Reduced costs help cut adjusted EBITDA loss at BetMakers in Q3
For the three months to 31 March, revenue hit AU$22.3m (£11.7m/€13.7m/US$14.7m). This is 4.1% lower than the $23.3m BetMakers reported in Q3 of last year.
BetMakers put this down to soft Australian trading results. It also notes the impact of slightly delayed delivery of key international deals with clients outside of Australia. As such, it expects full-year revenue growth to be closer to mid-single digits.
However, in terms of growing its business long-term, BetMakers is optimistic. It says that domestic Australian revenues now account for less than approximately 25% of its total revenue.
Key highlights in recent months include a five-year partnership with PA Betting Services to deliver a new international racing solution. It also agreed to deliver Gaming Innovation Group’s (GiG) racing solution and penned a new deal with Kambi Group.
Elsewhere, a Norway tote system is now in its final testing stages. BetMakers has signed a 10-year agreement and has an expected go-live date in the coming months.
In the US, BetMakers says its roll-out with Caesars is progressing. An embedded tote solution is now live in four Nevada venues, with over 20 more expected to launch in the coming weeks. On this, BetMakers says it is now also live in Iowa.
CEO Henson talks up “exciting” future for BetMakers
These deals have the potential to represent approximately $5.0m in annualised revenue, subject to successful implementation. As such, CEO Jake Henson said this puts BetMakers in place for an “exciting future”.
“There are several positive catalysts and a record pipeline of potential opportunities in train, all of which should continue to position BetMakers for an exciting future,” Henson said. “New contracts and partnerships are rolling out which should drive revenue growth.
“We are adding new capabilities to our offering, restructured less profitable contracts, and the development of our market leading NexGen platform continues to progress.”
Cutting costs in Q3
BetMakers did not go into full detail on its performance in Q3. However, it did shed more light on the impact of its restructure plan, which launched in May 2023 as a way to reduce costs.
This has already helped the business in previous periods, including H1, and continued to do so in Q3. Staff costs alone were 25.6% lower year-on-year at $10.7m, while other operating expenses were cut by 9.4% to $4.9m.
Cost of goods sold increased 21.2% to $9.2m. However, BetMakers says this is temporary and reflects the scale-up to prepare for migration of new environments, ahead of its NextGen platforms launching. Once NextGen platforms go live, BetMakers expects to realise substantial cost savings here and across other IT expenses.
While higher cost of goods mean gross profit fell 15.9% to $13.2m, operational savings led to a reduction in EBITDA loss. For Q3, adjusted EBITDA loss amounted to $10.7m, some 25.6% less than in the previous year.
Furthermore, net cash from operating activities in Q3 hit $1.0m. This is in stark contrast to the $5.0m loss reported last year.
“The benefits from our transformation programme continue to contribute to significantly reduced operating costs,” Henson said. “This, combined with a much more streamlined operating model, have ensured the foundations are in place to achieve sustainable and profitable growth.”
Where is BetMakers at for the year?
Looking at year-to-date, revenue in the nine months to 31 March was $73.7m, up 5.3% on the previous year.
Expenses are down as part of the cost reduction programme while adjusted EBITDA improved from a loss of $4.1m to a positive of $2.5m.
BetMakers adds that it continues to focus on reducing the cost base. It is targeting a 10% operating cost base reduction in H2 FY24 compared to H1.
“We are continuing to execute on our strategy of enhanced operating discipline with the tightening of our operating expenses and focus on higher margin, capital light revenue growth and profitability,” executive chair Matt Davey said.
“There is substantial progress being made across the entire business, with new partnerships and new customers, as well as previously announced deals now going live, which are expected to contribute to the fourth quarter and beyond.”
BetMakers signs off on Racelab Global acquisition
After Q3 concluded, BetMakers also announced the acquisition of assets from Racelab Global. An international supplier of racing wagering products and technologies, Racelab counts ProForm informatics among its assets.
BetMakers is paying $1.5m to take ownership of the assets. However, there is a clawback clause of up to $500,000, dependent on key customer obligations within 30 days of closing.
On closing, BetMakers said the deal represents a “highly strategic acquisition”. It adds race form, preview and statistics technology to its ecosystem, as well as proprietary fixed-odds pricing technology and associated algorithms.
Betr deal set to conclude
In other news, BetMakers is set to end its platform and services agreement with Betr. This comes in the wake of the latter’s acquisition by BlueBet. Announced on 11 April, BlueBet Holdings entered a binding asset sale agreement to acquire the Betr wagering business. The deal is due to complete by July.
This merger will see Betr customers leave the BetMakers platform and migrate to BlueBet. As such, this means there is no longer a need for the BetMakers partnership.
Under the termination agreement, Betr will continue to use BetMakers’ service under a reduced service arrangement until migration completes. This is due by the end of August this year.
On the flip side, however, conclusion of this deal allows BetMakers to work with more operators in Australia and New Zealand.
The agreement gave Betr exclusivity over certain premium services across the two countries. However, BetMakers will now be free to offer such services to other customers.