Good morning. In today’s Earnings Extra:

• PointsBet says the new arrangement with NBC spreads out marketing commitment.

• XLMedia suggests sports and gaming affiliate revenues are on the up.

Peacock tail.

PointsBet’s new deal

The deal with broadcaster NBC has been extended by two years, with the remaining marketing commitment now spread over seven.

Commercial break: PointsBet said its marketing commitment over the course of the remaining four years of its deal with NBC is US$269m after it renegotiated the deal with the broadcaster, with the maximum spend each year reduced to US$56m. CEO Sam Swanell said the new arrangement was “mutually beneficial” and marked a move to more targeted advertising.

• Swanell insisted a “dollar spent on any other platform doesn’t match what we can get from NBC”.

• PointsBet has relinquished its exclusivity around NBC Sports’ nationwide assets.

• Recall, in September last year BetMGM and NBC announced a marketing partnership around the NFL.

• Eric Foote, chief strategy officer in the US for PointsBet, said the NBC marketing effort was moving away from nationwide brand building to “highly focused’ targeted ads. 

The news came with the company’s FY23 H1 trading update where it said net win for the group rose 34% YoY to A$103.4m. US marketing expenses this financial year will be US$90m, down 24% from US$118m in FY22. In Q2, marketing fell 17% to US$24.5m. US net win rose 68% YoY to A$40.6m; iGaming net win was up 183% to A$15.2m.

• Micro data point: PointsBet said its version of micro-markets, Lightning Bets, accounted for 20% of all in-play betting, which itself was worth 53% of all handle.

Turning circle: “This is the turning point,” Swannel said of the trading performance, which included a return to growth in Australia (up 9%) and a 192% rise in net win in Canada to A$5m. “With operational scale now having been reached, the impact of our growing revenues will begin to be seen in H2 as cash burn reduces by ~35% from H1,” Swanell added.

• Asked about market shares across the 14 states where PointsBet is now active, Swanell said PointsBet was “focused on net win growth”. 

• But he added that “if the market is outpacing us because of spending on marketing, that is not the end of the world”. 

• He noted PointsBet was now “focused on certain jurisdictions” and its efforts were not apportioned equally.

No comment: Swanell said the company couldn’t comment on the bid from Australian rival Betr, which came in December. Asked about how integrated the Australian business was with the North American arms, he said the operations “share a common code base”.

• See Deal Talk from earlier this month on what a sale of the Australian business might mean for PointsBet’s US ambitions.

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XLMedia update

The digital media company forecasts a close to $74m increase in revenue for 2022.

In line: XLMedia expects FY22 consolidated results to be in line with expectations and deliver a ~55% rise in adj. EBITDA of $16.1m-$16.6m, with revenues rising 11% to $73.7m. US sports revenues grew 72% to $54m, while group revenues from sports and gaming were up 27% to $69.6m.

• Revenues from casino and bingo activities were down 33% to $15.6m and XL said it was continuing to rebuild its casino affiliates websites with “old tail revenues” declining further during 2022.

• XL will publish its FY22 results at the end of March.

Macau update 

Visitation numbers rise 297% YoY to 451k for Chinese New Year but remain way below 2019 figures. 

Rabbit hole: Figures from the Public Security Police show that the number of visitors who made the trip to Macau for Chinese New Year is far lower than the 1.2 million tourists who visited the jurisdiction for CNY in 2019. 

• Visitors from mainland China made up the bulk of the tourists at 58.7%, while Hong Kong accounted for 36.5% of the total.

• Hotel occupancy rates were 85.7% and daily average visitor numbers were 64.4k. Figures for 2022 also showed that average hotel occupancy rates were 34.8%, which compares with 91% in 2019.

Operators such as Las Vegas Sands have expressed confidence that Macau will rebound strongly in the coming months as China reopens, but the team at B Riley cautioned against  “longer-term stock valuations maintaining pre-Covid levels”.

• Concerns include volatile geopolitics, shorter concessions with new capex requirements and uneven VIP/premium mass player conversion.

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Calendar

• Feb 1: Entain Q4 trading statement

• Feb 2: Evolution, Penn National, Boyd Gaming

• Feb 7-9: ICE London

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