The Pointsbet Holdings Ltd (ASX: PBH) share price is having a strong session on Wednesday.
In afternoon trade, the sports betting company's shares are up 7% to 77 cents.
Image source: Getty Images
Why is the Pointsbet share price lifting?
Investors have been bidding the company's shares higher today after it released its first-quarter update. This is its first update since the sale of its US business to Fanatics Betting and Gaming.
According to the release, for the three months ended 30 September, Pointsbet reported a 3% decline in turnover to $632.9 million.
However, thanks to an improvement in its margins, all other key metrics improved over the prior corresponding period.
The company's gross win margin was up 50 basis points to 12.3%, which underpinned a 1% lift in its gross win to $75.3 million.
Things were even better for its sports betting net win margin, which improved 140 basis points to 9%. This underpinned a 15% in sports betting net win to $55.1 million.
And with its fledgling iGaming business growing its net win by 136% to $3 million, PointsBet's total net win improved 18% over the prior corresponding period to $58.2 million.
What were the drivers of its growth?
Pointsbet's growth was driven by positive performances from both its Australian and Canadian businesses.
Australian net win increased 11% on the prior corresponding period to $52.8 million. This reflects continued improvement in generosity efficiency, with promotions as a percentage of gross win at 26.3%. In addition, marketing expense was 41% lower than last year, with marketing as a percentage of net revenue reducing to 31% from 58%.
In Canada, its total net win increased 212% off a low base to $5.4 million. Management advised that its sports betting gross win margin expanded thanks to a higher mix of parlays. It also advised that in-play betting represents 68% of sports handle, up 9% on the prior corresponding period.
Guidance
Also giving the Pointsbet share price a boost was management's reiteration of its FY 2024 guidance.
It continues to expect its total net win to be 10% to 20% higher year on year, a gross margin of ~50%, total marketing expenses to be 15% to 20% lower, and gross EBITDA to be at or close to breakeven from April 2024.
