The PointsBet Holdings Ltd (ASX: PBH) share price is moving higher today after announcing its first-half result for FY22.
PBH share price
Revenue, losses and cash burn all accelerate
Currently, the PointsBet share price is up 3.93% to $3.70.
Key financial results for the half ending 31 December include:
- Revenue of $139.1 million, up 85% year-on-year (YoY)
- EBITDA loss of $126.0 million, up 82.6% YoY
- Net loss of $146.3 million, up 71% YoY
Despite achieving a big jump in revenue for the half, PointsBet’s net losses accelerated.
The business is investing huge sums of cash upfront to acquire new customers, particularly in the nascent North American market.
To illustrate the magnitude of the spending, PointsBet’s marketing expenses alone account for 89% of its revenue.
Overall, the company burnt through $94 million of cash during the half.
Fortunately, Pointsbet has $524 million of spare cash in the bank.
At the current burn rate, Pointsbet has 2.5 years of cash remaining. In that time one would hope it becomes profitable.
Alternatively, it will have to return to investors for more funds.
Pointsbet Australia
PointsBet Australia increased its total bets by 27% after onboarding an extra 90,000 clients.
With Australia reaching sufficient scale, management believes the region will reach EBITDA profitability in the next six months.
Marketing spending will be wound back, therefore increasing earnings for the second half.
But it will have to be wary of Tabcorp Holdings Limited (ASX: TAH), who announced last week it expects to ramp up investment.
Pointsbet North America
PointsBet’s investment in North America is like swimming against the tide.
Despite spending more on promotion than it received in revenue, its market share has gone backwards.
Of the seven North American states it currently operates in, five lost market share. Meanwhile, only one increased its competitive position.
It looks like Shaquille O’Neil is the only one profiting from PointsBet North America.
Positively, PointsBet ranked second amongst its peers for user experience.
Notable aspects of the PointsBet app include exclusive features which, unlike many competitors, it has built on its own tech stack.
“PointsBet was set up to build a customised, modern in-house technology platform specifically tailored for the North American Market”
What next for the PointsBet share price?
It’s been a tough start to the year for shareholders, with the PointsBet share price down 46% over the past two months.
Management provided no guidance for the FY22 results in August.
But if management can get the Australia operations EBITDA positive, this will be a major milestone and give the market confidence management can do the same in North America.
