Pointsbet cash burn accelerates despite record wins
Gaming group Pointsbet’s cash burn accelerated in the December quarter, despite growing the money it made from customer bets by more than a third and extending its partnership with American mass media outlet NBCUniversal.
In an investor presentation on Tuesday morning, the Melbourne-born company said its total net income — winnings from customers’ losing bets minus money paid to customers with winning bets — rose to US$103.4 million in the three months ended December 31 dollar is up 34 percent from a year ago.
However, cash burn increased to $75.7 million, from a negative cash flow of $60.7 million in the September quarter, which was a result of marketing costs and lower profit margins, with a large portion of revenue coming from sports betting in contrast higher margins came from race betting.
Shares of the $450 million company tumbled 12.4 percent to $1.48 a share as of 1:00 p.m. AEDT.
Looking at its profits, Pointsbet posted a record total US net profit of $40.6 million, up 68 percent from the same period last year, and a record Australian net profit of $57.7 million , an increase of 9 percent. Its online casino offering iGaming also achieved a record net profit of $15.2 million, up 183 percent.
Group chief executive Sam Swanell said the improvement in earnings was due to a return on years of investment in the United States, which is now its largest market.
“We’re now in 14 states, plus Ontario and Canada, and we really feel that the work we’ve put into the US market as a new entrant over the last few years is starting to pay off,” he said.
Pointsbet, which launched in the US in January 2019, defended the marketing and distribution costs of its expansion last year after posting losses for the second straight year in August. The company increased sales and marketing expenses to $67.5 million in the December quarter from $54.7 million in the September quarter.
However, Swanell said the company’s US marketing spend would fall to about $90 million this year, compared to $118 million in the previous fiscal year, after extending its existing partnership with NBCUniversal by two years to August 2027 and dedicated marketing spend has been expanded for the remaining two years of the original agreement to now four years.
https://www.smh.com.au/business/companies/pointsbet-cash-burn-accelerates-despite-record-winnings-20230131-p5cgpe.html?ref=rss&utm_medium=rss&utm_source=rss_business Pointsbet cash burn accelerates despite record wins