BetMakers Technology Group Ltd: Revenue Momentum Gathering, Upgrading Base Valuation

Revenue momentum gathering, upgrading base valuation

BetMakers Technology Group (ASX:BET) is a B2B software services business focussed on servicing the wagering market and race operators globally. The company’s technology and systems are used by every racing authority in Australia and most of the major online bookmakers. BetMakers is not a gaming company, it is a technology company that is facilitating commercial opportunities for racing authorities, rights holders, and corporate bookmakers while providing an improved racing experience for punters. The company is now taking its technology to the US market where fixed odds horse wagering is in its infancy. BET delivered on its FY20 guidance for revenue of ~$9m and positive EBITDA. The company reported total revenue of $9.2m, up 34% on the previous corresponding period and EBITDA before non-cash/one-time items of $0.83m, a
$2.9m turnaround year on year. This was ahead of our forecast for EBITDA of $0.54m and reflected the company’s tight cost regime throughout the year. The company reported an acceleration of revenues in June with both its content and integrity and wholesale wagering divisions posting respectively a 75% and 52% jump in annualised run rate. We have taken the better than expected cost base and the momentum in revenues into account in our FY21 and FY22 forecasts. Our base case DCF valuation has increased to $0.60/share, fully diluted (previously $0.39/share), with $0.32/share in the terminal value. On the current share count, this equates to a valuation of $0.77/share.