PointsBet (ASX:PBH) share price sinks 6% as losses widen to $52m

The sports betting company continues to throw millions at marketing in the second quarter…

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Four PointsBet customers and football fans put heads in hands and look disappointed while watching television

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Key points

  • The PointsBet share price is moving lower today on its second-quarter figures
  • Operating cash outflows increased to $51.8 million on $65.6 million in marketing expenses
  • PointsBet is now one of only six betting operators to cover New York, New Jersey, and Pennsylvania

The PointsBet Holdings Ltd (ASX: PBH) share price is unable to find its footing on Friday following the release of its second-quarter results.

In early morning trade, shares in the sports betting company are down 5.96% to $4.73 per share.

PointsBet share price slumps on solid second-quarter update

  • Group turnover increased 11% from prior corresponding period to $1,326 million
  • Sports betting net win up 61% year-on-year to $71.9 million
  • Total group net win increased 73% to $77.3 million
  • United States cash active clients up 210% to 211,113
  • Operating cash outflows increase from $38.7 million to $51.8 million
  • Cash and cash equivalents at the end of the quarter sat at $523.2 million

What else happened during the quarter?

For the three months ending December 2021, PointsBet achieved growth across all of its major metrics compared to the prior corresponding period. Importantly, the total turnover (money wagered) through its platform increased 11% to $1,326 million.

However, this appears to not be what shareholders were hoping for as the PointsBet share price moves lower this morning.

The group’s growth in turnover didn’t come from the United States as per usual. Instead, the Australian segment lifted 34% compared to a 9% contraction in turnover in the US.

Despite this, operations abroad pulled in an exceptionally improved gross win for the company. Compared to Australia’s gross win growing by 22% year-on-year, the US notched up an increase of 425% to $41.6 million in gross win for PointsBet.

Although, the improved win rates were not enough to counter the company’s marketing spend during the quarter. Between Australia and the US, PointsBet forked out $65.6 million for marketing and sales in the second quarter. As a result, the company widened its net operating losses to $51.8 million compared to $38.7 Q2 FY21.

On a positive note, the company has been able to expand its reach across the US. PointsBet is now one of only six operators with coverage across New York, New Jersey, and Pennsylvania.

PointsBet share price snapshot

It has been a difficult start to the year for the PointsBet share price. Since celebrating the start of 2022, the sports betting company has witnessed a 32% fall in the value of its shares.

The weakening share price has not been from a lack of business developments either. In the last couple of weeks, PointsBet has made three product update announcements. These have included being awarded a wagering and gaming license in Pennsylvania and launching its iGaming product in West Virginia.

Shares in PointsBet are down 68% in the last 12 months.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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