BetMakers rings management changes as shares slump on full-year profit warning

Australian betting supplier BetMakers has appointed industry veteran Matt Davey as both president and executive chairman.

Former SG Digital head Davey – who is also chairman and CEO of gaming investment firm Tekkorp Capital – will oversee a new-look management team. Tekkorp is the largest shareholder in BetMakers.

Changes at the top

Amid a flurry of changes at BetMakers, COO Jake Henson has been promoted to CEO, while former CEO Todd Buckingham has pivoted to the newly created role of chief growth officer.

Buckingham, who led the provider for more than 13 years as CEO, will take on a dedicated global project remit in his new role but has also stepped down from the board.

BetMakers said in a statement: “The intended purpose of these changes, collectively, is to enable the optimisation of the full potential of the business in an accelerated time frame.

“It is designed to align the skill base of our key executives to the areas that will deliver maximum shareholder value for the company.”

BetMakers NED Nick Chan: “These changes support our urgency to deliver on the next phase of profitable growth for the business.”

The overhaul did not have the desired effect immediately.

BetMakers shares stooped by more than 11% following the update, which was announced alongside a quarterly trading update.

Non-executive director Nick Chan said the personnel changes were designed to affect a “strategic reset” of the business as it shifts away from growth to focus on optimisation.

“These changes support our urgency to deliver on the next phase of profitable growth for the business,” said Chan. “It aligns the three business units of BetMakers with clear leadership and a pathway to execute.”

Time to reduce costs

The shift came after BetMakers warned the investment made in growth opportunities during the first half of the year would likely result in negative earnings for the full year.

In a trading update for Q2 2023, or the quarter ending 31 December 2022, the ASX-listed supplier reported a net cash loss of A$5.9m (£3.4m), stretching yearly losses to date to A$11.8m.

Meanwhile, handle (cash receipts) came in at A$26.9m, or 9% higher than the same period of last year.

For comparison, BetMakers said it delivered a positive normalised EBITDA in full-year 2022 from 300% growth in revenues to $91.7m.

But in the second half of this year, the new-look management team has pledged to focus on reducing and normalising costs. It hopes to deliver positive operational cash flow in H2 to set the business up to deliver earnings growth in time for full-year 2024.

What else happened during the quarter?

Noteworthy events in the quarter saw BetMakers launch a new NextGen proprietary wagering platform for News Corp-backed start-up betr in the Australian market.

Since the launch of betr, the platform has had more than 300,000 sign-ups, while customer traffic peaked at more than 8,000 bets per minute during the Spring Carnival.

The agreement will see BetMakers receive revenue worth 25% of betr’s net gaming revenue, guiding to potential revenue of more than A$300m over the full 10-year-term.

However, due to high levels of promotional spend, BetMakers booked just A$1.88m of revenue from the partnership during the quarter.