British bookmaker William Hill, now a subsidiary of 888 Holdings, has filed its financial results for full-year 2022 with Companies House.
The operator’s total revenue for 2022 was £1.24bn, a decrease of around 0.5% compared to 2021.
The flat results came in spite of a significant drop in online revenue, which was mostly offset by large gains in retail, as the operator’s network of betting shops returned to normal following Covid-related lockdowns during 2021.
UK online revenue for the year reached £509.1m, down 19% compared to £628.6m in 2021.
That decline was due to a combination of factors, Hills said, including some of its customers returning to spend in retail shops, alongside the implementation of enhanced customer safety checks in anticipation of the UK government’s white paper review of the 2005 Gambling Act.
Retail revenue, meanwhile, shot up by 52.7% to £514.2m, compared to just £336.8m in 2021.
International revenue also fell year-on-year in 2022 to £212m, a 23.2% drop annually. This was attributed to additional regulatory measures combined with William Hill’s withdrawal from the Netherlands market.
Turn to profit
Despite faltering revenues across the UK online and international segments, group adjusted EBITDA for 2022 rose 32.8% to £214.8m, primarily driven by an increased contribution from retail.
Retail accounted for £95.7m of the total adjusted EBITDA, compared to just £0.1m in pandemic-hit 2021.
EBITDA across William Hill’s other business segments fell, meanwhile, with the UK online division delivering £112.2m, down 26.9%, and the international division delivering £33.1m, down 2.9%.
William Hill’s operating loss for 2022 totalled £31m, improved from a £65.5m operating loss in 2021. The business said that was due to reduced marketing expenses helping to offset reductions in revenue.
Profit after tax, meanwhile, totalled £168.4m (compared to a £58.9m loss before tax in the prior year), following a one-off foreign exchange gain on financing items of £198.8m, as a result of exchange differences on the operator’s debt to its parent company.
The business held cash and cash equivalents of £160.4m at the end of the reporting period.
William Hill was also an active shareholder in several other businesses throughout 2022, and the report included commentary on its various investments.
Its 19.5% share in sports data supplier Sports Information Services (SIS), for example, allowed it “to exert significant influence” over the business, it said, alongside a seat on the firm’s board of directors.
SIS generated revenue of £231.8m and profit after tax of £3.9m during the reporting period.
William Hill’s shareholding in Green Jade Games, meanwhile, was sold to Caesars for £9m in June 2022, before the supplier folded in April of this year.
The operator also wrote off a £1m investment in game developer Good Luck Have Fun Group, and held no value in the investment as of the end of the reporting period.
In February 2022, William Hill acquired game developer Live 5 for a total consideration of £4.3m.
The revenue and profit resulting from the acquisition have since been “immaterial,” it said.
Looking to the future
The report also considered William Hill’s ability to continue operating as a going concern under 888’s ownership.
It assessed that even while facing several headwinds – such as the impact of 888’s suspension of VIP customers in the Middle East, reductions in profitability due to regulatory, macroeconomic or competitive pressures, increases in interest expenses and the potential adverse impact of the Gambling Act review – the business would still have the resources to continue operating for the foreseeable future.
Indeed, following cost-cutting measures that may be implemented to offset lower-than-expected cash generation, the enlarged 888 group “could withstand a decrease in forecast EBITDA of 31%,” it forecast.
The board of 888 considered the likelihood of such a decrease to be “remote,” however.
Esports betting operator Rivalry is set to receive up to C$10m in strategic financing via a non-brokered private placement of some 6.7 million subordinate shares in the company.
The funding will be led by global low-margin bookmaker Pinnacle, alongside technology and payments stakeholders, and is intended to allow Rivalry to accelerate its operational objectives and pursue strategic growth opportunities.
The company announced the funding today (26 April) alongside the release of its full-year 2022 and preliminary Q1 2023 financial results.
In 2022 the business generated C$26.6m in revenue, up 140% year-on-year, from betting handle totalling C$232.8m an increase of 198% over 2021.
Gross profit came to C$9.8m, up more than fourfold from just C$2.2m in 2021.
Still, the business declared a net loss of C$31.1m for the year, including share-based compensation expenses of C$8.2m, compared to a C$24.3m net loss in 2021.
As of 31 December 2022, the business held C$16.4m in cash and no debt.
As for Q1 2023, preliminary results suggest that betting handle for the quarter totalled C$120.2m, an almost threefold increase from the C$40.2m wagered with the operator in Q1 2022.
Revenue for the quarter came to C$12m, up 151% year-on-year, while gross profit came to C$5.4m, compared to just C$0.7m in the prior-year period.
Net loss for the quarter was C$3.5m, down from a C$6.6m loss in the prior year.
The business said it achieved those results alongside a 10% year-on-year reduction in marketing spend.
The firm’s new financing is undoubtedly the biggest news of the day.
The capital injection builds on an existing relationship between Rivalry and Pinnacle, which sees the former leverage Pinnacle’s “market-leading esports and risk management solution to provide a best-in-class offering for our users,” according to Rivalry CEO Steven Salz.
“Pinnacle’s commitment in our financing round adds a valuable layer of expertise to our organisation and credibility in our distinct market approach, and we look forward to expanding our relationship with them in this next chapter of the company,” Salz added.
Pinnacle CEO Paris Smith said: “As a leader and innovator in online betting, Pinnacle is constantly looking for like-minded partners to help further grow the industry and our global footprint.
“That is what led us to Rivalry, and it is impressive how in a short period of time, they have carved out a powerfully unique position in the field of online betting.
“The company’s long-time focus on product innovation, brand equity, and next generation consumers is disrupting traditional ways of thinking in the industry and blazing a trail for industry economics that were previously not thought possible.”
The private placement financing will see Rivalry issue 6,666,666 subordinate voting shares in the capital of the company at a price of C$1.50 per share.
It is expected to close in one or more tranches beginning on or around 5 May, subject to receipt of the necessary corporate and regulatory approvals including from the TSX Venture Exchange.
In other news, Rivalry included a list of its operational highlights from 2022 and Q1 2023 in its annual report.
Those included entering the Ontario and Australian markets in April and May respectively, entering the casino sector with its first third-party game, and the launch of its proprietary Casino.exe platform in Q3 2022.
The operator also registered more than 1.5 million customers by the end of Q1 2023, and maintained a brand-leading position among millennials and Gen-Z customers, who accounted for 97% of its active users in 2022.
The best question on today’s earnings call came from Brian Kinstlinger, head of technology research at Alliance Global Partners.
He asked CEO Salz how Pinnacle can act as a strategic partner and help elevate Rivalry’s business, rather than acting as a competitor.
Salz responded that there is a “natural tension” in leveraging Pinnacle’s esports offering for its own product, as both operators are active in some of the same global markets.
He added, however, that: “We don’t really have an issue with it for the same reason we don’t have an issue with anyone else we compete with, because of how we approach the market and the demographic we go after, and the approach we have has been super successful in that regard.”
With reference to Pinnacle’s investment in Rivalry, Salz added: “We prefer people that have skin in the game, it creates a lot more alignment. That skin in the game in terms of oddsmaking makes the product and risk management so robust, and that’s been really good for us.
“They support us in a really good way with producing bespoke markets for events that we run, that are tied to really unique marketing that we do. Them investing in Rivalry and having that further alignment just brings that whole piece even closer together.”
Current trading and outlook
In 2023, Rivalry said it expects to drive continued growth by expanding its esports offering to deepen its core product, attract new customers, and establish the most comprehensive esports offering globally.
It will also continue to evolve its Casino.exe platform and release additional proprietary and third-party games, as well as launching a mobile app in its regulated markets.
The firm also intends to expand into new geographies to increase its total addressable market and customer base while aiming to grow its investor base through proactive capital markets outreach.
XLMedia has released its full-year 2022 financial results, showing a 10% year-on-year increase in revenue as the group embraces a new operating structure.
XLMedia’s audited 2022 results fell broadly in line with previously issued guidance reported by iGaming NEXT in January.
Total revenue for the year came to $73.7m, up 10.2%, with $71.8m coming from continuing operations (up 24.2%) and $69.6m coming from XLMedia’s core affiliation business (up 27.5%).
Non-core business areas include the discontinued personal finance division, affiliate network revenue and external agency revenue.
Adjusted EBITDA across the group was $16.7m, down 6.7%, however the figures suggest that adjusted EBITDA from the core business ($18.2m, up 24.7%) was negatively impacted by losses in non-core business segments.
North America was the company’s highest earning region in 2022, generating $47.7m in revenue, up 114.9%.
Of the North American revenue, the vast majority came from sports betting, at $46.4m (up 111.9%), while iGaming generated just $1.3m (up from $0.3m).
European operations showed a more equitable split between sports betting and iGaming, albeit biased in favour of online casino.
The European iGaming segment generated $14.3m in revenue, a reduction of 37.6%, while sports betting in Europe generated a further $7.6m, down 20%.
Operating profit from continuing operations totalled $5.1m for the year, up more than fourfold from $1.1m in 2021. Overall profit for the year from continuing operations was $2.4m, down from $2.8m.
Discontinued operations, however, left the business with an $11.8m loss in 2022, compared to a $2.8m profit in 2021. That was largely the result of a $10.7m impairment charge.
Growth in North American markets alongside a reduction in European revenue appears to be in line with XLMedia’s expectations and objectives for the future.
The business is nearing the end of a restructuring process which has seen it turn its core focus away from European iGaming and towards US sports betting.
XLMedia said its strategy going forward is “to diversify our revenue streams in North America while expanding our footprint, optimising our sustainable gaming business and upgrading and innovating our European sports sites.”
Since beginning its restructuring, the business has made significant changes to its senior management team with the introduction of David King as CEO in July, as well as the appointment of Caroline Ackroyd as CFO.
Other senior management changes in 2022 included the appointment of Karen Tyrrell as chief people and operations officer with responsibility for European sports and gaming, the promotion of Elizabeth Carter to CMO, and the addition of Peter McCall as company secretary and group legal counsel.
Overall staff numbers, meanwhile, have been reduced, with the business entering 2022 with 267 staff and ending the year with 193.
“This major programme of change is now largely complete, and we anticipate a more stable operational base going forward,” XLMedia said.
Following the end of the reporting period, Kevin Duffey took up his new role as president of XLMedia North America in early 2023.
Duffey was the founder of Saturday Down South, one of XLMedia’s US sports media sites, and has now been tasked with overseeing all of XLMedia’s North American assets.
Those assets include acquired businesses such as CBWG, Sports Betting Dime and Saturday Football Inc, the integration of which into XLMedia’s core business has now been completed, the business said.
The integration of those acquired businesses saw the departure of the founders of Crossing Broad, a Philadelphia-based sports blog, and Elite Sports NY.
A highly topical question came from one of the listeners on today’s earnings call, referred to only as Natalie.
Natalie asked how the business intends to leverage the possibilities offered by new AI technologies, and what the related opportunities and threats would be.
In response, CEO King said: “We don’t use it at the moment to generate content. And indeed, in traditional search, Google puts a premium on ‘EAT’, meaning expertise, experience, authority and trust.
“Therefore, we have been putting a premium on creating content that fulfils those obligations, and we’ve looked very carefully and done a number of tests in the world of ChatGPT.
“We obviously see lots of opportunities and indeed have already started using this technology to educate ourselves about word selection and optimisation in our casino brands.
“We think that there’s a lot of use for selectively targeting these tools at specific areas of expertise, applying them to our own content, and educating ourselves not just through our own A/B testing, but also through using these tools to learn what others have done and apply that to our optimisation programmes.
“We also see opportunities to actually educate these tools to help us in creating our content and updating our content on a more regular basis.
“By writing high quality content that meets the ‘EAT’ criteria, we think we can then apply technology and AI to enhance and republish that content, to give the user a more fulsome experience.”
CFO Caroline Ackroyd on XLMedia’s debt arrangements: “We’re providing sufficient headroom for investment in organic growth. The business currently has no debt arrangements in place, but this remains a consideration for the future if working capital or acquisitions present a reason for the board to put this in place.”
Current trading and outlook
XLMedia said it has “enjoyed a strong start to 2023 with Ohio going live in January 2023 and Massachusetts going live in March 2023,” though it noted that no additional state launches have been confirmed for the remainder of the year.
With regards to its North American strategy for the remainder of the year, the business holds two key priorities.
One is to increase its focus on iGaming markets in the US, of which there are currently seven regulated state markets.
XLMedia holds a presence in just one of those markets at present, however, and said building its gaming presence is a key priority for the business.
Another of the firm’s key objectives is to turn towards rev share model agreements with operators in the US, where currently it operates on a principally cost-per-acquisition (CPA) basis.
In 2022, CPA agreements generated 69.4% of core revenue, at $48.3m, while rev share deals generated 26.6% at $18.5m.
XLMedia is currently in discussions with several of its US operator partners to shift its agreements from pure CPA to hybrid deals, offering reduced upfront costs to operators but allowing the affiliate to benefit longer term from the players they refer.
Flutter Entertainment continued to dominate leaderboards in key markets throughout 2022 as it grew full-year revenue by more than 27% year-on-year.
Flutter generated revenue of £7.69bn during full-year 2022, an increase of 27.5% year-on-year.
Of that total, £5.09bn, or around two-thirds, came from the group’s operations outside of the US, amid annual revenue growth of 9.6%.
The remaining 33.8% of revenue, at £2.6bn, came from Flutter’s FanDuel-led US operations, where revenue rocketed by 87.2% year-on-year.
Non-US operations generated £1.3bn in adjusted EBITDA, up 4.1%, while US operations generated an EBITDA loss of £250m, compared to a £243m EBITDA loss for 2021.
(On a constant currency basis, however, EBITDA losses from the US shrank by 6%.)
As a result, overall group adjusted EBITDA came in at £1.05bn, up 4.4% year-on-year.
The number of average monthly players (AMPs) across the group throughout 2022 was 10.2 million, up 25.8% year-on-year, driven by increased numbers of players both in and outside the US.
Flutter’s market dominance in several key markets was laid bare in its 2022 results.
FanDuel’s leadership position in the US, where it holds 50% of sports betting market share and 21% of iGaming, is widely recognised across the industry.
Meanwhile in the UK & Ireland, Flutter is also the number one operator by market share, with 38% of sports betting and 22% of iGaming.
In Australia, where Flutter operates its mass market Sportsbet brand, the business also holds the top spot for sports betting with 48% market share. Online casino is illegal in the country.
Following its acquisition of Sisal in August 2022, the operator also now holds the market-leading position in Italy.
That scale allows Flutter to launch into newly regulating jurisdictions with relative ease, as was demonstrated in Maryland towards the end of 2022, and in Ohio following the end of the reporting period.
Market share across those two states has shot to 50% already according to Flutter’s figures, with more than 6% of the states’ combined adult population using the operator’s products.
They were Flutter’s most successful launches ever. In Ohio, first-month customer acquisition as a percentage of the state population was three times higher than in New York following its launch last year.
Flutter made combined strategic investments in Ohio and Maryland of $78m in Q4 2022, consisting predominantly of pre- and post-launch generosity and brand content to acquire customers, which is intended to create greater future value by front-loading investment now.
In Q4 specifically, Flutter posted positive US EBITDA of £31m, excluding its investments in those two new state launches. The operator reported a full-year EBITDA loss of $313m in the US. For comparison, closest market-share rival DraftKings reported an EBITDA loss of $722m over the same period.
Also referring to the balance between investing in future growth and short-term profitability was the best question on Flutter’s 2022 earnings call, which came from Craig-Hallum analyst Ryan Sigdahl.
With many operators guiding to positive EBITDA at some point this year, he said: “Our thesis is that some of those had structural challenges scaling to meaningful profits beyond that.
“We agree with you that FanDuel can and will, but how do you think about the need to achieve positive EBITDA now, versus making investments in the near-term to build the business that can earn potentially billions in profits longer term?”
In response, Flutter CEO Peter Jackson said: “I think the important thing is that we’re compounding the advantages we have in the market.
“We’re continuing to see higher levels of hold against our handle than our competitors do. The parlay penetration was fantastic in things like the Super Bowl, and the product offering that we have there is the best in the market, and we’re continuing to develop and improve it.
“So we have a structural advantage in revenues, and we know that we are more efficient than anybody else from a customer acquisition perspective.”
CFO Jonathan Hill added some additional colour on Flutter’s strategy regarding profitability.
“Some of our competitors are targeting getting to profitability in Q4 of this year,” said Hill. “We’ve never targeted getting to profitability this year.
“We said it was a resultant outcome of [the building momentum among cohorts of US customers]. So this is not the be all and end all target. We expect it to happen because of the cohorts.”
Hill made reference here to the below slide in Flutter’s results presentation, demonstrating that each new group of customers brought in by the operator has required increasing levels of investment each year since 2018, but that as the investment in each new cohort grows, so too do the resulting revenues.
The idea of growing momentum in the US market was also the topic of the best quote from Flutter’s earnings call, which came from CEO Jackson. He said:
“The strong performance we’re seeing in the US is not just being driven by recently launched states. I think the benefits that we have are compounding.”
This was once again supported by an accompanying slide, which Jackson said demonstrated improvement in revenue performance and more efficient marketing, thus “powering the flywheel”:
Current trading and outlook
Flutter said trading in the first eight weeks of 2023 was in line with expectations, with the US continuing to deliver strong growth across existing states, and following successful launches in Maryland and Ohio.
Flutter has already acquired more than 1.2 million customers in those two states in 2023, it added.
The US remains on track to deliver positive EBITDA for the full-year 2023, it said, which will mark the first time any US sports betting operator has delivered a full-year profit since the market began to open following the repeal of PASPA in 2018.
“The group is currently at an earnings transformation point and we look forward to delivering future growth and progressing further against Flutter’s strategic priorities in the coming year,” commented Jackson in the firm’s financial report.
Non-US revenue is also benefitting from strong momentum in the UK & Ireland and in International, which is helping to offset the impact of a “more challenging environment and tough comparatives in Australia,” Flutter added.
For 2023 across the group, Flutter said it expects capital expenditure of between £480m and £500m, alongside adjusted depreciation and amortisation charges of another £480m as a result of increased US product investment, as well as group investment in casino studios and shared platforms.
In a note sent to investors, Regulus Partners said of the firm’s performance: “There are reasons to be positive for each of Flutter’s divisions. Perhaps most crucially, Flutter is clearly showing that a strong central investment in product and technology can drive revenue synergies as well as cost synergies.
“If Flutter’s capex is anything to go by, it is hard to see how disruptors dent Flutter’s market share in key markets without a radical shakeup of the customer proposition (which in fairness the online gambling sector is due for).”
Affiliate group Raketech has reported all-time high revenue in Q4 2022, supported by year-on-year growth of 149.3% in US markets.
Raketech reported Q4 revenue of €15.7m, an increase of 32.5% year-on-year.
Organic growth for the quarter amounted to 23.1%, which Raketech said was driven by an increase in revenue through its affiliate marketing assets, as well as in its software as a service (SaaS) sub-affiliation division.
Affiliate marketing generated €10.4m during the quarter, or 65.9% of total revenue, amid year-on-year growth of 16.2%.
The sub-affiliation division generated €3.5m (22.3% of total revenue) amid 53.7% year-on-year growth, while the remaining 11.8% of revenue (€1.9m) came from Raketech’s betting tips and subscription division, up 175.1%.
By vertical, casino was by far and away the biggest sector for Raketech, generating €11.5m in revenue or 73.3% of the total, amid a year-on-year increase of 24.6%.
Sports betting revenue also grew significantly by 60.2%, as the vertical generated the remaining €4.2m in overall group revenue.
Adjusted EBITDA for the quarter was €6.3m, an increase of 15.9% on the prior year, while adjusted operating profit totalled €4.3m, up 11.9%.
Those figures brought full-year revenue for 2022 to €52.6m, up 36.7% from 2021, while adjusted EBITDA hit €20.2m, up 22.4%.
Adjusted operating profit for the full year came to €12.5m, up 29.3%.
The business referred 52,295 new depositing customers (NDCs) during Q4 amid a year-on-year increase of 27.7%. For the full year 2022, Raketech referred 161,146 NDCs, up by just 1.7%.
The Nordics made up the best-earning region for Raketech in Q4, generating €6.5m or 41.3% of total group revenue. Year-on-year growth in the region, however, was a paltry 1.6%.
While generating a more modest 15.6% of total revenue, at €2.4m, the US was Raketech’s fastest growing region in Q4, as stateside revenue shot up 149.3% compared to 2021.
The Rest of the World (excluding Europe) also saw major growth at 60.9%, as it generated 39% of overall group revenue at €6.1m, making it the second largest region by revenue for the affiliate.
The Rest of Europe (excluding the Nordics), meanwhile, generated just €644,000, as revenue slipped by 5.4% compared to Q4 2021.
The firm’s US growth (149.3% in Q4 and 266.3% in FY 2022) was driven principally by businesses acquired by Raketech in 2021.
Acquired businesses included ATS Consultants Inc, which runs tipster services including Winnersandwhiners.com and Stasalt.com, as well as QM Media and its subsidiary P&P Vegas Group, which runs assets including Picksandparlays.net.
When asked whether the development of Sweden’s unregulated online gambling market was holding Raketech back, CEO Oskar Mühlbach had the following to say: “Since Sweden re-regulated back in 2019, this has been a major issue for a lot of us affiliates, but also from the operator perspective, of course.
“But we’re seeing a positive change here where the Swedish legislature is finally taking action against the black market, putting in various obstacles and sanctions potentially against the payment providers and as from May this year, also introducing new laws to get to other parts of the value chain that is supporting the black market.
“We’re finally looking positively on the development with regards to the black market in Sweden, where we hope to see that most of this volume over the next one or two years will return to the white market,” he added.
Mühlbach echoed his counterpart Michael Daly (Catena Media CEO) on the importance of the Japanese online casino market:
“We see Japan as a pre-regulated market. And we think that it’s very important for Raketech to have a significant share of revenue from pre-regulated markets. This is very opportunistic, and those markets are typically growing faster than others, and are also typically much more profitable than other markets because operators are fighting to gain market share. And once the markets regulate, we come out with pole position.”
Current outlook and trading
Raketech expects revenue (excluding any new acquisitions) to fall between €60m and €65m in 2023, driven by strategic growth initiatives aimed at expanding the reach of its existing product base.
EBITDA for the year is expected to reach between €20m and €24m, when accounting for operational costs of around €2m for the year as an effect of the company taking over Casinofeber and Infinileads following the end of the earnout period.
Free cash flow is expected to increase substantially to between €11m and €13m, including around €6m following the integration of the businesses mentioned above.
CEO Oskar Mühlbach said that would help position the business to continue investing in its organic growth while continuing to be active in M&A.
The firm also expects to continue paying dividends to its shareholders in line with its current policy, he added.
Betting operator Sportech expects to report full-year 2022 adjusted EBITDA ahead of market consensus, according to a pre-close trading update published today (24 January).
Sportech operates both physical and online pari-mutuel betting channels across 10 venues in Connecticut, and is also licensed by the Connecticut Lottery Corporation to offer sports betting under the PlaySugarHouse brand.
Shares in the business are trading some 7% higher today after it announced it had delivered “solid growth” in the second half of 2022.
The firm said that GGR, including from sports betting, continued to perform strongly, while food and beverage (F&B) revenue also delivered solid growth.
Alongside its growing revenues, the London-listed business has also been able to “significantly” reduce its group operational costs, it added.
Net cash as of the end of the year was deemed “healthy” by the operator, which it said gives the potential to return further capital to shareholders in H1 2023.
In 2022, 7p per share was returned to shareholders in cash.
“The group continues to evolve and deliver new growth opportunities,” said Sportech executive chairman Richard McGuire.
“We are strengthening relationships with our betting partners and aggressively reshaping non-operational costs to align with group scale.
“The outlook for 2023 and beyond is very positive. We will continue to discuss the future business structure with key shareholders to ensure alignment with the board on objectives and direction for the divisions and group,” McGuire concluded.
In response to the update, London-based investment bank Peel Hunt has upgraded its full-year EBITDA forecast for Sportech from £0.7m to £1m, but admitted the actual figure could be higher.
Peel Hunt also estimated that the firm ended 2022 with around £8m of surplus cash – equivalent to 8p per share in the business.
The update “should provide a supportive backdrop for exploring new opportunities,” Peel Hunt added, while reiterating its previously issued Buy recommendation for the stock and 43p per share target price.
Sportech’s latest financial report was published in September 2022 and covered the first half of the year.
Revenue to 30 June totalled £12.6m, delivering gross profit of £6.5m and adjusted EBITDA of £0.3m.
For comparison, in 2021 full-year revenue came to £22.9m, while adjusted EBITDA came in at a £1.8m loss.
The business has streamlined this year, disposing of non-core assets and focusing its resources on covering a few key areas, namely sports betting and digital lottery operations in Connecticut.
Shares in ASX-listed operator PointsBet are trading more than 15% lower today (1 September) following the release of the firm’s full-year 2022 financial results, covering the 12 months ended 30 June.
PointsBet’s share price has collapsed by more than 75% in the past 12 months, from more than A$10 in 2021 to less than A$2.50 today.
Shares are trading down despite the business recording a 48.4% increase in net win – consisting of the total wagered less the amount paid in winning bets, excluding the cost of client promotional costs – for FY22, to A$309.4m.
Despite the significant net win increase, PointsBet’s net loss after expenses also continued to widen by 42.6%, from A$187.7m in the prior year to A$267.7m.
The vast majority of net win – A$289.1m or 93.4% of the total – was generated by the sports betting vertical and from A$5.01bn in total sports wagers handled by the business, up 32.4% on FY21.
Total sports betting handle was divided at close to a 50/50 split between Australia and the US, where customers wagered A$2.54bn and A$2.45bn, respectively.
Despite the similarity in overall handle between the two regions, net win margin was significantly higher in Australia at 8.5%, giving net win in the region of A$215.4m, compared to just 3.0% in the US for net win of A$74.1m.
PointsBet chairman Brett Paton: “It is clear that North America will deliver the vast majority of regulated global gaming growth over the next decade.”
iGaming net win made up the remaining A$20.4m, or 6.6% of the total, though the vertical saw exceptionally high growth of close to 1,300% after generating just A$1.5m net win in FY21.
The number of cash active clients using PointsBet was also up significantly during the period, by 22% in Australia to 239,121, and by 67% in the US to 266,882.
US growth during the reporting period was supported by a number of new market launches and access deals signed by PointsBet.
In July 2021, the business launched iGaming in New Jersey, followed by the launch of online sports betting operations in West Virginia in August. It subsequently launched iGaming in West Virginia in January 2022.
Other launches during FY22 included online sports betting in New York, OSB and iGaming in Ontario, and both online verticals in Pennsylvania.
The business also secured market access for iGaming in Iowa and sports betting in Texas, pending the passage of relevant legislation in each state.
In the US, Illinois, New Jersey and New York proved to be the most lucrative states for PointsBet, generating A$32.4m, A$29.1m and A$12.5m in net win, respectively.
In a letter to the company’s shareholders, PointsBet chairman Brett Paton said: “It is clear that North America will deliver the vast majority of regulated global gaming growth over the next decade.
“We have established ourselves as a global gaming operator which has built incumbency in both North America and Australia.”
As of 30 June 2022, PointsBet held net assets of A$736.4m including A$519.6m in cash and cash equivalents.
The continuing operations of ASX-listed operator Tabcorp generated A$2.37bn in revenue during the financial year 2022 (12 months ended 30 June), down 4.3% on the prior-year period.
Of the total, the vast majority came from the company’s wagering and media division, which generated A$2.18bn, down 5.1%, while its gaming services segment brought in a further A$193m, an increase of 5.3%.
Growth in the gaming services segment was driven by an increase in revenue from its venue services division, which generated A$119.3m, up 20%.
Meanwhile, revenue from its regulatory services division fell by 12.2% to A$73.6m, reflecting Covid-related closures in New South Wales, where 75% of the division’s business is located.
Tabcorp said its overall revenue reduction was a result of the continued impact of the Covid pandemic during the year, in addition to a record number of racing cancellations as a result of poor weather conditions.
Group EBITDA from continuing operations – excluding the lotteries and keno division – totalled A$381.6m, down 21.7% from the prior-year period, which the business said was reflective of external impacts including Covid-19.
Tabcorp managing director and CEO Adam Rytenskild: “We’ve made an urgent start to transform Tabcorp into a competitive and growing business. We have a clear strategy and a focused ambition to grow our customer base.”
The business reported group statutory net profit after tax of A$6.78bn, including a A$6.51bn gain resulting from the demerger of its lotteries and keno business, which completed on 1 June.
This meant like-for-like net profit was around A$262m, a reduction of 2.6% year-on-year.
Following the end of the period, Tabcorp reported it had increased group revenue by 14.6% year-on-year in July, while securing digital revenue market share of 25%.
Its new TAB app – whose upcoming release is one of the business’ key priorities at the moment – has been trialled by some customers, it added, and will be launched in September ahead of Australia’s spring carnival races. The overwhelming feedback from customers on the app has been positive, Tabcorp said.
Tabcorp is targeting a growth in costs of 3-4% on a pro-forma basis in FY23, with forecast capital expenditure of up to A$150m, alongside depreciation and amortisation of A$250m-260m.
Following a strategic review of its gaming services division, Tabcorp has also decided to sell off its eBet brand, and is currently negotiating terms with a preferred bidder.
The eBet business segment focuses on gaming systems, and develops and markets a range of networked solutions for electronic gaming machines.
According to an article published today (24 August) by The Australian, former Tabcorp executives Frank Makryllos and/or Tony Toohey are thought to be behind the forthcoming bid.
The eBet business generated EBITDA of A$4.4m in FY22, at a year-on-year growth rate of 37.5%.
Tabcorp managing director and CEO Adam Rytenskild: “FY22 results reflect a disrupted period – it’s a line in the sand and the end of old Tabcorp. We’re resetting our business and culture to focus only on customers and growth. I can’t wait to roll-out our new TAB app.”
Significant events during the reporting period included the retirement of former Tabcorp managing director and CEO David Attenborough retired, who was replaced in the role by Adam Rytenskild as of 1 June 2022.
Commenting on the company’s FY22 performance, Rytenskild said: “We’ve made an urgent start to transform Tabcorp into a competitive and growing business. We have a clear strategy and a focused ambition to grow our customer base.
“The hero metric for everyone in the company is digital revenue market share, without exception. I’m determined for us to be different and to be totally obsessed with creating products and experiences that Australia loves.
“FY22 results reflect a disrupted period – it’s a line in the sand and the end of old Tabcorp. We’re resetting our business and culture to focus only on customers and growth. I can’t wait to roll-out our new TAB app.”
Rytenskild added that the business is preparing for an “exciting” spring, and that it will also release two further new TAB digital products before Christmas, including a social betting feature and a “same race multi product”.
As of the end of the reporting period, Tabcorp boasts a strong balance sheet with net debt of A$20m, excluding lease liabilities and significantly restricted cash. Undrawn facilities of A$810m provide it with the flexibility and optionality to invest in growth initiatives, it said.