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.
Today, the Company announced its Q2 2023 results. All amounts are in Canadian dollars.
- Total revenue of $5.3 million in Q2 Fiscal 2023, an increase of approximately 14% over the same period in Fiscal 2022
- Gross margin of $3.3 million (62%) in Q2 Fiscal 2023, an increase of 70% as compared to $2.0 million (41%) in Q2 Fiscal 2022
- EBITDA of $4.3 million in Q2 Fiscal 2023, an increase of $15.3 million as compared to ($11.1) million in Q2 Fiscal 2022
- Net loss of $0.5 million in Q2 Fiscal 2023, as compared to a net loss of $15.9 million in Q2 Fiscal 2022
- Unrestricted cash increased to $3.5 million as of June 30, 2023, as compared to $2.9 million as of December 31, 2022
- Net working capital of $6.1 million as of June 30, 2023, as compared to ($4.2) million as of December 31, 2022
Major operational highlights of the quarter includes FansUnite selling McBookie Ltd, a Scottish private limited company, for $5.5 million cash. A sale price which equated to 7x their 2022 EBITDA resulting in a net gain on sale of $4.4 million.
In May 2023, FansUnite sold the source code related to its Chameleon Gaming Platform to Betr Holdings Inc. for a total consideration of $10 million. The sale of Chameleon iGaming Platform led to a gain on sale of $3.1 million.
In terms of the current strategic focus, FansUnite is focusing to grow the more profitable affiliate segment by scaling its Betting Hero and Props.com operations while entering new North American markets once legislation to regulate sports betting and iGaming is in place in those markets. The Company plans to grow Betting Hero’s additional revenue streams namely Betting Hero Hotline and Betting Hero Research.
“We are excited to announce a significant increase in revenue and gross margins during the second quarter of Fiscal 2023,” said Scott Burton, CEO of FansUnite. “During the quarter, we saw a 14% increase in revenues year-over-year while our overall gross margins exceeded 60% due to our focus on higher margin operations. This renewed focus allowed us to record an EBITDA of $4.3 million during the quarter which was up from a loss of $11.1 million during the same quarter last year.”
Mr. Burton added, “Following the sale of McBookie and the Chameleon iGaming Platform, we will focus more on growing business segments that produce significant cash flow. We intend to achieve this goal by scaling our affiliate business segment, led by Betting Hero, which has generated substantial revenue and high gross margins as well as identifying more opportunities to improve our operational and financial efficiency.”
At time of writing FansUnite stock is up over 9% on the earnings news, and sits at a market cap of just over $21 million.
The technicals are looking very bullish. After printing, and ranging, at all time record lows at $0.04, FansUnite began to show positive price action running up to today’s earning report. The stock closed and broke above interim resistance at $0.05 and is currently testing the major resistance zone at $0.06.
As long as the stock remains above $0.05, upside momentum can continue which would result in a breakout above $0.06. A close above this level would be extremely bullish for the stock and could set us up for a move towards the longer term target around $0.10.
