The Pointsbet Holdings Ltd (ASX: PBH) share price has taken off in early trade, up 9.09% at the time of writing while many other ASX growth shares are in the red.
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Why is the PointsBet share price spiking?
This morning, the company announced it had signed an agreement in Australia to become the exclusive wagering partner for Fox Sports AFL (Fox Footy) during the 2020 season. According to PointsBet, this highlights management's continued deliberate approach to targeting media assets to deliver efficient client acquisition and increased betting volumes.
Additionally, the company also provided a net win trading update for the fourth quarter of FY20. As previously announced in its third-quarter update, PointsBet's Australian trading business achieved a record net win month in February 2020, and again in March 2020.
PointsBet considers net win as the dollar amount received from clients who placed losing bets less the dollar amount paid to clients who placed winning bets, less client promotional costs such as money-back offers and bonus bets. So in other words, gross profit.
PointsBet revealed this positive trend is continuing in Q4, with the Australian trading business achieving net win of $18.2 million for the period from 1 April to 25 May 2020 (unaudited). And despite the closure of the major sporting leagues, the United States business recorded net win of $0.3 million for the same period.
Group year-to-date net win from 1 July 2019 to 25 May 2020 came in at $67.2 million (unaudited). For context, PointsBet achieved full-year net win of $28.9 million in FY19, up 181% on the prior corresponding period of FY18.
The company attributed the continued strong performance of the Australian trading business to 3 primary factors:
- The shift of gambling spend online due to retail venue closures;
- PointsBet's year-over-year racing turnover growth outperforming other wagering service platforms – according to Racing Victoria's 4-week average ending 10 May 2020; and
- The improvement in PointsBet's overall product offering, leading to a greater share of wallet from existing clients.
What now?
As has already been announced, 2 of the major Australian sporting codes will soon be resuming their respective 2020 seasons – NRL on Thursday, 28 May and AFL on Thursday, 11 June. The resumption of both the NRL and AFL seasons expands PointsBet's product offerings and is certainly welcome news for the revenue and growth of its Australian business.
As for the US, timing still remains unclear as to the start of the major sporting leagues. However, both the NBA (basketball) and MLB (baseball) are looking to resume their seasons in July. Meanwhile, the PGA (golf) has already announced the commencement of the PGA Tour on 11 June 2020.
According to PointsBet, its US business has continued to keep clients engaged during the shutdown period with the offering of additional wagering contingencies that are not impacted by COVID-19, along with its free to play offering.
In the meantime, the company reported a cash position of $149.4 million and no debt as of 31 March 2020, putting it in a strong position to continue to weather the COVID-19 storm.
