Shares in Betmakers Technology Group Ltd (ASX: BET) have gained a staggering 62% over the past eight weeks.
This recovery follows the rejection of a $4 billion acquisition proposal for the wagering arm of Tabcorp Holdings Limited (ASX: TAH).
With the unsuccessful attempt out of the way, investors have now shifted their focus towards the company’s FY21 results, which you can read about in detail here: Betmakers (ASX:BET) share price bolts off on FY21 results.
BET share price
FY21 highlights
Here’s a quick refresher on Betmakers’ FY21 results.
Revenue came in at $19.5 million, up a huge 127% on FY20. From this, around $2 million came from the recent Sportech acquisition in the first 14 days after completion.
The group’s net loss widened, however, to around $17.5 million for FY21. This was largely the result of a much higher share-based compensation expense.
If you use cash flow from operations minus capital expenditure (capex) as a proxy for free cash flow, it looks like Betmakers delivered negative free cash flow close to $4 million in FY21.
Future outlook
Based on the month of July, Betmakers is now on an annualised run rate in excess of $70 million per year.
The future growth story remains within the US, where recent legislation changes have meant that fixed odds betting has become legal in various states.
Betmakers isn’t a bookmaker similar to Pointsbet Holdings Ltd (ASX: PBH), but rather provides the backend data that feed into these platforms. So, it might be in a more unique position where there’s less competition compared to the customer-facing side of the industry.
At the end of FY21, Betmakers had $120.6 million of cash on its balance sheet.
Time to buy Betmakers shares?
Provided Betmakers passes your ethical filters, there seems to be some decent upside potential if it can continue to execute in the US.
At 56x FY21 sales, the market might have priced this opportunity in. But then again, it could continue to grow much larger than the market is anticipating.
I don’t have a strong view on Betmakers as I haven’t done a discounted cash flow analysis to get a better idea of its intrinsic value.
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