PointsBet (ASX:PBH) share price rising despite $131 million EBITDA loss

Shares in PointsBet are on the move today…

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Key points

  • Pointsbet released its half-year earnings today 
  • It was a period of mixed results but shareholders are responding well in early trade
  • In the last 12 months, the PointsBet share price has collapsed by 76%

Shares in PointsBet Holdings Ltd (ASX: PBH) are on the move today after the company released its financial results for the half-year ended 31 December 2021.

At the time of writing, the PointsBet share price is 3.37% higher at $3.68 apiece. It initially spiked to $3.85 and then retraced its steps immediately towards yesterday's close of $3.56.

PointsBet share price up despite EBITDA loss, as group net wins flourish

Key takeouts from the company's earnings results today include:

  • Net revenue for the period of $97.6 million, signifying 27% growth over the prior corresponding period (pcp)
  • Statutory EBITDA loss of $130.6 million, a poorer result than the EBITDA loss of $71.3 million in the pcp
  • Group net win of $146.7 million, representing 77% growth on the pcp
  • Australian trading business had 232,875 Cash Active Clients, a 63% increase compared to the pcp
  • US business had 211,113 Cash Active Clients, a 210% increase on the pcp
  • Australian trading business recorded a net win of $107.9 million, representing 27% year on year growth
  • US business recorded a sports betting net win of $31.3 million compared to a $2 million net loss in the pcp
  • US business recorded an iGaming net win of $7.6 million
  • Blended US online handle sports betting market share for Q2FY22 was 4.2%.

What else happened this period for PointsBet?

PointsBet surmounted several milestones in its growth narrative during this half, underscored by collaborations with the National Football League (NFL) in America and Major League Soccer (MLS).

Specifically, it has been selected by the NFL as an Approved Sportsbook Operator, starting with the 2021 season, and is also Austin FC's exclusive sportsbook partner as of September last year.

PointsBet also became the new major partner of the Manly Sea Eagles NRL team here in Australia last year.

"The new exclusive multi-year sponsorship deal will see PointsBet take over the main front position on the Sea Eagles NRL jerseys for at least the next four years," the company says.

In Australia, the company recognised revenue of $97 million after growth of 27% at the top. On this result, and others, the group recorded a net win of around $147 million for the period, a mammoth 77% leap from last year.

However, as a result of "significant investment into the US business", PointsBet recorded a statutory EBITDA loss of $131 million this half – a stack behind last year's loss of $71 million.

In other news, customer interest appears to have piqued for the company's technology platforms. The company said "for Q2FY22, app download volumes grew by 121% versus Q2FY21" backed by its "improved product offering, user experience and brand equity".

Management commentary

PointsBet noted that the business is focused on widening its footprint in the US after investing big here. The report said:

The Company continued to capitalise on its expanding US presence by scaling its operations through key hires across all departments, as well as rolling out sports betting and iGaming operations in to new states as well as preparing for future sports betting and iGaming operation launches.

Regarding one key partnership with the NFL, it said:

On 8 July 2021, PointsBet announced that NFL all-time great Drew Brees officially joined the PointsBet team. Brees, who this season is transitioning to a broadcasting career with NBC Sports (PointsBet's official sports betting partner) will deepen the NBC Sports and PointsBet relationship as the Company continues to expand and realise the growing North American online sports betting and iGaming opportunity in 2021 and beyond. Brees will star in and help develop original content for PointsBet, provide sports betting education and commentary, host events, and steer marketing and promotional concepts, among other areas.

What's next for PointsBet?

The company also says it has garnered "positive momentum" by reducing its expenditure. As such, it anticipates marketing expenses to reduce down to roughly $16 million for H2FY22.

As a result, it expects the Australian trading business to be EBITDA positive for FY22. PointsBet also expects iGaming launches in Pennsylvania and Ontario during H2FY22.

PointsBet share price snapshot

In the last 12 months, the PointsBet share price has collapsed by 76%. It is down 48% this year to date, and is thus trailing the S&P/ASX All Ordinaries Index (ASX: XAO), which is down 8%.

Motley Fool contributor Zach Bristow 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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