BetMakers Technology Group Ltd - FY22 Maiden EBITDA Profit, Strong Outlook for FY23

Business model

BetMakers provides racing, wagering and integrity data, software and hardware products to bookmakers, racing authorities and rights holders globally. These include the supply of an international tote and other betting product engines, and services for bet types, including fixed odds, that monetise horse racing for stakeholders. BetMakers operates in more than 30 countries globally with greater than 225 racing partners, 60+ online wagering operators and processes over $15 billion of wagering turnover annually. This, combined with BET’s 15- year exclusive deal to operate fixed-odds horse wagering in New Jersey, positions the company to be a significant player in the transforming US wagering market.

Operating result better than forecast

BET delivered its maiden full-year operating (EBITDA) profit (adjusted for one-time and non- cash items) of $2.2m, a $5.1m turnaround on FY21 and ahead of our forecast for a loss of $0.85m. Adjusted NPAT was a loss of $1.0m, which was an improvement on the $2.2m loss reported a year ago. Revenues of $91.68m were previously reported at the fourth quarter and were up 371% on the previous year. The result reflects both the benefit of the Sportech acquisition and the company’s execution of its stated ambition to expand its technology platform globally. We have maintained our forecasts for FY23 and FY24 and note that while the company has given no guidance, it has stated it is broadly comfortable with consensus estimates for the year ahead. Note that FY24 includes $20.2m in revenues from NJ fixed- odds wagering and $21m in revenues from the NTD consortium.

Base-case DCF valuation is $2.28/share (up from $2.11/share)

We have rolled our model to the new financial year and, as a consequence, our base-case DCF valuation is now $2.28/share (previously $2.11/share) on the current share count and $1.99/share fully diluted for all in-the-money options and performance rights on issue. Our forecasts capture estimates for the broader US fixed-odds wagering opportunity, the NTD wagering opportunity, and assumptions for growth for the Global Racing Network division which will service the Penn National Gaming deal and other data and vision opportunities. We see key catalysts as evidence of take up of fixed-odds wagering in New Jersey and other US jurisdictions, the rollout of the NTD wagering platform in Australia and New Zealand, and growth in GRN revenues from Penn National Gaming and other ventures.