Shares in BetMakers Technology Group fell by 15% after the company reported negative adjusted EBITDA of A$27.9m for financial year 2023 (12 months ended 30 June).
While the B2B technology supplier saw a 3.7% year-over-year revenue increase to A$95m, primarily due to enhanced performance in the global betting services division, it still posted a loss of A$38.8m.
BetMakers’ results come after a period of reorganisation and restructuring.
In May, the company implemented a $20m cost reduction programme, which involved reducing the headcount from 568 employees to 440.
The firm also saw several management changes, including the appointment of Jake Henson as the new CEO.
BetMakers said revenue growth was boosted by the launch of its Next Gen wagering platform and managed trading service technology.
The expansion of content distribution rights and partnerships in global markets also contributed.
Its global betting services division accounted for A$43.1m of total revenue, up 6.1% on 2022.
Global tote remained its largest division, although this was down 3.5% year-on-year to A$45.3m.
Betmakers’ global racing network added A$6.7m to the firm’s total revenue, an increase of 61% year-over year.
This growth was attributed to its new fixed-odds offering in New Jersey.
Henson described the year as transformative: “In FY23, BetMakers undertook an operational restructure based on costs and efficiency, while delivering key objectives around the development of our proprietary technology and making significant progress towards the goal of generating positive operating cash flow.”
Henson said financial year 2024 has been identified “as a period to aggressively drive further simplification to the operating model and to retire legacy systems in order to establish a solid foundation for growth”.
BetMakers aims to reduce and manage the cost base to under A$110m this financial year and would try to advance opportunities with clients such as Norsk Rikstoto, Penn Entertainment and Caesars Entertainment.
It forecast low double digit revenue growth in financial year 2024 and unrestricted cash reserves of at least A$20m throughout the year.
Henson emphasised that the bolstered board and management team, coupled with a well-defined strategic roadmap for expansion and profitability, meant he could approach 2024 with a sense of “confidence and enthusiasm”.
However, investors did not share the same sentiment, leading to a substantial 15.4% plunge in the company’s shares.
This decline adds to recent challenges, as its stock has suffered a cumulative loss of almost 48% over the past six months.
Shares in sportsbook supplier BetMakers are trading higher today (31 May) after the company revealed it would reduce headcount from 568 to 440 this year.
The reduction in staff numbers is set to take place as part of a series of ongoing cost-cutting measures expected to be completed in the next quarter.
The supplier first announced the measures in January this year, which were “designed to affect a strategic reset of the business, with a clear focus on operational discipline, specifically a return to positive cashflows, cost efficiency and optimal capital management,” according to non-executive director Nick Chan.
The review followed on from the appointment of former SG Digital head Matt Davey as BetMakers’ president and executive chairman.
According to an update published today, the business has since undertaken a wide-ranging operational review resulting in significant reduction of both operating overheads and staff costs.
The company’s annualised costs based on the first half of its financial year 2023 (six months ended 31 December 2022) came to A$91.5m, consisting of A$68m in staff costs and A$23.5m in operating overheads.
Those annualised figures are set to reduce to a total of A$70m as of the first quarter of its financial year 2024 (three months ending 30 September 2023), a reduction of 23.5%, with the new costs set to consist of A$50m in staff costs (down 26.5%) and A$20m in operating overheads (down 14.9%).
The reduction in cost is primarily driven by a restructuring of BetMakers’ global operations and technology, it said.
As part of the cost reduction, the business expects to continue making cuts to its headcount this year, from a total of 568 employees as of the end of 2022 to 440 as of Q1 FY24, a reduction of 22.5%.
In addition, the restructure has seen the business streamline and consolidate its key software offerings, while leveraging technology monitoring and reporting capabilities, it said. Those changes, in turn, have allowed BetMakers to streamline its operational infrastructure.
“The changes made aim to provide the business with a clear path to profitability while also providing a more streamlined operating structure to maximise future growth opportunities,” said CEO Jake Henson.
Executive chairman Davey added: “The company is focused on delivering operational efficiencies, simplifying our global operating model, and positioning the company for profitable growth.
“Management and our global team have delivered on this promise, and we now expect the company to be well positioned to drive operating leverage as we expand our revenue base.
“Importantly, this restructure will allow increased focus on our core platform and products, improving the benefits and value we can deliver to our domestic and international customers.”
In the company’s H1 FY23 results, covering the six-month period ended 31 December 2022, BetMakers increased its revenue by 7.5% year-on-year to A$46.7m, helping narrow its comprehensive loss for the period from A$27.2m in the prior year to A$17.6m.
Shares in BetMakers have surged more than 6% after the company announced a new round of leadership changes and a renewed commitment to generating positive cash-flow over the coming months.
The management moves include the departure of North American CEO Christian Stuart, effective 6 April, as well as the promotion of Chelsey Abbott to the executive team as chief people officer.
In January, the ASX-listed supplier already reshuffled its executive team, with Jake Henson (pictured) being promoted from COO to CEO.
Commenting on Stuart’s departure, Henson thanked him for his service and commitment and wished him all the best for his next challenge.
Stuart added: “It has been a pleasure working with the team and advancing the interests of the company here in the US. I am confident we will see the company go from strength to strength as the US market expands.”
Aiming for positive cash-flow
Meanwhile, BetMakers said it remained committed to moving “the business into a position of positive cash-flow generation” and positioning itself to capitalise on organic and inorganic growth over the next 18 months.
Although BetMakers reported a 7.5% increase in revenue for the first half of its 2023 financial year, which ended on 31 December 2022, the company reported an adjusted EBITDA loss for the period of A$15.4m.
Moreover, BetMakers share price has fallen by more than 73% during the past 12 months.
However, the new management team has pledged to focus on reducing and normalising costs in the second half of this year.
The company has relocated its headquarters from Newcastle, New South Wales, to Melbourne, where the CEO and other executive members are based.
Las Vegas-based executive chairman Matt Davey said he was pleased to see the progress the team had made both internally and with key industry stakeholders.
“Moving forward, we will continue to execute on market expansion and a relentless focus on optimising our business,” he concluded.