The PointsBet Holdings Ltd (ASX: PBH) share price has just opened 52% higher after the betting company announced a major partnership with NBCUniversal.
PointsBet also released its full-year results and unveiled plans to raise capital. The company was on track to release its results next Monday but the partnership with NBCUniversal fast-tracked the timeline.
Transformational partnership
In what PointsBet is calling a ‘transformational’ deal, it has entered into a five-year media partnership with NBCUniversal, the American media and entertainment conglomerate.
As part of the deal, PointsBet will become the official sports betting partner of NBC Sports in the US. This will provide PointsBet access to broadcast assets which span 184 million viewers, the largest sports audience of any US media company, and digital assets which span 60 million monthly users.
Under the media partnership, PointsBet will have exclusive gameday integrations across NBC Sports Regional Networks, be the exclusive partner of the NBC Sports Predictor app, and have premium placement and an agreed pricing structure across NBC Sports’ television and digital assets.
PointsBet said these assets will act as the cornerstone of its marketing strategy. It is committing a total marketing spend of US$393 million, which will be allocated in progressively increasing amounts over the five-year deal.
In terms of consideration, PointsBet has entered into a subscription agreement with NBCUniversal, under which NBC will be issued a 4.9% stake in PointsBet ordinary shares (subject to shareholder approval) and 66.88 million options maturing in five years.
Ordinary shares will have a deemed price of $6.50, while the options will be exercisable at $13 per option. Interestingly, as an alternative to exercising the options, NBC can choose to receive $105.3 million (the value of the options) in cash.
PointsBet said the equity consideration underpins the strategic partnership with NBCUniversal and aligns their interests.
PointsBet’s FY20 results
Here are the headline figures from PointsBet’s full-year report (some of which have already been revealed in previous announcements):
- Turnover of $1.52 billion, up 103% on the prior year
- Net win of $82 million, up 191% on the prior year
- Net revenue up 193% to $75.2 million
- Normalised EBITDA loss of $37.6 million, compared to a loss of $32.7 million in FY19
- Statutory loss of $41.5 million, a slight improvement from a $41.9 million loss in FY19
Despite the increase in revenue, PointsBet extended its losses after heavily invested across marketing, employees and technology to support its growth.
Total expenses jumped by 68% to $83.5 million, driven by a near doubling of employee benefits expenses and a 42% increase in marketing spend.
At the end of the FY20, PointsBet had $144.4 million cash sitting on its balance sheet, bolstered by a $122 million capital raising in November 2019, and no debt.
Capital raising
Along with the partnership and full-year results, PointsBet also announced it intends to launch a ~$300 million capital raising after-market on Wednesday, 2 September – at which point shares will enter a trading halt.
PointsBet said the raising will likely be structured as a pro-rata entitlement offer and a placement, with the offer price to be determined at the time of the announcement next week.
The company expects the entitlement offer ratio will be 1 new share for every 6.5 shares held on the record date.
What happens next?
“There remains a once in a lifetime market opportunity in the United States and PointsBet has already taken significant steps towards capitalising on this opportunity,” the company said.
PointsBet didn’t provide much in the way of a trading update but noted it expects to launch retail and online operations in Illinois in the first quarter of FY21, with Colorado and Michigan to follow. The company is also working towards launching an iGaming product.
Keep your eyes peeled for PointsBet’s capital raising announcement next week. In the meantime, grab a copy of the free investment report below.
