The Pointsbet Holdings Ltd (ASX: PBH) share price has reacted favourably to its update about the December 2020 quarter.
Pointsbet December quarter
Using the second quarter of FY20 as the comparison, Pointsbet’s turnover increased by 303% to almost $1.2 billion in the second quarter of FY21. This broke down as a 193.9% increase of Australian turnover to $543.3 million and a 482.4% rise in the US to $654.9 million.
The ‘gross win’ is the dollar amount received from clients who placed losing bets less the dollar amount paid to clients, excluding the cost of pricing promotions. Pointbet’s total gross win jumped 189.2% to $83.4 million, with the Australian gross win rising 264.4% to $75.5 million and the US gross win falling 2.6% to $7.9 million.
The total gross win margin declined from 9.7% to 7%. The US win margin dropped from 7.2% to 1.2%.
The net win, which includes promotion costs, was up 148.1% to $44.6 million. This was up 239.7% in Australia to $49.8 million, but in the US there was a net loss of $5.1 million.
That left the net win margin at 3.7% for the business, with an increase in Australia from 7.9% to 9.2% and the US net win margin sinking to a negative 0.8%.
Pointsbet’s number of active clients went up 106.6% to 211,100. Australian active clients grew 76.5% to 143,000 and US active clients rose 222.1% to 68,100.
Pointsbet Q3 trading update
There has been a reversal of fortune in the US in the first 24 days of January 2021. Overall turnover was $237.7 million, split roughly 50/50 between Australia and the US.
However, the total net win was $22.9 million for the first few weeks of the second half of FY21, with $9.2 million coming from Australia and $13.7 million from the US.
Pointsbet said that as it looks to grow across its business across the US and utilise its deep sports wagering experience to risk manage those clients whose average bet size is significantly above the median, volatility across reporting periods can occur.
Summary thoughts
Pointsbet is growing quickly and the partnerships it has signed could help the business grow into a much bigger entity over the next few years. Is it a buy today? I suppose it depends how optimistic you are about the assumptions with Pointsbet. I think it could be worth a small ‘bet’ today and then perhaps accumulate more on strategy success.
However, gambling shares aren’t my preferred type of businesses that I like to invest in. Instead, ASX growth shares like Redbubble Ltd (ASX: RBL) or Pushpay Holdings Ltd (ASX: PPH) appeal to me more.
Instead of Pointsbet, I suggest getting a free Rask account and accessing our full stock reports. Click this link to join for free and access our analyst reports.
