Smarkets turns first profit since 2019 following significant downsizing last year
Major cost cutting measures led to betting exchange and sports betting operator securing a profit in 2023, as CEO champions business for “returning to its roots”
Smarkets recorded pre-tax profit of £2m during 2023 as the sports betting exchange delivered a huge 111.3% swing into the black after a £17.7m loss in 2022.
The company generated revenue of £21m for 12 months to 31 December 2023, up 16.1% year on year (YoY) from the £18.1m recorded in 2022.
Of the revenue total, £15.9m came from the operator’s SBK sportsbook brand, up from £14.3m in 2022, in what was a record year for the vertical.
As per the filing with Companies House, Smarkets said 2023 was spent “heavily focusing” on the SBK app as a “primary growth product”.
The business said it aims to make the SBK app one of the “top 10 products” in the UK, and pointed to improved bet builder, sign up, betslip and boosts implemented during 2023 as key drivers for growth.
The betting exchange product saw revenue decline from £6.7m to £5.5m YoY.
Smarkets also paid out £411,000 worth of bonuses to customers, down from £3.0m in 2022.
Three-quarters (76%) of Smarkets’ 2023 revenue was derived from operations relating to its Malta licence, while the UK accounted for 22% of the group’s revenue – down significantly from 96% in 2022 – while other jurisdictions contributed 4%.
The business said Q4 2023 saw it ramp up focus in Ireland and Sweden.
It also holds licences in Colorado and Indiana in the US.
The increase in revenue came despite a decrease in monthly active users last year, which fell 23.8% YoY to 37,108, against 48,670 in 2022.
Cost cutting measures and restructuring were key to the firm’s swing to profit for 2023, with bosses pointing to a 60% reduction in annual marketing spend which did result in actives declining.
During the year, the company reduced its headcount from 140 to 91, leading to a 47.2% reduction in administrative expenses from £27m to £14.3m.
Overall, Smarkets said it was able to secure a 3% gross revenue increase in tandem with a 40% reduction costs.
On keeping a tight cost control in place, Smarkets noted: “Financial discipline will continue to be paramount and, while we intend to increase our marketing spend, this will align with the revenue position of the business.
“We anticipate further declines in active customers and revenue on Smarkets due to a market decline in our core customer group, alongside the increased regulatory pressures of affordability checks that have and will continue to impact the sports betting industry.”
CEO Jason Trost praised the company’s ability to grow despite such significant downsizing, remarking the business was “returning to its roots”.
He said: “2023 marked a reset year for Smarkets. By the end of 2022, we reviewed our operations and downsized our team in response to changing economic conditions. The new year brought fresh challenges, with high inflation and increased living costs.
“It is a testament to our heritage as a lean, bootstrapped organisation and our talented team that we are able to grow alongside a significant reduction in our cost base.”
“I am proud that Smarkets is returning to its roots as a lean organisation that is laser-focused on bringing our customers the best price and best product experience.”
Trost added: “It is a testament to our culture and the quality of our employees that we have been able to rebuild so quickly, while maintaining revenue growth.
“Our commitment to reforming the betting industry remains unwavering, and we are looking forward to taking major steps forward towards this vision in 2024.”