On the 29th of July PointsBet Holdings ASX: PBH released their FY21 Q4 results. The ASX Bookmaker has once again delivered, with revenues soaring 182% as they continue to take over the US and Canada. Is another 100% increase in store for PBH?
PointsBet Q4 Report
PBH: A Key Player in Our Market-Beating Portfolio
After Pointsbet first came onto our radar it was an instant buy for us. Pointsbet shares have profited massively from the widespread legalization of betting in the USA. Being a first-mover in the US’s $54 Billion bookmaking and iGaming PBH has unrivaled potential.
PointsBet has the ambitious goal of achieving a 10% online market share in every state that it enters. It plans on disrupting 18 US states by the end of 2022. It doesn’t stop there as PBH also plans its launch into Canada, starting with Ontario.
The US sports wagering and iGaming market opportunity for PBH over the term of the NBC Universal partnership to 2025 is predicted to be worth at least US$12.1 billion of annual revenue.
If these numbers hold true we could expect to see a 1412.5% increase in US revenue alone over the next 4 years.
PBH Q4 Results: Share Price
Unfortunately, investors didn’t get a chance to trade on PBH’s record results as a trading halt was initiated on opening to facilitate a bookbuild. Over the course of a year, shares are up over 116%, these massive gains have dropped off, with a 27% correction in the last 6-months
PointsBet Q4 FY21 Results
PBH has highlighted:
- Strong strategic and operating momentum in Q4 FY21 and FY21 overall in both our Australian and US businesses
- Successfully completed two strategic acquisitions during Q4 FY21, which accelerates the development of our unique, in-house technology platform and product offering
- Strong pipeline of growth through H2 CY21 and CY22, with the expectation of launching in 12 US states and Ontario, Canada
- Capital raising to leverage the established business platform to take advantage of the near-medium term growth pipeline
Across the board, PBH’s numbers were nothing short of impressive, which is what we expected. We saw the group’s turnover increase 182% up to $986.1m during the quarter.
These turnover results have shown the success of their US market, where they have a ‘first movers’ advantage. In the states, we saw a massive increase of 956%. Their US turnover for Q4 was $491.3 Million. This is only set to go higher as the group plans their strategic takeover of 12 more US states, and Ontario Canada by the end of 2022.
Pointsbets turnovers unsurprisingly came out to solid bottom-line results with the group’s gross and net wins up 128% and 77% respectively representing a net win of $59.3 million. Again the real story was their US results which saw their gross winnings up 1,859%.
We did see the group Australian Net Win margins decrease by 2 basis points, although US margins increased by 0.8 basis points.
PBH continues to show strong performances with online handle market share in New Jersey of 7.8%; Illinois of 7.8%; Michigan of 4.9%; Indiana of 5.5%; Colorado of 5.0%; and Iowa of 3.1%.
Eyeing Off Canda:
PointsBet as heavily speculated is panning its move to Canada, with Ontario expected to launch sports betting by January 2022. Canada’s market has big potential with $14bn Annual illegal sports betting revenues and US$3bn in
Estimated Canadian iGaming and Sports Betting.
The group is expecting to complete its move before the end of 2022, as the Candian market opens up. Again their quick takeover will place them well as an early mover to take over large market shares.
PBH Q4 BookBuild
PBH shares went into a trading halt on the Q4 release date to facilitate a bookbuild. This was an underwritten capital raising of approximately A$400 million with entitlement and institutional offers.
The capital raise is something we foresaw during our initial investigation:
“With current cash on hand of $144.3 Million, we expect PBH to complete more capital raisings in the coming months to build capital to support their money-hungry marketing campaign, including the commitment of US$393 million over the 5-year agreement with NBC”
The Capital raising is being used to expand and solidify Pointsbets’s strong position in the exploding US sports betting and iGaming market.
Funds will be used to:
- North American marketing and client acquisition;
- Technology and product development (sports betting and iGaming);
- US market access and government licensing fees;
- Continued investment in talent and scale of operations; and
- Balance sheet flexibility.
The Capital Raising was highly successful and completed the next day.
The successful placement added a total of 21,506,682 new shares. Upon the completion of the bookbuild, the total new shares are unknown at the time of writing but we are expecting a further 23,125,000. Bringing the grand total to 44,631,682.
PBH currently has 208,049,825 shares on issue, our estimates would bring this to 252,681,507. This represents an increase of 21.5%
Working on these estimates shareholders would be diluted around 17%.
Although total ownership would be decreased we are not overly concerned about dilution at this stage. This book build brings in an additional $400 million in capital we now have ownership of and allows us to continues our aggressive growth and US land-grab which has already proven to bring substantial returns.
When Will PointsBet Begin Trading Again?
Trading halt lifted and retail rights commence trading on ASX on Wednesday, 4 August 2021.
What Does PBH’s Q4 Results Mean For Investors?
PBH’s strong Q4 results have further demonstrated the group’s ability to create massive turnover growth and the massive opportunities of the US market.
With Pointsbet looking to secure another 12 US states, and Ontario by the end of 2022, the growth is still just beginning. It seems PBH has massive potential. And with their bookbuild, the group will be well-capitalized to continue their aggressive growth strategies.
PBH Q4 Results: Prophet’s Take
The ASX Bookmaker Pointsbet has once again delivered in their Q4 FY21 results. Revenues and Winnings have grown massively. The group numbers have been strong on all accords, with plenty more growth in store.
Their $400 million bookbuilds will keep them well capitalized. We are eagerly awaiting the recommencement of trading on Wednesday, 4 August 2021. Check out our full PBH analysis here and why we chose to add it to our portfolio.