PointsBet Holdings Ltd. ((AU:PBH)) has held its Q2 earnings call. Read on for the main highlights of the call.
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During the recent earnings call, PointsBet Holdings Ltd. displayed a mixed but generally positive sentiment. The company highlighted significant improvements in EBITDA and a strong performance in the Australian market, alongside notable growth in its Canadian customer base. However, these positives were tempered by challenges such as customer-friendly results that affected the net win and a revenue guidance downgrade due to various factors.
Improved EBITDA Position
The company reported a significant improvement in its H1 EBITDA position, showing a $10 million boost compared to the previous corresponding period (PCP). Despite a loss of $3.3 million, PointsBet is projecting a full-year EBITDA profit of $8.2 million for 2024, marking a substantial turnaround.
Record Australian Performance
Australia emerged as a strong performer for PointsBet, achieving new Q2 records. The net win increased by 2% to $60.5 million, and gross profit surged by 16% to $28.9 million compared to the PCP. Additionally, the total number of Australian cash actives rose by 8%, underscoring the market’s robust growth.
Growth in Canadian Market
The Canadian market also showed promising signs, with a 49% increase in the 12-month rolling cash active clients compared to the PCP. H1 total net win grew by 14%, driven by a stronger mix of higher-margin Slots games, highlighting the market’s potential for further expansion.
Gross Profit Margin Efficiency
PointsBet achieved improved gross profit margin efficiency, particularly in Australia. The efficiency gains were attributed to a mix of high-cost racing and lower-cost international sports, helping to strengthen the company’s overall profitability.
Impact of Customer-Friendly Results
Despite the positive aspects, PointsBet faced challenges due to customer-friendly results, which negatively impacted the group’s net win by approximately $3.9 million in Canada, especially affecting NFL and Slots outcomes.
Revenue Guidance Downgrade
The company updated its revenue guidance to a range of $260 million to $270 million. This revision was attributed to several factors, including negative variance, VIP softness, and delays in casino product launches, which have weighed on expected revenue.
Canadian Sports Net Win Impact
Customer-friendly results in Canada also had a significant impact on the sports net win, suppressing it by approximately $2.9 million, with an additional $1 million impact from Slots games.
Pending Regulatory Changes
PointsBet is observing pending regulatory changes at the federal level, which could potentially impact operations. Although these changes seem less likely to occur in the short term, the company remains vigilant in monitoring the regulatory environment.
Guidance and Future Outlook
PointsBet provided forward-looking guidance with a narrowed EBITDA forecast for FY ’25, ranging from $11 million to $14 million. Despite challenges, the company is optimistic about achieving sustainable growth, driven by investments in technology and marketing, and maintaining strong gross profit efficiency. The revenue guidance was adjusted to $260 million to $270 million due to customer-friendly outcomes and softness in the VIP cohort.
In summary, PointsBet Holdings Ltd. presented a balanced outlook in its recent earnings call. While the company faces certain challenges, particularly in the Canadian market, its strategic improvements in EBITDA and strong performance in Australia provide a solid foundation for future growth. Investors should keep an eye on how PointsBet navigates regulatory changes and continues to adapt to market conditions.
