PointsBet has reported a record net win across all markets in the quarterly earnings report covering the second quarter of FY 2023.
The Australian-based legal sports betting operator announced during its quarterly earnings call on Monday that it had posted a total group net win of $72.4 million in Q2 FY 2023. This represents a new quarterly record for PointsBet and an impressive 34% year-over-year gain from the second quarter of FY 2022.
The positive result was driven by PointsBet's online sports betting site, which accounts for the overwhelming share of the operator's total net. PointsBet's sportsbook operations recorded a group net win of $61.8 million for the quarter on a total group handle of $1.45 billion — a 56% increase YoY increase from the previous fiscal year's Q2 handle of $928.9m.
"We’re now live in 14 states, plus Ontario in Canada, and we really feel the work we’ve put in over the last couple of years in the U.S. market as a new entrant is starting to pay off," said PointsBet CEO Sam Swanell in remarks made during the Monday earnings call.
On the negative side, the company reported that its cash burn had increased from $42.4 million to $54.3 million in the quarter owing to lower profit margins and elevated marketing costs due to its launch in new U.S. markets.
However, Swanell gave an upbeat assessment of PointsBet's overall direction and stated that the quarter represented an important milestone for PointBet. Having reached "operational scale" as of December 31st, the CEO said that the next six months (H2) would see the company turn EBITDA positive in Australia when the current fiscal year ends on June 30, 2023. This would be achieved largely by lowering its cash burn by an estimated 35% as compared to H1.
"As can be seen from our H1 trading results, together with the realigned NBC deal and commentary on our cash flow outlook, we believe this is an important and positive juncture for the company and for our path to profitability," said Swanell.
NBC partnership restructured to reduce PointsBet's annual marketing spend
In addition, the bookmaker also revealed that it had renegotiated its marketing partnership with NBC Universal, extending its deal by two years to August 2027. This allows PointsBet to spread out its ad spending over a longer time span and thereby reduce its average annual marketing expenditures in the U.S.
In exchange, PointsBet gave up its exclusive partnership status with the U.S. TV network, giving NBC Sports the right to sign up an additional sportsbook partner.
Meanwhile, the company's iGaming unit also reported a record net win of $10.7 million for the quarter, a 183% YoY gain over the $3.8 million posted in the same quarter of the previous year.
U.S. operations now account for nearly half of PointsBet's net win
Significantly, PointsBet’s U.S. operations now account for nearly half of the group's overall net win. The company's U.S. division reported a total net win of $28.4 million for the quarter, a 68% YoY improvement (Q2 2022: $16.9 million), which represents 46% of its total net win.
The operator's U.S. sportsbook registered a quarterly net win of $19.9 million (2022: $13.2m), a 51% YoY improvement. Meanwhile, the sports betting handle soared to $735.5 million, a massive 75% YoY gain over the $419.6 million registered in the same period last year.
"The December quarter has been another period of progress for the company, achieving record net win across the group as well as each region," said PointsBet CEO Swanell on Monday.
Swanell was also keen to indicate that Ohio delivered "the highest number of first-time bidders of any state launch" while adding that "these early results highlight the importance of being on the starting line in order to improve state launch effectiveness."
This strong U.S. performance could add fuel to PointsBet's ongoing discussions with Rupert Murdoch's Betr sportsbook start-up regarding a possible sale of its Australian bookmaking operations.
Restructured NBC partnership
By extending its sportsbook partnership with NBC Universal by an additional two years, PointsBet can now spread out its committed ad spend with NBC's various broadcasting and streaming services over the next five years instead of over the next three years as per the previous arrangement.
The operator now expects to be able to reduce its overall U.S. marketing expense for the current fiscal year to $90 million as compared to the $118 million it spent in the previous FY22.
PointsBet will continue to be able to promote its online sportsbook app on various NBC platforms, including Peacock, CNBC digital, USA Network, and Comcast’s EffecTV.
Ontario operations continue to gain momentum
PointsBook opened its new headquarters in Ontario, where operations are headed by Scott Vanderwel, CEO for Canada.
It reported a total net win of $3.5 million in Ontario. This represented solid performance from its online sportsbook, which recorded a quarterly net win of $1.5 million on a handle of $56.8 million, a sensational gain of 284% from the previous quarter.
Meanwhile, the operator's online casino app registered an even higher net win of $2 million, a no less formidable gain of 128% quarter-on-quarter.