PointsBet Shares Fall on Q4 Cash Burn

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PointsBet Holdings [ASX:PBH] shares fell on Friday after the stock reported heavy operating cash outflows in Q4 FY22.

Year-to-date, the PBH share price is down 50% and down 70% over the past 12 months.

ASX:PBH stock prices 2022 chart

www.tradingview.com

Pointsbet Quarterly instils confidence in investors

Let’s take a look at the company’s financials.

Here are the highlights:

– Turnover up 32% to $5 billion

– Gross win percentage up 0.6% to 9.9%

– Gross win up 41% to $497.8 million

– Total net win up 48% to $309.4 million

Despite the top-line growth, PBH continues to burn a lot of cash.

Cash outflows from operating activities were $60.8 million in Q4 and $197.5 million in FY22.

All up, PBH recorded negative free cash flow of about $290.6 million in FY22.

The company did end the period with a cash balance of $519.6 million, which was up $44.4 million since the quarter began due to large equity raises.

PointsBet also announced a pro-rata deferred bonus equity option for eligible shareholders on 20 June, creating the opportunity to raise $150 million over the next two years.

Operations

PointsBet said that, in the US, it received $687.9 million in sports betting turnover (amounts wagered by clients before winnings or losses) — which is an increase of 40% compared to the previous period.

$41.9 million on gross wins for the sports betting system came through — increasing again, this time by 30% on previous totals.

For net wins, the system recorded a total of $30.4 million, a 72% increase.

In Canada, turnover reached $16 million, gross wins came to $0.7 million, and total net wins were $0.2 million.

Cash Active Clients reached 7,239 with $7 million brought in, less marketing expenses.

ASX:PBH ket financial metrics

Source: PBH

PointsBet recorded 266,882 Cash Active Clients, 67% more than the previous period, and a 7% increase quarter-on-quarter.

For the quarter, in-play handle was 63%, a significant jump from the same time last year, which reached 46%.

For the company’s iGaming segment, a record quarterly net win of $6.7 million was reported after PHB launched in Ontario and Pennsylvania.

An ITF Tennis streaming segment launch added 870 more games for clients.

In June, SIG Sports became PBH’s largest shareholder, paying $94.2 million for a 12.76% stake. PointsBet believes that in SIG Sports it has found a long-term partner who can help it scale in the key North American market. As part of SIG’s involvement, PBH also entered an exploratory agreement with Nellie Analytics, where Nellie Analytics is set to provide exclusive sports data analysis.

PBH also upgraded its MLB product, introducing ‘lightning bets’ and ‘live, same game parlay’.

ASX:PBH trading data 2022

Source: PBH

Betting on EVs

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Lithium stocks have been experiencing some corrections this year, which leads our experts to believe there may be a smarter way to play the EV theme from now on.

Learn about the ‘smarter way’ by getting to know lithium’s little brother.

Regards,

Kiryll Prakapenka,
For Money Morning

About Kiryll Prakapenka

Kiryll Prakapenka is a research analyst focusing on investigating the biggest trends in investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from the University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding…

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