PointsBet (ASX: PBH) shares tumbled 15% after the company cut its full-year revenue and earnings guidance by 6-7% amid customer softness, macroeconomic headwinds and unfavourable betting outcomes.
Australian betting turnover down 34% to $591.5 million
Total net win flat year-on-year at $69.9 million
1H25 revenue up 6% to $124.4 million
1H25 Total gross profit up 11% to $65.0 million
1H25 Total normalised EBITDA loss of $3.3m (vs. -$13.3m a year ago)
Full-year EBITDA guidance cut to $11-14 million vs. prior guidance of $11-16 million (7.4% downgrade at the midpoint)
Full-year revenue guidance cut to $260-270 million vs. prior guidance of $280-290 million (7.0% downgrade at the midpoint)
The below topics have been answered by Group CEO Sam Swannell.
EBITDA margins: “We are now delivering positive EBITDA margin and will continue to maximise our operating leverage and improve gross profit efficiency to strongly expand this margin.”
Regulatory changes and impact: “These impressive results have been achieved despite an increase in the Victorian point of consumption tax on July 1, 2024. PointsBet remains active in encouraging the wagering industry, governments, sports bodies, and media to promptly resolve sustainable and pragmatic advertising reform.”
Canada market performance: “H1 total net win growth of 14% versus the PCP. However, Q2 results were negatively affected by customer-friendly results, impacting both sports and casino, with an estimated $3.9 million in net win variance.”
Impact of favorable sports results on profitability: “Total Q2 group net win was $69.9 million and was negatively impacted by circa AUD 3.9 million due to some very customer-friendly results in Canada across NFL and slots. This NFL season has been the most customer-friendly since the launch of regulated online sports betting, with the highest rates of favorites winning in nearly 20 years.”
Consumption taxes: “In Q2 FY25, PointsBet paid $29.1 million in GST, point of consumption tax, and product fees to Australian governments and racing and sports bodies. This represented 48.1% of our net win for the quarter.”
EBITDA guidance and its impact on margins in FY25 and beyond: "Gross profit is largely on track. The difference is just the way we're getting to that gross profit figure ... Revenues off a little bit, some negative variance in H1, some VIP softness ... But it's nearly all been made up for in that improved gross profit efficiency ... As it relates to EBITDA margins going forward, no change. We’re now delivering positive EBITDA margins in calendar year 2024, will keep improving ... We won’t see a cost blowout and will keep improving those gross profit margins."
Federal government spending and potential regulatory changes: "It does seem less likely now that anything’s going to happen in the shorter term... Some of the rumored outcomes from last year have been put on hold because of logical and reasonable feedback... We’d like it cleared up full stop. We think there’s a logical solution."
Major sports exposures and impact of AFL product fee changes: "Broadly speaking, AFL is one of the biggest ones ... NBA, NRL, NFL, soccer, tennis ... Lots of consultation going on ... We are rational and PointsBet is the perfect example of a company customising its strategy around the cost model in the Australian market ... I’d be surprised if there’s a really material adverse outcome."
Canada’s breakeven timeline and Ontario market growth: "We said that towards the end of the financial year, we’d expect some months to be tipping over. We’re still hopeful that can be the case ... No change to our expectation that FY26 can be that first year where we move into profitability ... Additional provinces coming online around that time will be very helpful."
Revenue guidance downgrade due to VIP softness and strategy shift: "It’s not a change in strategy ... Negative variance of $4 million in the first half, some VIP softness in both jurisdictions, partially due to macroeconomic factors ... But I’d rather be downgrading revenue and keeping gross profit relatively stable versus upgrading revenue and dropping gross profit."
Marketing expense allocation between Australia and Canada: "We haven’t disclosed that ... But broadly speaking, both Australia and Canada will spend in line with what they spent last year ... It’s not our intention to cut costs ... Spending profile is very similar to last year."
FY25 cash flow expectations and end-of-year cash balance: "We finished the half at $15.3 million ... Given the updated guidance, we probably fall a bit short of what we said was cash flow neutral for the full year, which would have meant finishing at around $28 million ... It’ll be a bit short of that, but not far off it."
This article was generated with the support of AI and reviewed by an editor.
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