FansUnite (FANS.TO) is a sports and entertainment company, focusing on technology related to regulated and lawful online sports betting, esports betting, casino and fantasy. Their mission is to be a leader in the gaming industry by providing their partners and players the industry’s most versatile and vertically integrated platforms with a portfolio of unique products and a focus on esports, sports betting, casino and the next generation of bettors.

In recent weeks, the Company has been announcing a consistent stream of press releases. The Company announced that its customer acquisition, retention, and development brand, Betting Hero has received three 2023 EGR North America Awards (“EGR Awards”), which includes Employer of the Year, Acquisition and Retention Partner of the Year and Customer Onboarding Partner of the Year.

In early May 2023, FansUnite announced it had sold all of its shares in its wholly owned subsidiary McBookie LTD., a Scottish private limited company. FansUnite acquired McBookie in March 2020 for $2.2 million CDN. Three years later, FansUnite recognized a significant profit, selling McBookie for more than $5 million CDN in cash, over 7x their record 2022 EBITDA.

A week later, FansUnite announced it has sold the source code related to the Company’s Chameleon gaming platform to Betr Holdings, a micro-betting specialist sportsbook co-founded by Jake Paul, currently operating in Ohio with plans to expand throughout the U.S. Future code sales by FansUnite would not include any future enhancements made by Betr post close. The Transaction will allow the Company to further focus on growing its most profitable business units. Betr will acquire the property and assets used in the Platform for total consideration of approximately CAD$10 million.

Today, FansUnite announced Q1 2023 financial results (all amounts in CAD). Highlights include:

• Total revenue of $8.73 million, a decrease of approximately 11% over the same period in Fiscal 2022
• Gross margin of $5.41 million (62%) as compared to $5.90 million (61%) over the same period in Fiscal 2022
• Net loss of $6.15 million in Q1 Fiscal 2023 which includes non-cash expenses of $6.39 million, as compared to $9.17 million over the same period in Fiscal 2022, which includes non-cash expenses of $10.31 million
• Unrestricted cash increased to $5.18 million as of March 31, 2023 as compared to $2.91 million on December 31, 2022
• As of March 31, 2023, the Company had a net working capital of $5.90 million as compared to $(4.16) million as of December 31, 2022

Operational highlights include:

• On February 9, 2023, FansUnite announced a transaction that will result in Stram Entertainment Limited, d.b.a. BestOdds, acquiring one of the Company’s affiliate brands, BetPrep. As part of the transaction, BestOdds will pay FansUnite a 30% revenue share for 36 months (subject to a minimum monthly guarantee), after the agreed upon ramp-up period ends on September 1, 2023.
• On February 27, 2023, FansUnite reported that Betting Hero registered more than 6,700 new depositing customers for its sportsbook partners, setting a new Company record for new depositing customers in a four-day period during the Super Bowl LVII weekend.
• On March 14, 2023, FansUnite announced that the Company and Betting Hero were shortlisted as finalists for the following six award categories in the 2023 EGR North America Awards (and won three on May 1, 2023):
  • Sportsbook Platform Provider of the Year
  • Affiliate of the Year
  • Employer of the Year (winner)
  • Diversity & Inclusion Model of the Year
  • Acquisition & Retention Partner of the Year (winner)
  • Customer Onboarding Partner of the Year (winner)
• On March 16, 2023, FansUnite completed a $3.04 million non-brokered private placement offering (the “Offering”) led by Tekkorp Capital and affiliates (“Tekkorp”), an investment firm that advises and invests in innovative public and private companies within the global digital gaming industry, in which a total of $1.4 million was invested into FansUnite by both Tekkorp and FansUnite’s insiders and management.

“The work we began in 2022 to reduce costs and streamline operations are being reflected in our results,” said Scott Burton, CEO of FansUnite. “The first quarter of 2023 saw an increase in gross margin to 62%, a decrease in net loss to $6.4 million as compared to $9.2 million in Q1 of the prior year while we generated positive cash flow from our operations. Additionally, we reached multiple strategic milestones, including the sale of one of our affiliate brands, BetPrep, to achieve cost-savings and reallocate our resources to other high-revenue segments as well as the Company obtaining a prominent strategic investor, Tekkorp Capital, in our recent financing.”

Going forward, FansUnite will continue to expand its affiliate operations into new markets in accordance with its sportsbook partners’ operations. Betting Hero will also aim to diversify its revenue streams and provide additional service offerings through its Hero Research and Hero Hotline services. FansUnite will also continue to assess and streamline various business units to maximize cost-efficiency and improve overall revenue growth.

Mr. Burton added, “We are going to continue our focus on growing our high margin and profitable U.S. affiliate-centric businesses, primarily Betting Hero and its new divisions. The affiliate side of our business has continued to produce substantial revenues while having a strong foothold in the affiliate business. The focus moving forward will be to execute on new revenue opportunities while driving improved margins and positioning FansUnite as a business that generates significant cash flow in the global gaming market.”

The stock is down -14.29% at time of writing on the news, and is sitting at a market cap just below $22 million.

Shares have dropped back to the key support/price floor zone that FansUnite has held going back to 2022. Earlier this year, this zone provided the basis for a major move. The pop provided a return of over 100% from support at $0.07 to highs just above $0.15.

We know buyers are stepping in this zone as can be seen by large candle wicks and the full bodied engulfing candle, the strongest single price action candle, printed on May 10th 2023. As long as we remain above support, we remain in this range/consolidation phase. Buyers have not been able to lift the price above $0.075, and hence the stock has developed an interim range here. A strong candle close above $0.075 would be a major bullish trigger as it would trigger a breakout.