PointsBet Holdings Ltd (ASX: PBH) shares are languishing today following the company's release of its FY21 first-half (1H21) results. At the time of writing, the PointsBet share price has slumped 1.8% to $15.24.
Today's release marks the company's first interim result following its transformational media partnership with NBCUniversal.
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PointsBet share slumps on triple-digit growth
The PointsBet share price is failing to respond today despite the company delivering a group net win of $82.8 million, up 177% on the prior corresponding period (pcp). Net win is defined as the total amount of gaming income after prizes or winnings have been paid out. At the revenue level, which is typically close to the net win, the group recorded a 174% increase from $27.4 million to $75.1 million.
From a geographic perspective, a record net win was delivered in Australia of $84.8 million, up 211%. Meanwhile, PointsBet's United States presence continued to scale, with a 345% increase in betting turnover to $819.1 million. The region's net win came in at a loss of $2.0 million.
The number of active clients on the platform also continued to grow, with users in Australia and the US doubling to 211,000 from 102,000 in 1H20.
US sports betting, a runway for growth
Sports betting in the US was illegal up until May 2018, when the Supreme Court ruled that the 1992 federal ban on sports betting in most states violated people's rights.
The US sports betting market is seen as a land grab opportunity for bookmakers to rapidly grow their customer bases and revenue. Morgan Stanley and JP Morgan are bullish on the sector, estimating the US sports betting and iGaming industry to be a US$12 billion opportunity by 2025.
PointsBet currently has operations in New Jersey, Iowa and Indiana. Operations in Illinois are scheduled to commence in September 2020 with Colorado commencing in November.
The continued strong performances in the US has seen PointsBet grow its online handle market share to 10.8% in New Jersey, 8.9% in Illinois, 3.8% in Indiana, 2.4% in Iowa and 1.0% in Colorado.
The company is pulling on its NBC Sports media assets to continue targeted marketing activities in New Jersey, Indiana and Illinois.
The significant growth opportunity does come at a cost of significant marketing expenses and a string of net losses in the short to medium term. For the half, PointsBet delivered an earnings before interest, tax, depreciation, and amortisation (EBITDA) loss of $69.0 million. Its sales and marketing expenses surged from $20.6 million in 1H20 to $62.9 million in 1H21. Despite the losses, the company had $388.3 million in cash and cash equivalents to support its growth story moving forward.
What's next for PointsBet?
PointsBet is focused on the development and launch of its iGaming product as consumers move away from in-person casino gambling to mobile apps. The company is running this product in-house, with complete control over its product roadmap, unlike some competitors which are reliant on third parties.
PointsBet is targeting an inaugural launch in Michigan in 2H21, followed by New Jersey. Elsewhere, the company hinted at a potential launch in New York and Canada.
Based on the current PointBet share price, the company has a market capitalisation of around $2.85 billion.
