Digital Mobile Platforms Will Redefine Betting Across Australia And Canada

Key Takeaways

• Expansion in digital betting and North America, plus proprietary technology, are driving revenue growth, user gains, and improved margins.
  
• Operational efficiencies and profitability advances are strengthening sustainability and positioning PointsBet for continued reinvestment and resilience.
  
• Market contraction, regulatory pressures, limited geographic diversification, uncertain takeover prospects, and thin financial buffers collectively threaten PointsBet's profitability, resilience, and future growth.

Catalysts

Provides sports, racing, and iGaming betting products and services through its cloud-based technology platform in Australia.

• Despite a contracting Australian online wagering market, PointsBet delivered record revenues and gained market share, suggesting the company is well-positioned to benefit from the continuing shift of consumer betting activity to digital and mobile platforms, which should drive future revenue growth and customer base expansion.
  
• Canadian operations achieved strong net win and active user growth, with further upside anticipated as new regulated markets like Alberta open up, leveraging the ongoing expansion of legal online betting in North America to support sustained top-line growth.
  
• PointsBet's continued investment in proprietary product and technology-including expanded iGaming offerings and enhancements to in-play/multi-bet formats-are yielding higher customer engagement and improved net win margins, indicating potential for further gross margin and earnings improvement as technology-driven differentiation attracts and retains users.
  
• Improved marketing efficiency and a shift toward a more diversified, mass-market user base are translating to lower customer acquisition costs and a more sustainable revenue stream, which in turn supports expanding EBITDA margins and increased operational leverage over time.
  
• Recent achievement of full-year group profitability and ongoing cost optimization post-US business sale position PointsBet for continued positive net earnings and cash flow performance, enhancing its ability to reinvest in growth and weather competitive or regulatory pressures.

PointsBet Holdings Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming PointsBet Holdings's revenue will grow by 10.0% annually over the next 3 years.
• Analysts assume that profit margins will increase from -6.9% today to 6.7% in 3 years time.
• Analysts expect earnings to reach A$23.2 million (and earnings per share of A$0.06) by about September 2028, up from A$-18.2 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 22.3x on those 2028 earnings, up from -24.1x today. This future PE is lower than the current PE for the AU Hospitality industry at 35.2x.
• Analysts expect the number of shares outstanding to grow by 0.11% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.93%, as per the Simply Wall St company report.

PointsBet Holdings Future Earnings Per Share Growth

Risks

• The Australian online wagering market experienced material negative growth in FY '25, indicating a contracting or stagnant core market despite PointsBet gaining share; this secular trend could constrain topline revenue growth and long-term earnings potential if market contraction persists.
  
• Ongoing increases in regulatory levies, such as higher point of consumption tax and domestic sports product fees (e.g., AFL), now absorbing nearly half of PointsBet's net win in Australia (47.9%), may continue to pressure net margins and reduce profitability over time.
  
• After the sale of its U.S. business, PointsBet's growth strategy is reliant on the smaller Australian and Canadian markets, making it vulnerable to country-specific regulatory and competitive dynamics; this geographic concentration risk could limit diversification and revenue resilience.
  
• The MIXI Australia all-cash takeover bid, upon completion, provides limited future upside for existing shareholders and presents uncertainty for those holding shares post-offer closure, as the board itself cautions that the share price is likely to fall if no superior proposal materializes, impacting capital gains prospects.
  
• Despite achieving its first year of group-level profitability and positive operating cash flow, PointsBet's net assets stand at only $6 million with corporate cash of $22.7 million as of June 2025, which represents a limited financial cushion; sustained investment needs and market challenges may expose the company to liquidity risk, potentially eroding future earnings or necessitating capital raises.

Valuation

• The analysts have a consensus price target of A$1.183 for PointsBet Holdings based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be A$347.7 million, earnings will come to A$23.2 million, and it would be trading on a PE ratio of 22.3x, assuming you use a discount rate of 7.9%.
  
• Given the current share price of A$1.26, the analyst price target of A$1.18 is 6.5% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.