Operating profits at the company rose €80m in the six months to the end of June, up 33 per cent on the same period last year.
Revenues were up 25 per cent, with growth across both its online and retail divisions, to €527.8m.
Diluted earnings per share increased by 31 per cent to 114.8 cents.
The bookmaker also increased interim dividend by 20 per cent to 60 cents per share.
Why it's interesting
Bookmakers have been hit by increased taxes on betting activities in the UK - and hard times have caused a lot of the industry to consolidate. While Ladbrokes and Gala Coral have already unveiled a tie-up, Paddy Power and Betfair today announced a possible merger.
Under the deal, the pair (cheekily dubbed "Betty Power" in a surprisingly forward-looking "joke" tweet by the company last month) will become one of the world’s largest online gambling companies.
Hot on the heels of the Ladbrokes/Coral merger, we can exclusively reveal that we have merged with Betfair. Our new name is Betty Power.— Paddy Power (@paddypower) July 24, 2015
Despite the harsh times, Paddy Power said it expects to “achieve a mid to high single digit percentage increase in reported operating profit for the full year” - compared with expectations of flat revenues across many of its rivals.
And unlike many of its rivals, its UK and Irish retail offerings continued to grow, with 21 new shops opening in the period.
But much of the focus is online, where the company continues to grow strongly, in part thanks to product enhancements. Mobile continues to drive growth, accounting for 67 per cent of online revenue.
What Paddy Power said
Andy McCue, chief executive of Paddy Power, said:
Paddy Power has delivered a very strong performance in the first half with net revenue up 25 per cent in constant currency and operating profit up 33 per cent. Underlying operating profit was up 68 per cent excluding the impact of new taxes and product fees. While this performance was broadly based across all our online and retail divisions, Australia has been the standout with reported operating profit up 78 per cent.
We have made substantial progress implementing the strategy we set out in March, with further payback to come from new mobile product releases, refreshed marketing campaigns and efficiency gains. We now expect full year 2015 reported operating profit to be a mid to high single digit percentage above 2014 and the consensus market forecast.
Paddy Power has reported strong revenue and profit growth on the same day that it unveiled a merger with Betfair to create the world's largest online gambling company.