Sports betting company PointsBet (ASX: PBH) has struggled to secure bids for its underperforming businesses in Australia and the United States. While the Company received an offer from Australian wagering company Betr for its Australian business, it turned it down initially before resuming discussions again which have now broken down. This took place in the backdrop of plans to sell the US business discussions there continue to simmer slowly.
Reports suggest that PointsBet may be refusing to budge on its sale price of $250 million for its Australian business after knocking back an offer for $220m in June 2022.
Had that sale taken place, it would have gone a long way towards relieving PointsBet of cash burn pressure where its pursuit of the lucrative US market has come at a massive cost to shareholders.
For the quarter ended 31 March 2023, PointsBet reported a 39% increase in revenue to $106.6 million with growth primarily driven by the United States, where the net win grew by 103% compared to the prior year. There was a 3% decline in net wins in Australia as turnover growth in sport was offset by softness in horse racing which is continuing. Still, PointsBet achieved a 15% increase in net win contribution from mass-market clients, which is a positive sign for the company’s long-term sustainability.
None of this came even close to offsetting cash outflows for PointsBet though, with $70.6m in cash consumption for the quarter taking their YTD figure beyond $180m for the 9 months, leaving the Company with $301m of cash in the bank.
PointsBet Managing Director and CEO, Sam Swanell, commented, “Strong Momentum continues in our North American business and the Australian business is outperforming the market in an industry facing headwinds. Group Net Win growth was a company record this quarter and continues to perform well vs PCPs, and together with our continued focus on reducing costs, improves the global business performance.”
To improve operational efficiency, the company carried out a cost and efficiency review of its North American workforce, resulting in a 12% reduction in headcount and expected annualised savings of $6 million. PointsBet also reported having 555,125 global cash active clients over the past 12 months as of March 31, 2023.
Swanell added, “Our North American business continues to grow. In January, we went live in Ohio, our 14th US state, which now sees us serving 35% of the US adult population.”
Providing its financial outlook for the second half of FY23, PointsBet stated that it anticipates a Normalised Group EBITDA loss to be in the range of $(77.0)m to $(82.0) million. Additionally, the Company expects its net cash outflow, excluding movement in player cash, to be around 30% lower in H2 FY23 compared to H1 FY23.
With takeover deals for its Aussie business falling through and deals meandering for its North American business, PointsBet doesn’t expect to be rid of its underperforming assets just yet.
Alinda is a Business Reporter for The Sentiment
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