PointsBet share price tumbles on $178m first-half loss

This sports betting company's first-half loss has increased but management remains positive…

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Key points

  • PointsBet has released its half-year results and revealed another large loss
  • This has reduced the company's cash balance by a quarter
  • Management appears optimistic that its losses are going to lessen in the second half

The Pointsbet Holdings Ltd (ASX: PBH) share price is under pressure on Tuesday.

In morning trade, the sports betting company's shares are down 5% to $1.38.

This follows the release of the company's half-year results.

PointsBet share price falls on big loss

  • Turnover up 40% to $3,225.5 million
  • Gross win up 6% to $267 million
  • Revenue up 28% to $178.1 million
  • Net win up 14% to $158.5 million
  • Net loss after tax up 22% $178.2 million
  • Cash balance down 25% to $387.2 million

What happened during the first half?

For the six months ended 31 December, PointsBet reported a 40% increase in turnover to $3,225.5 million. This was driven by a 14% increase in Australian turnover to $1,550.5 million, a 66% jump in USA turnover to $1,573.7 million, and a $101.3 contribution from the new Canada business.

However, with the company's gross win margin falling 2.6 percentage points to 8.3%, PointsBet's gross win grew by a more modest 6% to $267 million.

And while the company's lower marketing spend and growing iGaming operations gave its net win a boost, it couldn't stop PointsBet from recording another large loss of $178.2 million.

This left the company with a cash balance of $387.2 million at the end of December.

Management commentary

PointsBet's managing director and CEO, Sam Swanell, commented:

These results show our North American strategy is delivering – revenue growth is up and costs are going down, and the Australian business is continuing to deliver. To put it simply the jaws at PointsBet are positive. Revenue is growing strongly, and costs are reducing. We held $320.7 million in corporate cash as at 31 December 2022 and we have no corporate debt.

The US business saw total Net Win increase by 81% to $70.1 million, with 17% less marketing expense and strong iGaming performance. iGaming also represented 31% of total North American Net Win. In the United States – the largest and fastest growing online betting market in the world, we are the 7th largest online operator, out of a field of over 60 licensed online operators. On top of that, our app which is powered by our proprietary tech stack is independently ranked as top three in the US market.

This has not gone unnoticed. The third-party strategic interest shown in our company demonstrates we have built a very valuable business. This gives us significant optionality around how we take the business forward to maximise value for our shareholders.

Outlook

PointsBet revealed that it expects to record a normalised EBITDA loss of between $77 million and $82 million for the second half of FY 2023.

Management notes that this a significant decrease to both its first half loss and the second half loss of FY 2022.

Editor's Note: This article originally contained a typographical error that implied PointsBet saw a loss of $378 million in 1H FY23. This has been amended to show the correct figure of $178.2 million. 

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended PointsBet. The Motley Fool Australia has recommended PointsBet. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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