Sports betting group PointsBet has posted a net loss of AUD 178 million ($119 million) in the latest half, despite nearly doubling its US revenue. The negative H2 2022 results come as speculation grows on new operator Betr taking over its Australian arm.
The company widened its EBITDA loss to AUD 163 million ($109 million) over the six months to December, up 25% from the first half of financial year 2022.
Back in December, the company confirmed that it was in a preliminary discussion about selling its Australian business to News Corp-backed wagering startup Betr, but there has been no further news on the matter since.
Chief Executive Sam Swanell told investors Tuesday that the interest in the company demonstrated the value it had built, although he did not comment on specific details of the proposed deal. “Conversations of this nature are common in our industry,” he stated, as reported by WA Today.
Industry sources have said the deal is close to completion, amid News Corp’s growing discontent about the costs of Betr, which totaled about AUD 49 million ($33 million) over the past six months.
Betr has reportedly engaged financial services firm Barrenjoey to secure the funding needed to acquire PointsBet’s Australian arm, according to local media. The deal is believed to be worth up to AUD 250 million, as per The Australian Financial Review.
Normalized earnings increased by 17% to a loss of 149.1 million over the H2 2022 period for PointsBet. The bookmaker forecasts a significant reduction in normalized earnings loss to between negative AUD 77 million ($51.8 million) and negative AUD 82 million ($55.1 million) for the second half of financial year 2023.
“We’re at an inflection point. North American revenues are growing slowly, US marketing has become more efficient and we think we’ll continue to stabilize and grow that aspect down as time continues,” Swanell said. “Revenue growth and lower costs is a good story for us.”
PointsBet’s share price fell 21% to AUD 1.14 by mid-morning trade before recovering to AUD 1.26 late afternoon, notes WA Today.
PointsBet has pumped money into expanding its market share in the US since 2019 and is now active in 14 states, as well as Ontario in Canada. The US arm grew by 86% over the December half, a figure largely attributable to years of heavy spending on marketing, despite a 17% reduction in marketing expenses in the latest half to a negative AUD 131 million.
“I don’t believe we’re getting appreciation for what we’ve built in the US,” Swanell further said on Tuesday, as reported by The Australian Financial Review. “If you do a sum of the parts and you think about what our Australian business could be worth … there’s no value being assigned to North America.”
“We certainly don’t think that we’re getting the credit that we deserve for what’s been achieved in the half in the company, led by North America but also still there with a very strong Australian business,” he added.
Swanell said this month the company’s marketing expenses should decline to $90 million this year, down from $118 million in 2022, after it extended a partnership with NBCUniversal and stretched its current expenditure to go over four years, up from two.
Original article: https://www.yogonet.com/international/news/2023/02/28/66253-pointsbet-sees-us-revenue-nearly-double-in-h2-2022-but-company-profit-collapses
