BlueBet blames marketing spend for fall in revenue

| By Marese O'Hagan
ASX-listed sports betting operator BlueBet reported revenue of AU$24.7m (£13.8m/€15.6m/US$16.5m) in its half-year 2023 results, a decline of 5.1% year-on-year.
BlueBet

BlueBet attributed this drop in revenue to an increase in marketing investment and shifts in the market regarding sports.

For the six months, advertising and marketing expense totalled at $11.4m. This was 67.5% higher than in H1 2022.

Despite the drop in revenue, Bill Richmond, CEO of BlueBet, said that the company had seen success in Australia and made progress in its US entry during the six-month period.

“The BlueBet team delivered a strong performance in H1, remaining focused on delivering the strategy and on providing an excellent experience for our customers in the face of increased market competition,” said Richmond. “As a result, we continue to gain market share in Australia and make strides in our US market entry.”

In May 2022, during its third quarter results, BlueBet announced the launch of its ClutchBet brand across the US. Richmond says the roll out of the brand is still ongoing.

“In the US, the roll out of ClutchBet continues, with first bets taken in Iowa in August as we head towards an expected go-live in Colorado in March,” he continued. “We have had strong early interest for our white-labelled sportsbook-as-a-solution B2B offer in the US, with discussions underway with multiple potential B2B partners.”

Half-year results

Turnover for the half-year was $280.5m, up by 6.1% year-on-year.

After looking at payouts – which are gross of goods and services tax (GST) – at $244.2m, the gross revenue for the six months totalled $36.2m, largely stable with the AU$36.4m generated in half-year 2022.

Promotions given, which totalled at $9.0m, brought the revenue to $27.1m. This is the revenue before considering GST.

Following GST at $2.4m, the revenue came to $24.7m.

Cost of sales at $11.6m – a stable figure year-on-year – resulted in a gross profit of $13.0m.

Earnings before interest, tax, depreciation and amortisation (EBITDA) hit a loss of $10.5m for the period. Within the EBITDA expenses, which include administration and IT, advertising and marketing expenses were the highest of the quarter.

In terms of locations, the EBITDA consisted of $4.6m from Australian operations, $3.8m in US operations and $2.1m in corporate EBITDA.

After depreciation and amortisation expense at $889,000 and finance costs totalling AU$22,000, the profit before income tax expense was $11.3m.

Two final sources of income – income tax expense and foreign currency translation – brought the total comprehensive loss for the six months to AU$9.8m – an exponentially high increase of AU$9.1m year-on-year.

Australian operations

A total of $27.2m in revenue came from BlueBet’s Australia operations, down by 4.9%.

Operations in Australia also contributed almost all the turnover, hitting $279.3m. Bets on thoroughbred racing made up over half of this at $143.5m, followed by greyhound racing at $70.1m. Sports hit $41.2m in turnover, while harness racing generated $24.5m.

Per channel, most of the total turnover came from iPhone play, which was $157.9m – up by 6.5%

BlueBet said its “strong performance” was aided by a growth of active customers during the half-year. By the end of the second quarter of FY23, the number of total active customers was 59,632, 32.3% higher than in Q2 2022.

H2 outlook

Marketing is set to take priority for BlueBet in the second half of 2023. The company plans to increase its investments in marketing technology such as Salesforce and Other Levels.

BlueBet also predicted that it is set to return to operating cashflow positive for its Australian business in the next half. For H1 2023, its net cash from total investment activities was a loss of $6.3m.

Turning to the US, BlueBet said it aims to go live in Colorado and continue focusing on the licensing process for Louisiana and Indiana.

Subscribe to the iGaming newsletter