The source reports that Australian sports betting operator PointsBet confirmed that the company is currently discussing the sale of its North American operations with ”multiple parties.”
Three Interested Entities:
According to the source, there are three entities interested to take over PointsBet’s North American business. Also, the company informed that it has suspended discussions with the Betr brand regarding the sale of its Australian operations. The company’s statement reportedly reads: “Consistent with commentary previously provided to our investors and the market more generally, PointsBet continues to engage in discussions regarding strategic transactions that offer the potential to add value for our shareholders.”
The company decided to sell its American operations after sustaining two consecutive years of financial losses. On the other hand, its Australian arm recorded a $600 million handle in the first quarter of 2023 resulting in 50.7 million in revenue, which was only a 3% decline from the last year’s levels, as IGB reports. The company has terminated the sales talks with Betr regarding the Australian business.
Growth Reported:
Over the same period, the operator’s North American business reportedly achieved almost $50 million in revenue standing for a 103% rise on a year-on-year basis and adding value to the expected transaction. The same applies to Point Bet’s Canadian operations, which recorded a 21% growth over the prior quarter and reached $6.1 million, according to the source.
Compensating the Loss:
But it seems that the revenue growth in the United States and Canada still cannot fully offset the loss from previous years as the company is reportedly expecting to face a loss of between $77.0m and $82.0m for the second half of the current financial year ending June 30, 2023. Points Bet is also expecting a 30% lower handle by the end of the current financial year than in H1 2023. These figures, as the source reports, have driven the company to seek ways to reduce costs and concentrate on a range of measures to achieve higher profitability rates.
Cutting Costs:
Points Bet’s statement reportedly also reads: “We recently completed a cost and efficiency review of our North American operational workforce. This resulted in the streamlining of operations and resulted in a 12% reduction in headcount. This reduction is expected to result in annualized cost savings of approximately $6m”.
The source continues that PointsBet reduced the costs of sales operations by 10.5% in the first quarter of 2023 to bring them to the $ 55.5 million mark, down from the $ 61.3 million level spent in the preceding period. But sales and marketing costs rose to $69.0m from the $67.5m spent by the North American arm the previous quarter, while staff costs rose to $26.8m from $25.5m.
Administration costs reportedly also increased to $19.7m from $18.9m. As of 31 March 2023, the company reportedly avails of $251.7m cash and discusses the three bids for its North American sale.
