BetMakers posts 4% dip in Q3 revenue as share price tumbles
ASX-listed supplier reiterates commitment to cost-cutting measures and aims to have an operating cost base reduction of 10% in H2 compared to H1 for full-year 2024
BetMakers Technology Group posted a 4.1% year-on-year (YoY) dip in revenue to A$22.3m (£11.7m) in the three months to 31 March 2024 (BetMakers’ Q3), with the operator attributing this to “soft conditions” in the Australian betting market.
As part of its Q3 report, the supplier said that its year-to-date revenue for the nine months to 31 March 2024 is A$73.7m, representing a 5.3% YoY increase.
Cash receipts for the quarter were up 16.8% YoY and included a payment of A$3.75m received from its Betr partnership.
The supplier also confirmed that while it registered an EBITDA loss of A$2.5m for the quarter, this was a 39% increase from the A$4.1m EBITDA loss posted for the same period in the previous year.
The firm’s gross profit significantly decreased from A$15.7m in Q3 2023 to A$13.2m in Q3 2024.
Following the publication of the results, BetMakers’ share price dipped by 10.7% to A$0.125.
BetMakers also confirmed that as part of its ongoing cost-cutting programme, staff costs came down by 25.6% from A$14.4m to $10.7m.
Other costs for the supplier included A$100,000 for strategic and leave costs, A$500,000 for the Punting Form deal, and A$250,000 for prior-period employment taxes.
Overall, the supplier said that operating expenses for the period were down 8.3% YoY to A$26.5m, which resulted in a positive operating cash flow of A$1m compared to a negative cash flow of A$5m in 2023.
The firm explained it is committed to further reducing operating cash flow losses through Q4, which it believes will better position itself for positive cash flow.
Total cash on hand for the supplier as of 31 March 2024 was A$30m, with unrestricted cash of A$18.9m.
As part of the Q3 report, BetMakers shared updates on new and existing deals and partnerships it is working on.
In the quarter, the firm tied up a five-year deal with PA Betting Services to deliver a new international racing platform.
It also tied up deals with Kambi and Gaming Innovation Group to supply its racing solution.
In April, the firm soft launched Caymanas Park’s digital solution and expects to go live with TonyBet in Q4.
BetMakers noted its rollout agreement with Caesars in the US is progressing, with more to come in the coming weeks.
Finally, the firm’s Norway tote system is in the last stage of testing and the go-live date is expected to be in the coming months.
BetMakers expects these agreements and rollouts to contribute roughly A$5m in annualised revenue over the balance of full-year 2024 and through full-year 2025.
Regarding the quarter’s results, executive chair Matt Davey said: “We are continuing to execute our strategy of enhanced operating discipline with the tightening of our operating expenses and focus on higher margin, capital light revenue growth and profitability.
“There is substantial progress being made across the entire business, with new partnerships and new customers, as well as previously announced deals now going live, which are expected to contribute to the fourth quarter and beyond.”
Following the conclusion of Q3, BetMakers announced the acquisition of assets from RACELAB Global.
BetMakers is paying A$1.5m to the racing supplier for its range of racing wagering products and tech, including ProForm informatics. The deal includes a clawback clause of up to A$500,000, dependent on key customer novation in the next 30 days.
Alongside that announcement, BetMakers shared that it will now pay the remaining special deferred amount in the Punting Form deal, penned in October 2022.
The board has elected to pay the remaining A$2.5m in the form of A$1m in cash and A$1.5m in Punting Form shares.
Finally, BetMakers confirmed the key changes to its partnership with Betr following the startup’s confirmation that it is to merge with Australian rival BlueBet.
Betr will continue to use BetMakers’ solution under a reduced service arrangement until customer migration, which is anticipated to occur on or around 31 August 2024. Should the migration not be complete by 1 October 2024, Betr will pay BetMakers a reduced fee of A$500,000 monthly from 1 October until customer migration is complete.
Betr has also agreed to pay BetMakers A$2.25m by 14 June and an amount between A$1.5m and $2m by 13 September.
Speaking on the supplier’s future, BetMakers CEO Jake Henson said: “There are several positive catalysts and a record pipeline of potential opportunities in train, all of which should continue to position BetMakers for an exciting future.
“New contracts and partnerships are rolling out, which should drive revenue growth. We are adding new capabilities to our offering, we have restructured less profitable contracts, and the development of our market-leading NexGen platform continues to progress.”