markets and will likely pressure future revenue growth and net margins.
  
• The company shows persistent reliance on traditional retail lottery channels in France, with the multichannel digital transformation strategy only expected to have meaningful impact after 2025, raising concerns that slower digital adaptation may undermine its ability to compete for revenues in an industry rapidly shifting to online platforms.
  
• FDJ United's international expansion, highlighted by the Kindred acquisition, has increased financial leverage and integration risks; ongoing high IT service costs and delayed cost synergies could depress net margins and earnings stability for several years.
  
• Revenue and earnings remain exposed to societal and regulatory headwinds around gambling addiction, which may drive higher compliance and sustainability costs over time, causing structural erosion of net margins even as the company aims to boost its societal contribution ratio.
  
• Intensifying competition from digital-native and global online gambling platforms, combined with the shift of consumers toward more interactive digital entertainment, threatens to erode FDJ United's customer base, putting sustained pressure on revenues and contributing to revenue volatility and long-term market share loss.

Valuation

• The assumed bullish price target for FDJ United is €43.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of FDJ United's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €43.0, and the most bearish reporting a price target of just €27.8.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be €4.3 billion, earnings will come to €698.3 million, and it would be trading on a PE ratio of 14.7x, assuming you use a discount rate of 9.1%.
• Given the current share price of €28.16, the bullish analyst price target of €43.0 is 34.5% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.