PointsBet shares slide as losses mount

| By Zak Thomas-Akoo
PointsBet reported that year-on-year losses increased 42.6% to AU$267.7m (£157.8m/ €182.6/ $183.7) from AU$187.7m, with the company's share price falling more than 11% after the release of the report.
PointsBet

Group revenue rose 52.3% from $194.7m in H1 2022 to $296.5m in the same period the previous year. However, most of the additional revenue was swallowed up by the increased cost of sales which increased to $174.9m from $107m – leaving a 2022 gross profit of $121.6m compared to $87.6m in Q2 2021.

The market responded negatively to the company’s H1 financial report, with the business’ share price falling over 11% since the report was released.

While all listed expenses have increased year-on-year – a reflection of the business’ growth during that period – sales and marketing were the largest single expense. In June, the business made two senior marketing appointments as part of a wider plan to re-orient the company’s marketing strategy away from “promos and blitzes”.

The rise of the marketing spend from $170.7m to $236.8m is reflected in the large amounts that the company is investing in the US market as more states regulate sports betting markets. PointsBet US revenue rose 122% year-on-year during the period to $93.9m.

Despite Pointsbet’s high marketing spend, it is still relatively more disciplined than some of their competitors. PointsBet CFO Andrew Mellor defended the company’s strategic decision in this regard:

“The reporting period saw aggressive marketing spend from our US competitors. However, we maintained our disciplined and ROI focused approach to marketing and promotional spend,” he said.

“A pullback in competitive marketing and promotion aggression in the US, will lead to greater share of voice for PointsBets’s continued disciplined marketing investment, to provide greater client exposure to our ever improving market leading product and service offering.”

US expansion

The business continues to expand in the US, with announcing just today that the Kansas Racing and Gaming Commission have awarded the business a provisional sports wagering certification, which will allow the business to offer bets on the day the market launches on 1 September 2022.  

CEO Sam Swanell pointed to PointsBet’s Australian division as a sign that the group can be successful in achieving growth in mature markets:

“In Australia, the trading business achieved year-on-year net revenue growth of 30% and its third year of annual EBITDA positivity. These strong performances demonstrate PointsBet’s capability to grow market share in an advanced market where we compete successfully against global groups such as Flutter and Bet365.”

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