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  • It’s a big day of news for bookmaker PointsBet (PBH), which released its full-year results, announced a five-year deal with NBC, and told investors to gear up for a capital raise
  • The digital-centric sports betting player, run by industry magnate Sam Swanell, managed to nearly double its revenue in FY20 while improving its loss margin by one per cent
  • It also inked a major U.S. media deal, giving it exposure to 184 million viewers and over the next five years in exchange for a US$393 million (around A$540.17 million) marketing spend
  • Amid the news, PBH also told investors it wanted to raise around $300 million through a proposed entitlement offer and placement, set to be finalised next week
  • The three big announcements sent the billion-dollar company’s share price soaring on Friday
  • PointsBet shares were up a whopping 64 per cent in intraday trade, bringing company shares to $12.30 on the ASX — an all time share price high

It’s a big day of news for bookmaker PointsBet (PBH), which released its full-year results, announced a five-year deal with NBC, and told investors to gear up for a capital raise.

Financial results

The digital-centric sports betting player, run by industry magnate Sam Swanell, managed to nearly triple its revenue in FY20 while improving its loss margin by one per cent.

All up, PointsBet brought in over $75 million in revenue over the financial year — a 193 per cent increase on FY19’s $25.62 million.

In addition, on a statutory basis, the bookmaker tabled a $41.5 million loss, which is a slight improvement on the previous financial year’s $41.9 million loss.

Over FY20, the PBH group increased its active clients by nearly 40 per cent, while bringing its net win — that’s all of the income it receives after winnings are paid out — to $82.1 million, which is a 191 per cent jump on the previous corresponding period.

Of course, shareholders will have to play the long game if they want to see a dividend down the line — the annual loss means a per-share-payout is still a while away.

Speaking to its operational highlights, PointsBet talked up its U.S. expansion strategy. During the financial year, the group launched programs in Iowa, Indiana, Illinois and Colorado, while it secured market access to seven other states.

In addition, the bookmaker prepared for the launch of iGaming — online betting for games and events —across Michigan, New Jersey and West Virginia.

However, in addition to its FY20 results, PointsBet also announced a significant overseas contract today.

NBC partnership

The bookmaker has inked a “transformational” five-year partnership with U.S. media giant NBC.

Under the new media deal, the company will become NBC Sports’ official sports betting partner — a move that will give it access to more than 184 million viewers.

To support the contract, PointsBet has committed to a US$393 million (around A$540.17 million) marketing spend. This will be dished out in increasing allotments over the deal’s five-year term.

Speaking to the deal, PoinstBet Chief Sam Swannell said the NBC partnership would also give the company access to digital assets spanning 60 million monthly active users.

“These assets will act as the cornerstone of our marketing strategy and combined with our in-house technology and products, as well as our talented and experienced team, will deliver outstanding client acquisition and retention efficiency as we scale rapidly over the next five years,” Sam stated.

In addition, NBCUniversal will subscribe for a 4.9 per cent stake in PBH, along with nearly 67 million options set to mature within five years, subject to shareholder approval.

The deal means PointsBet has “an exclusive right to certain pre-game, post-game and in-game promotional enhancements and integrations on certain NBC Sports’ national and regional television and digital platforms”.

“We are excited to begin this partnership with PointsBet, which will deliver unmatched sports betting engagement opportunities across multiple platforms,” David Preschlack, President of NBC Sports Regional Networks and Executive Vice President of Content Strategy at NBC Sports Group, told the market.

“Looking ahead, we’re also excited about the significant activation opportunities that will come to fruition as sports betting continues to proliferate across the U.S.,” he continued.

Show me the money

Following the financial results and news of the NBC deal, PointsBet told investors to prepare for an upcoming capital raise.

So far, details of the raise are still being finalised, but the bookmaker outlined the rough structure of the proposed offer in an announcement today.

As it stands, PBH expects to conduct an accelerated renounceable pro-rata entitlement offer and a placement.

Breaking it down, this means the offer will take place over a very short window, where shareholders are able to trade their right to participate in the offer on the market. They’ll also be able to subscribe for shares based on their current holding.

PBH wants to launch the offer after market close next Wednesday, September 2, where it’ll also enter a trading halt. Shares are expected to resume trading on an ex-rights basis by September 9.

At this time, the sports betting company will wait until the offer is officially announced to disclose the offer price. However, it expects it’ll shareholders will be able to subscribe for one new share for every 6.5 they already held by the record date.

In addition, PBH wants just the entitlement offer to come with one free attaching option for every two shares already held.

Currently, those options are intended to have a $13.00 exercise price — that’s double the average daily volume-weighted average price (VWAP) over the 20 days up to and including August 26. The options’ expiry date is pencilled in for September 30, 2022.

All up, Pointsbet expects to nab around $300 million under the offer — but it reserves the right to raise more or less when the offer gets underway.

There’s no guarantee the offer will go ahead, or that the terms will remain the same, but further details should be released early next week.

What’s to come?

PointsBet’s announcements today are underpinned by its strategy of U.S. expansion, an area the company believes will be a key market in years to come.

At the start of FY20, PointsBet had won sports wagering access in four U.S. states. Now, the bookmaker has operations over 13 states and head offices in Colorado and New Jersey.

Looking ahead, PointsBet believes the U.S. iGaming and sports betting market will be worth more than US$12 billion (around A$16.49 billion) in 2025.

Beyond that, when the sports betting sector in the U.S. reaches maturity, Goldmann Sachs forecasts it will be worth around US$27 billion (about A$37.11 billion). On top of that, the iGaming market has an expected valuation of US$30 billion (approximately A$41.23 billion) when it matures.

The big three announcements sent the billion-dollar company’s share price soaring on Friday.

PointsBet shares were up a whopping 64 per cent in intraday trade, bringing company shares to $12.30 on the ASX — an all time share price high.

PBH by the numbers
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