BlueBet (BBT): Off to the races

Bluebet (BBT) offers sports and racing betting products and services to online and telephone clients, via its online wagering platform and mobile applications. The company’s September quarter was highlighted by strong margins in the Australian business. Customer additions were slightly softer, but this was offset by a higher turnover from its active customers. The company expects to launch the BlueBet Global Platform in the second quarter of FY24, which will further bolster their ‘Sportsbook-as-a-Solution’ offering, in our view. We reiterate Bluebet as an attractive investment, particularly as the B2B opportunity offered by ‘Sportsbook as a Solution’ gains momentum, and retain a Buy rating with target price of $0.80.

The Australian business remains on track in our view, putting together consecutive quarters of positive operating cash flow, with management expecting the Australian business to end FY24 with positive EBITDA and operating cash flow. In the US, Bluebet experienced further growth in its turnover as its ClutchBet product continued to gain traction in Iowa and Colorado. The company also reiterated its expectation to launch into Louisiana and Indiana in coming months. Bluebet reported a material jump in in-game betting, with the launch of their HyperLive product leading to 62% of US turnover occurring in-game versus less than 50% prior to the launch of HyperLive. Bluebet anticipates this proportion of turnover to grow, which should enhance margins. The company’s capital-lite business model remains an attractive prospect, particularly with the potential for ‘Sportsbook as a Solution’ to be a share price catalyst.