betr Entertainment Limited used its Q2 FY2026 quarterly business update to outline the near-term earnings impact of front-loaded investment and customer-friendly wagering results, while reiterating expectations for a return to profitability in the second half of the fiscal year.
Strategic investment and H1 earnings impact
Chief Executive Officer Andrew Menz said betr invested in “strategic brand and marketing assets” during the first half, highlighted by a September brand relaunch, as well as product and customer experience initiatives including Sky Racing integration and a first-to-market “Live Same-Game Multi-Tracker.” Menz characterized these costs as “one-off investments” intended to support profitable market share gains and shareholder value creation, including as the company pursues M&A opportunities.
Menz added that net win margin “has reverted to north of 11%” in the December-to-January period, which he said supports confidence in longer-term consistency.
Turnover growth and customer metrics
Management highlighted market share gains, noting first-half turnover growth of 13% after backing out the impact of TopSport customers’ contribution. Menz said this outpaced estimated Australian wagering market growth of about 2% to 3% over the same period, describing betr’s underlying growth as roughly four times market growth.
On an absolute basis, betr reported record turnover of AUD 444.4 million in the quarter, up 25% year-on-year, and net win of AUD 37.9 million. Menz said net win was below the company’s target range due to unfavorable Spring Carnival results, though he emphasized “strong underlying growth.”
Cash-active clients totaled 163,504, up 5.7% quarter-on-quarter. Menz said performance has normalized since December following customer-favorable outcomes in October and November that temporarily reduced net win margin.
Spring Carnival outcomes and margin normalization
Chief Operating Officer Bill Richmond attributed the margin pressure to Spring Carnival betting dynamics, including a higher concentration of bets on favorites and an unusually high win rate among heavily backed runners. Richmond said six of the eight highest-backed runners won, compared with two in the prior year. He also said betr’s strategy of offering “best odds on favorites” over the carnival led to a disproportionate impact compared with peers.
Richmond said customer-friendly results on NRL Grand Final day and the following four Saturdays reduced Q2 net win margin by about 175 basis points, and that adverse results across the half translated to an estimated AUD 7 million impact at the normalized EBITDA line.
He said net win margins have since normalized, citing a December exit rate of 11% and January trading to date of 10.8%.
Marketing, product initiatives, and customer engagement
Management said strategic growth investment contributed about a AUD 3 million impact on H1 normalized EBITDA. The company pointed to front-weighted spending tied to the brand relaunch and marketing partnerships with Seven, the AFL, and Fox Cricket, as well as digital campaigns across Meta and TikTok. Menz said these initiatives were designed to align with major sporting events including AFL finals and the Ashes.
Menz said that between September and December, unprompted brand awareness increased by 19% and brand consideration rose by 16 points. He also said engagement initiatives supported growth in active customers and underlying turnover.
On product, Menz said the Sky Racing integration had delivered measurable uplift, with customers viewing Sky recording a 15% increase in bet frequency and a 27% uplift in turnover. He added that this translated into a 9% improvement in racing net win versus the overall betr customer base year-on-year. Management also referenced “My Promotions,” enhanced form guides, and bet placement improvements as contributing to higher conversion rates and stronger customer ROI.
Menz said the company does not anticipate “elevated levels of product launch spend” moving into H2 and FY2027.
Cash flow, outlook, buyback, and M&A commentary
Acting CFO Blake Matthews said the company ended the quarter with cash of AUD 41 million, inclusive of AUD 13.6 million of customer balances. Operating cash outflow was AUD 9.7 million in Q2, which Matthews attributed primarily to front-weighted investment in brand, product, and Sky Racing, as well as the temporary impact of customer-friendly outcomes.
Advertising and marketing outflows were AUD 10.3 million. Matthews also noted payments for business and investments of AUD 42.1 million related to a PointsBet share buyback and transaction and advisory costs associated with the PointsBet offer. He said the company expects a “materially improved cash flow profile” in H2 and does not anticipate needing external capital to execute its operating plan and financial targets.
For guidance, Menz said that assuming net win margin remains within its historical 10% to 11% range and absent material changes to product fees and taxes, the company expects:
- H2 FY2026 normalized EBITDA of AUD 5 million to AUD 8 million
- FY2027 normalized EBITDA of AUD 13 million to AUD 19 million
In Q&A, management said it is modeling normalized net win margin at a 10.4% historical rate. Menz said the company assumes low single-digit market growth and continued share gains, though not necessarily at four times the market growth rate to reach the guidance range. He also said marketing spend is front-weighted, with a reduction in H2 to about AUD 10 million.
Management also discussed capital allocation, including a previously announced share buyback of up to 10% of issued capital, with the board stating it believes shares are trading below intrinsic value. Menz said the company continues to pursue “value-accretive M&A opportunities,” with active discussions progressing.
On PointsBet, Menz said the company’s 27% stake is viewed as a “strategically valuable asset,” adding that betr has “a range of options available” and would update the market if anything changes.
During Q&A on TopSport, management said its focus has been on improving margin toward historical levels, noting TopSport’s cohort has been driven “up to 9% and 10%” margins in recent quarters, with an emphasis on “profitable turnover.”
The company said it expects to release its audited half-year result at the end of February.
Editor’s note: The company referenced reactivation of the betr and BlueBet (ASX:BBT) customer bases when discussing turnover growth drivers following the merger.
About BlueBet (ASX:BBT)
BlueBet Holdings Ltd provides sports and racing betting products and services to online and telephone clients through online wagering platform and mobile applications. BlueBet Holdings Ltd was founded in 2015 and is based in Sydney, Australia.
