Thank you for standing by and welcome to the PointsBet Holdings Limited H1 FY23 financial results briefing. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Sam Swanell, Group CEO. Please go ahead. Good morning. I would like to thank you for joining us today about PointsBet's half year results. As you know, I'm usually joined by our CFO, Andrew Mellor. Unfortunately, Andy fell ill and is now self-isolating. I will take you through all the results. Also on the call to answer questions are Johnny Aitken, Andrew Catterall, and Scott Vanderwel. All figures in this presentation are in Australian dollars unless otherwise stated. I will give a brief overview of the half and will then open to questions from analysts and investors. First, and most importantly, we continued our global commitment to responsible gambling. This is an important issue for the long-term sustainability of the industry, and we take our obligations in the area very seriously. Turning to slide five. These results show, firstly, that our North American strategy is working. Revenue growth is up and costs are going down. The Australian business continues to deliver. Most of all, we have built a very valuable company. We expect a normalized EBITDA loss of between AUD 77 million and AUD 82 million for the second half of FY23. This is a significant decrease to both the reporting period loss of AUD 149.1 million and the PCP loss of AUD 117.6 million. The bottom line is revenue is growing and we are driving down costs. We held AUD 320.7 million in corporate cash as at 31 December 2022. We have no corporate debt. I think it's important to understand that these results show our strategy, backed by world-leading technology and a world-leading team, is building a platform for future growth and profitability. In the United States, the largest and fastest-growing online betting market in the world, we are the seventh largest online operator out of a field of over 60 licensed online operators. On top of that, our app, which is powered by our proprietary tech stack, is independently ranked as top three. This has not gone unnoticed. The amount of third-party strategic interest shown in our company demonstrates we've built a very valuable business. This gives us significant optionality around how we take the business forward to maximize value for our shareholders. The key takeaways during the half were: Group revenue was up 28%, anchored by an 81% increase in U.S. Net Win with 17% less marketing expense and strong iGaming performance, a continued disciplined and focused approach to cost management. To put it simply, the jaws at PointsBet are positive, revenue is growing strongly and costs are reducing. Turning to slide nine. While you will see that we've included all individual country disclosures in our results release, for the purposes of this presentation, I will speak regularly today to North America. That is U.S. and Canada in aggregate. What you can see from the results and from slides eight and nine is that our focus on the super user over the past six months is really delivering. While overall North America revenue was up 98%, our target segments were up 199%. As you can see on slide nine, targeting the right customers has led to a 63% increase in online sports book gross revenue. Understanding these customers better has allowed us to increase bet count, increase multi-product usage, and improve gross margins for these clients. This increase in active clients and revenue per active, combined with increased promotional spend efficiency, has led to an overall 124% increase in online sports book net revenue. Layered on top of these improvements is the improved cross-sell and direct acquisition into iGaming, leading to an overall revenue improvement of 199% for our targeted cohorts. Turning to slide 10. Effective targeting and monetization of the right clients is our recipe for improving unit economics and delivering ROI on marketing. In summary, we are acquiring more of the higher value players at a lower cost. As is demonstrated by the two charts on this slide, first year Net Win Payback of acquired clients in H1 FY23 was 264% more efficient than the PCP. For those clients who have completed two years of activity with PointsBet, we are seeing in the second year 30% more Net Win than in the first year. These trends provide positive forward-looking indicators that we are building a growing and sustainable revenue base. Turning to slide 11. During the half, we executed on our locally focused U.S. advertising strategy, utilizing our exclusive and heavily discounted access to the powerful media properties of NBCU. The correlation between increased U.S. Net Win and reduced marketing expense during the reporting period is evidence of our more targeted strategy. As mentioned, the North American business grew online sports betting and iGaming Net Win by 98% from the PCP. iGaming is a critical and important part of our North American strategy. iGaming Net Win represented 31% of North American Net Win in the reporting period, with total iGaming Net Win of $23.7 million, representing a 213% increase on the PCP. These results were driven by ongoing improvement in our ability to convert and retain cross-sold sports bettors and by the growth of the casino-only cohort. We still have significant headroom to improve our iGaming product and to increase the Net Win contributions iGaming can deliver. Turning to slide 13. Total turnover in Australia was AUD 1.55 billion, up 14% on the PCP. Total Net Win for the Australian trading business was AUD 105.3 million, down 2% on the PCP. As previously reported, our trend improved through the half with a 9% PCP increase in Net Wins for Q2, almost offsetting a 13% PCP decline for Q1. Based on data provided by principal racing authorities, we estimate the online market for racing turnover is down between 5%-10% for the reporting period versus the PCP. Our total racing turnover is consistent with this trend. The shift in turnover mix towards sport led to a reduction in overall Gross Win Margin to 10.7% in the reporting period versus 13.3% in the PCP. Total gross win was AUD 166.5 million, down 8% on the PCP. However, this was offset by continued improvements in the efficiency of our client promotion spend, enabled by our new tokens capability. Total spend on client promotions was AUD 11 million lower than the PCP and will be lower again in the second half. The rate of promotions as a percentage of gross win improved to 36.8% versus 40.1% in the PCP. Despite net win being slightly down period on period, we are encouraged by the shift in client mix towards mass market, which reduces the reliance on VIPs as seen on the right-hand side of this slide. VIP remains important, however, due to intense promotional spend led competition from new entrants. This remains a highly competitive segment. However, we are confident that in time, the current rate of promotional spend offered by competitors is not sustainable. VIP customers will choose consistent, reliable offerings on the best online platforms. Further industry consolidation and attrition is inevitable. Importantly, early Q three trends give us confidence in continued growth in sports and multi-turnover, and combined with continued client promotions efficiency, we expect to see net yields return in Australia to greater than 8%. Turning to slide 15. Talking to the normalized results. For the reporting period, PointsBet reported net revenue of AUD 178.1 million, a growth of 28% versus the PCP. Gross profit of AUD 69.9 million represented growth of 28% over the PCP. Gross profit margin for the reporting period was 39% in line with the gross profit margin we achieved for the PCP. We expect gross profit margins to continually improve in H2 and beyond with improving operating scale in North America. As previously disclosed in our quarterly activity reports, group sales and marketing expense was AUD 131.3 million for the reporting period, with Australia accounting for AUD 45.3 million, the U.S. accounting for AUD 70.6 million, being $47.3 million, and Canada accounting for AUD 15.4 million, being CAD 13.7 million. This marketing investment assisted in the delivery of 548,236 rolling twelve-month cash-active clients. U.S. marketing expense will be lower in H2, being circa $90 million for the full year. Australian marketing expense in H2 will be circa AUD 15 million, down from the AUD 45.3 million in the first half. Canada will also be less in H2. Whilst employee benefits expense, product and technology expense and admin and other expenses did increase versus the PCP, I would note that the total of these three operating expense items in H2 are anticipated to be consistent with the total cost in H1, reflecting the stabilization of our cost base. EBITDA loss was AUD 149.1 million for the reporting period. As previously referenced, in the second half last year, PointsBet delivered a normalized EBITDA loss of AUD 117.6 million. We expect a normalized EBITDA loss of between AUD 77 million and AUD 82 million for the second half of FY23, as we see the benefits of the operational leverage being realized on the back of our growing revenue. Slide 16 sets out our statutory segment results. Slide 17 covers the balance sheet. The group has net assets of AUD 577.8 million December 31, 2022. Turning to slide 18, cash flows. Reiterating, the company held AUD 320.7 million in corporate cash December 31, 2022 and has no corporate debt. Based on expected trading performance for the duration of the financial year, we expect H2 FY23 net cash outflow, excluding movement in player cash, to be approximately 30% lower than H1. This represents a decrease from the previous outlook of a circa 35% reduction. The change in outlook is primarily driven by two factors in the Australian market, a decline in the online racing wagering market and heightened VIP volatility. Moving to slide 20. In summary, today's results clearly show that our North American strategy is working. Revenue growth is up and costs are going down, and the Australian business continues to deliver. Most importantly, we have built a very valuable company. We held AUD 320.7 million in corporate cash as at 31 December 2022. We expect a normalized EBITDA loss between AUD 77 million and AUD 82 million for the second half, which is a significant decrease to both the first half and the PCP results. Thank you. The team here and myself will now take questions. Thank you. If you wish to ask a question, please press Star one and wait for your name to be announced. If you wish to cancel your request, please press Star, then two. If you're using a speakerphone, please pick up the handset to ask your question. The first question today comes from Ben Brownette from Jarden. Please go ahead. Hi, Sam. Can you just Sorry, you were speaking rather quickly, and I just missed your reasoning for the cash flow to be a little bit better than you thought before. What was that? Sorry. No, no. Good day, Ben. Hope you're well. no, we spoke about the fact that, guidance for cash flow, we're saying, is now gonna be 30% lower than H1. The reason that's a slight downgrade from what we previously said was a decline in the online racing wagering market in Australia and heightened VIP volatility. There's just two Australian factors that I referenced. Right. just to be clear, the cash outflow is going to be greater or less than? 30% less than H1 is what we've guided to. Is that better or worse? It's better. Better, sorry. A 30% improvement on H1. Yes. Yeah. Okay. Got it, got it, got it. Just, as well, just with the, I'm just wondering, I know that there's, you know, there's some obviously media articles and things going on that you've announced, and I didn't wanna specifically talk on that, but I did wanna talk about, potentially with the improved EBITDA guidance that you've provided, and again, you've spoken about the second half marketing in Australia going to be greater than what it was in the first half. Presumably, if you're in these kinds of discussions. No, Ben. Sorry, just to correct you there, Ben. Yeah. What we spoke about was Australia's first half marketing was AUD 45 million, and we expect the second half marketing in Australia to be AUD 15 million. It's a dramatic drop off. That's consistent with what we did last year. Last year, we heavily weighted marketing in the first half, and that led to a lot. Yeah. F rom an EBITDA perspective. Then, as per last year, we eased off on marketing in the second half. Right. There's no change with respect to that because of other things that may be going on? Absolutely not. No, no. That's always been our strategy. I think even on previous 4C calls, we've spoken about the fact that we'll weight marketing to the first half and ease off in the second half. Yeah. Okay. Cool. Just with respect to slide 16, I know you're not the numbers man, but if you could speak maybe more qualitatively around exactly what expenses there. In the first half, AUD 12 on technology and AUD 18.6 in corporate, what. Like, I know it's difficult to split them between Australia and the U.S., but can you kinda give us a bit of a guide in terms of what you would need as if you were running two separate businesses? Sorry, can you just repeat that, Ben? Slide 16. Yep. Got that. In terms of the technology and corporate spend. Okay. The way we run our business from a technology perspective is the technology segment charges the trading businesses, okay? It's basically 8% of Net Win in each jurisdiction is charged for the technology services that our group provides, okay? From a P&L perspective, the P&Ls are, you know, clean, and they represent the support that comes from our technology segment. I've spoken before about the fact that we run 16 instances of our, of our platform. We're in 14 states of America. We're in Ontario, Canada. We're in Australia. Every one of those jurisdictions needs its own instance of the platform, standalone, you know, instance. Yeah, in terms of, you know, the scalability and the separability of our, of our platform, that already happens very, very clearly. What I've also spoken about is that, from a technology perspective, why do we run that global tech team is because we believe we can get some synergies, from doing so rather than, you know, necessarily, having certain roles, certain support roles, I suppose you would say, duplicated. There's nothing in the way that we're structured that reduces our optionality and flexibility around breaking things up or doing other things that would help us realize shareholder value. Everything can be done, but that doesn't mean at the moment we are structured in a way that the global technology function can support the entire business. Okay. like, if you were to think about, like half/half, like would that be a reasonable assumption? If you're talking about the product and technology expense, that's like the leftover proposed extra expense that's not covered by the 8% that is charged to the various entities. In terms of practicality half/half, I'm not gonna comment on that. I mean, we have local resources in every jurisdiction that are very focused on local product initiatives. We have local sprint teams, we have local parts of our tech function, but then we also have some global sort of support functions that allow us to be to add some extra efficiency. Okay. Thanks very much, Sam. Cheers. Thanks, Ben. Thank you once again. To ask a question, please press star one on your phone. The next question comes from Rohan Sundram from MST Financial. Please go ahead. Thanks, Jane. Just the one from me. Sam, what are you able to say around the decision to withdraw the application in Massachusetts? Is that just consistent with the strategy or what were the circumstances there? Yeah. Good day, Rohan. Hope you're well. Yeah, look, we've launched a lot of states, you know, in recent times. You know, we've spoken about the fact that our job is to prove the unit economics and the path to profitability of our North American business. We think that the total addressable market that we have access to now being 14 states of America, plus Canada is huge. You know, I suppose we made the prudent decision that adding Massachusetts was probably one step too far. The other thing that gave us some encouragement is, you know, we're not launching at this time, but that doesn't mean that we can't launch into Massachusetts at a future time. You know, it's a bit like a state like Tennessee, Rohan, where we've basically said, "Look, we can go in there at some time, but at the moment we're gonna let it go." Yeah, we felt like we've launched a lot of states recently. We've got enough of a total addressable market to focus on. We need to prove as we are the unit economics and the path to profitability. You know, that's sort of a prudent decision, a prudent balanced decision. Thanks, Sam. That seems fair enough. Are you saying that with upcoming state launches, some states, does it make sense to be there on day one, whereas others the economics may not quite stack up to even be there on day one? I mean, I think we were really happy with our Ohio and Maryland launches, Rohan. Like we definitely got off to a fast start, faster than we'd ever got to, in any other state. We spoke about that. I think it also needs to be recognized that our competitors, you know, they've all spoken very heavily about the fact that they put a huge focus on early state launches as well, right? Even though we're getting better and we're getting faster, I think they probably are too. No, we don't expect Massachusetts was probably the obvious one that was a new state launch for calendar year 2023. You know, I probably we don't expect that there's gonna be others popping up. We'll assess any new state on its merits and, you know, at a point in time. Thanks, Sam. Thank you. The next question comes from Darshana Nair from Goldman Sachs. Please go ahead. Hi, Sam. Thanks for taking my question. Just keen to understand, as we have now finished about one, two months into the quarter, how are you seeing Australian market operations settle in terms of both the trading as well as the promotional environment, please? Yeah. That's We basically made some comments around that, you know, in the run through on what we are seeing. It is a continuation of what we've sort of seen in the first half, and that is, you know, that racing, online racing turnover continues to be under pressure. You know, the let's call it the promotional intensity, predominantly the VIP sort of segment, continues to be pretty strong. We're flagging those two areas as probably challenges for the sector. Having said that, you know, as it relates to the latter, you know, I think it's not sustainable for some of the smaller operators to be as aggressive as they are from a promotions perspective. As those sorts of things normalize, you know, again, we expect players to congregate back to the best products and the best service of which, you know, we are one. Definitely some headwinds in those two areas. Like I heard the Tabcorp call the other day or saw the outcomes of that, and they spoke to obviously some macroeconomic factors, you know, cost of living increases. You know, you can probably overlay that a little bit too. No, specifically, you know, we're pointing to racing turnover coming under pressure and some, you know, increased intensity in VIP generosities, the latter of which we don't, you know, we don't necessarily think is sustainable. Got it. As a quick follow-up, can you remind us how much is your exposure to racing versus sports betting? We haven't disclosed that. We haven't disclosed that. What I will say is, you know, the weighting is changing, obviously. You know, our percentage of our turnover that's coming from racing is coming down and our percentage for sport is going up. To some degree, that's also driven by our product enhancements. You know, we're getting our sports on the OddsFactory, our in-house OddsFactory models, which improves our product suite, including multis, and we've got some features coming out in the coming months that will further improve that. Yeah. Yes, there's some things happening in the environment relating to racing coming up, but we also are probably driving that sports switch by the innovation that we're bringing to sport. Okay, thank you. A quick follow-up. I think you mentioned this earlier in terms of the guidance for marketing in the various regions. Can you remind us of what that was for Canada in particular for the second half? Yeah, all that I said for Canada was that it would be reduced. We've given. Got it. From obviously Australia, sorry, the Canadian market's a little bit newer. We've given firm guidance on the U.S. being a total of AUD 90 million for the year and Australia being circa AUD 60 million for the year. Got it. Thank you very much. Thank you once again. To ask a question, please press star one on your phone. We'll pause for a moment to allow any parties to enter the queue. At this time, we're showing no further questions. That does conclude our conference for today. Thank you for your participation. You may now disconnect.