Q2 proved to be a productive quarter for BetMakers, with several major clients renewing contracts. These include the Selangor Turf Club in Malaysia and Argentina Jockey Club. Both renewed with BetMakers’ Global Tote division.
BetMakers also renewed with Meadowlands in New Jersey and ZeTurf in the Netherlands. In addition, the BetMakers’ digital division renewed with William Hill UK and PointsBet Australia.
These deals, BetMakers executive chair Matt Davey said, played a major part in the Q2 revenue rise.
Cost reduction strategy continues at BetMakers
Davey also praised the operator’s wider performance and its reduction of EBITDA loss. This was the result of the cost reduction strategy launched last year.
BetMakers announced the scheme in May 2023 to reduce operating overheads and save money across the BetMakers business. This followed BetMakers warning it faced negative growth in FY23 due to outstanding investment commitments.
The streamlining of BetMakers, Davey said, has simplified its operating model to two key segments: Global Betting Services and Global Tote. This, he added, provides a more effective and efficient way to manage and report on the business.
“We are continuing to execute on our strategy of growing the top line, lowering operating expenses and moving towards profitability, as evidenced by this quarter’s results,” Davey said.
“I am pleased to say that we again signed new customer agreements and extended contracts with key partners, which is expected to aid BetMakers’ growth going forward.
“In addition, the company has continued to drive down the cost base with a key focus on the significant cost items of staff and core infrastructure costs.”
BetMakers edging closer to positive EBITDA
Taking a closer look at the results for the three months to 31 December 2023, the headline figure is revenue. With this 10.0% higher year-on-year, it will settle nerves about the impact of cost reductions.
BetMakers published a snapshot of its financial performance in Q2 and did not go into full detail on its performance.
It did however, reveal costs of goods sold increased 17.0% to $9.1m. However, such was the impact of revenue growth that gross profit was 6.3% higher at $16.1m.
As for other costs, staff expenses were cut by 29.2% to $12.3m and other operating spend by 27.7% to $5.0m. This resulted in negative underlying EBITDA of $1.2m, although this was 86.8% less than the $9.1m loss posted in Q2 of 2023.
Other figures of note include $1.5m in capitalised staff costs and a $2.0m debtor shortfall. However, these were partly offset by $1.6m in positive balance sheet movements. As such, net cash used in operating activities was down from $5.9m to $2.6m.
“We remain incredibly excited about the future and realising many of the benefits from our restructure programme that has already been initiated,” Davey said. “We expect to see continued improvement come through in the third quarter through reduced outflows and a continued focus on costs.
“I am happy management has achieved the operating efficiencies we were looking for. I’ll now turn my attention to growth opportunities both organic and external.”
Could cost cutting continue?
While Davey said that BetMakers is heading in the right direction, he said the operator will continue optimisation of its cost base during the second half of FY24.
“To be clear, as we look towards future growth opportunities, management will maintain our current momentum and continue to optimise our cost base through FY24,” Davey said.
CEO Jake Henson seemingly agreed, saying the task is “not finished”.
“BetMakers has continued to simplify its operating model and sharpen its focus moving forward,” Henson said. “While we have made significant progress over the last 12 months, we’re conscious that the job is not finished.
“We remain very focused on achieving positive underlying EBITDA and operational cash flows, to provide a sustainable foundation for future growth.”