PointsBet aims to curb US losses in 2023 by focusing on existing markets and pursuing high-value bettors. In the short term, that means passing on upcoming state launches. Long-term, however, the goal is long-term, sustainable success for the Aussie import.
According to executives during a recent fiscal earnings call, the course correction is expected to normalize its EBITDA loss to between $52 and $55 million in the latter half of fiscal 2023. The shift represents a significant drop from the $100 million lost during the same period last year.
However, PointsBet’s share price fell more than 10% to a 52-week low after the company update, signaling a skeptical market.
Swanell Explains Massachusetts Exit
Less than a week before the H1 call, PointsBet made headlines when it abandoned its planned Massachusetts sports betting launch.
Pulling out of the second-largest US state to launch sports betting might be questionable to some.
However, on the call, Pointsbet CEO Sam Swanell explained the strategy:
We’ve got enough of total addressable market to focus on. We need to prove as we are the unit economics and the path to profitability. And so that’s a sort of a prudent decision, a prudent balanced decision.
Importantly, Swanell didn’t rule out entering Massachusetts at a later date.
If Massachusetts eventually its doors to iGaming, the possibility of a PointsBet Casino in the Bay State would probably be too good to resist.
Exit Followed Restructuring of PointsBet’s NBC Universal Deal
Swanell also touched on PointsBet’s restructured NBC Universal deal, which extended the partnership from 5-7 years.
The rejig lowered this year’s required ad spend by 42% to $58 million.
The deal also provides PointsBet discounted access to NBC’s local markets. It also means that the sportsbook is no longer the exclusive odds provider of Sunday Night Football.
During the half, we executed on our locally focused U.S. advertising strategy, utilizing our exclusive and heavily discounted access to the powerful media properties of NBCU.
The CEO touted the deal as a tool to help optimize ad spending toward long-term, high-value customers.
However, despite the openness, Swanell declined to comment on talks with Betr about selling PointsBet’s Australian business.
That said, during the company’s fourth-quarter call for fiscal 2022, Swanell noted the outside interest positively.
The amount of third-party strategic interest shown in our company demonstrates we have built a very valuable business. This gives us significant optionality around how we take the business forward to maximize value for our shareholders.
PointsBet Looks to “Super Users” for Long-Term Sustainability
PointsBet’s North American revenue jumped 98% year-over-year, though this wasn’t enough to appease investors. The reception for the earnings report was chilly.
The company credits at least some of that jump to efforts to target “super users.” According to the operator, super users spend more, cost less to acquire, and require less effort to convert from sports bettors to online casino users.
To that end, the company measured a 199% revenue bump for targeted users. The increase in active clients and related revenues, plus more efficient promotions, equaled a net revenue boost of 124%.
PointsBet Betting Handle Increases 40% Year Over Year
According to the latest earnings report, PointsBet earned $2.17 billion in US sports betting handle during H1 of fiscal 2023.
For PointsBet, those numbers represent a 40% jump over the same period last year. In addition to the increase, the company’s hold dropped from 6% to 4.9%. Marketing expenses also fell by 17%.
Of the over $2 billion handle, 56% belonged to live bettering. However, PointsBet’s in-house Odds Factory tech drove 80% by the end of the half.
Notably, PointsBet’s online casino added 31% in net revenue during the half — an increase of over 200%.
These results were driven by ongoing improvement in our ability to convert and retain cross-sold sports bettors and by the growth of the casino-only cohort.