PointsBetCEO Sam Swanell confirmed that the group has been in talks with multiple parties about the possible sale of its US businesses.
Swanell confirmed during the company’s Q3 earnings conference call that media reports that a possible sale of the US division was on the cards were true and that discussions had already begun.
According to reports, PointsBet has hired New York’s Moelis & Company for guidance. Reports suggest that the bank will explore all options including the sale of its US sports betting operation. Rumors continue to circulate about the future of the firm.
PointsBet US sales talks are underway
Swanell, in an address to investors, confirmed that there were discussions taking place. “In response media speculation of 27th December 2022 PointsBet informed that it was engaged in discussions regarding potential transactions involving the sales of its Australian Business Points but has terminated these particular discussions but remains in conversation with other third parties that have expressed interest in purchasing our Australian business.
“There is no guarantee that any of the above-mentioned discussions will result in a binding deal.” PointsBet confirms it is in compliance with disclosure obligations and will inform the market of any relevant developments.
In a statement, the company also stated: “The Company is currently in discussions with multiple parties regarding potential transactions which would include part or all our North American operations.” Certain negotiations have reached a good stage.”
Investors asked him why the company wanted to explore alternative strategic options. He replied that it would need additional capital to move forward.
Swanell said: “We have built a valuable company, we are pleased with the market conditioning we’ve achieved, and we have clearly a growth strategy that we deliver on.” We are aware that we work in a market that is rapidly changing. We have a solid balance sheet, but we recognize that we will need additional capital at some point. We continue to evaluate all these credible strategic opportunities very carefully.”
The CEO was unable to discuss the specifics of any sales, but he acknowledged that certain discussions were progressed. He did not give a timeline for any development, instead explaining that he will update the markets when the time is right.
PointsBet pulled out of the Massachusetts online sports betting market in the eleventh-hour, despite receiving the required approvals for a Category Three Online License. The company said that it already had an important TAM to aim for.
PointsBet’s latest quarterly report shows that its cash flow has dropped by A$88.7m since Q3 and it now only has $251.7m. This means that the company will run out of money within a year.
Management dismissed these concerns by explaining that the company’s revenue growth would compensate for any cash problems, and that “it is all going in the right direction.”
This information was revealed as PointsBet announced its Q3 results for FY2022/23. The total revenue reached A$106.6m. This is a 39% increase year-over-year, and 3% up sequentially.
Total global handle was A$1.4bn. This is up 4%, generating A$91.2m revenue, which is up 28% year-over-year. Igaming revenue grew 181% year-on-year, reaching A$15.4m.
The US grew its revenue by 103% and pushed global growth to A$49.8m. The A$49.8m was split into A$38m for sports betting and A$11.8m for igaming. The revenue from sports betting doubled year-on-year, while igaming revenue increased by 115%.
In Canada PointsBet reported 28k active clients in the third quarter, and revenues of A$6.1m. This revenue was generated by sports betting, which generated A$2.4m. Igaming contributed A$3.6m.
Swanell stated that there are no plans to expand further in the US following the withdrawal from Massachusetts, especially with a potential sale already underway.
Swanell stated that the TAM already covers 35% adult US residents: “That TAM we have with 35% is very large.”
We want to continue improving the net win growth and manage that relationship with cost. “We don’t see any launches in near future.”
Swanell summarized the performance of the quarter by saying: “Strong Momentum is continuing in our North American Business and the Australian Business is outperforming the Market in an Industry facing Headwinds.”
Our North American business is growing. We went live in Ohio on January 1, our 14th US State, and now we serve 35% of US adults.