PointsBet Holdings Limited (PBH) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the PointsBet Holdings Limited H1 FY '22 Financial Results Call. [Operator Instructions] I would now like to hand the conference over to the group CEO, Sam Swanell. Please go ahead.

Good morning. I'd like to thank you for joining this call for the PointsBet Holdings Limited Half Year 2022 results. This is Sam Swanell, Group CEO. I'm joined today by Group CFO, Andrew Mellor. Today, we will talk to our investor presentation, which was lodged with the ASX this morning, together with our half year financial report. All figures in this presentation are in Australian dollars, unless otherwise stated. Turning to Slides 4 and 5. H2 FY '22 has been a period of great progress for PointsBet. During the half, we saw improvement in relation to many of our core financial metrics compared to the PCP, and we've also made great strides in terms of expanding our addressable market and delivering on our product vision. Since July 2021, we've increased the number of live sports wagering states from 6 to 10, with the addition of West Virginia, Virginia and recently, New York and Pennsylvania. We launched our inaugural iGaming product in Michigan in June, which now includes live dealer games and PointsBet branded VIP tables. This was quickly followed by iGaming launches in New Jersey and West Virginia, and we anticipate launching iGaming in Pennsylvania in March, having received our license last month and Ontario in April as part of our Canadian launch. The recent sports wagering launches in Virginia, New York and Pennsylvania are obviously very substantial markets and allow PointsBet to leverage key strategic NBC regional sports network assets in each market and to monetize more broadly our national media assets. We continue to focus on expanding our total addressable market. And in September 2021, we announced an inclusive agreement with Austin FC of Major League Soccer, gaining market access in the state of Texas, subject to the passing of enabling legislation and licensure. Texas has a growing population of over 29 million, as the first and only pro sports team located in Austin, in addition to our statewide online access. The partnership will also provide for the only retail sports wagering presence in Austin, which is amongst the fastest growing cities in the United States. During the half, PointsBet also announced that NFL all-time great, Drew Brees, had officially joined the PointsBet team. Brees has transitioned to a broadcasting career with NBC Sports and has deepened the NBC Sports and PointsBet's relationship. In August 2021, we announced our appointment as 1 of only 7 NFL approved sportsbook operators. The relationship provides PointsBet with sponsorship opportunities and brand visibility via unique integrations across various television and digital assets, including NFL-owned networks as well as their full suite of media partners. PointsBet also gained use of official NFL data ultimately enhancing the customer experience. During the half, the company has continued to invest in the development of its In-House Scalable Technology platform, resulting in the launch of new products and enhancements. We were thrilled that our U.S. app was ranked second out of 34 in the latest [ Isles and Crytek ] at buy app testing just behind FanDuel. This is a testament to the fact that PointsBet is now hitting its stride, and building upon the investment we have made in our technology and product. In January, PointsBet became the first sports book to offer live in-game Same Game Parlay options for NFL and NBA concept as part of its proprietary technology integration. This provided clients with the ability to instantly build their perfect PointsBet live Same Game Parlay, while tracking odds player performance and team statistics. In Australia, the December quarter saw the seamless delivery of record activity across the Spring Carnival. It is imperative that we deliver a reliable, secure and scalable system that meets the needs of our clients on peak days, such as Melbourne Cup Day. At its peak on Caulfield Cup and Everest day, PointsBet Australia processed over 4,000 bets per minute up 2.5x on last year. On Melbourne Cup Day, we processed over 683,000 bets for the day, setting a new record. Similarly, PointsBet had a successful 2022 Super Bowl earlier this month, becoming the first ever sports betting operator to integrate into Super Bowl programming, including pregame segments and NBC ticker integration with viewership in the tens of millions. Underpinning our operational success was PointsBet's In-House Technology, which again continued its impressive record and successfully managing peak days without incident in both Australia and the U.S. Following our New York launch, we are now among an exclusive group of operators that are live in New Jersey, Pennsylvania and New York. We have the Philadelphia regional sports network via relationship as the official sports betting partner of NBC. This delivers us integration exclusivity for all 76ers, Phillies and Flyers Games, an extremely powerful asset. In New York, we are again leveraging our NBC relationship through sports net NY, a part of the NBC Sports Group. SNY is the regional broadcast home of major lead baseball's New York Mets in addition to carrying supplemental coverage of the NFL's New York Jets they offer points the year-round multi-platform media and marketing opportunities. Before I wrap up the introduction, I would like to provide an update on Canada. Ontario has a population of nearly 15 million people and would represent the fifth largest U.S. state. PointsBet was the first operator to be approved by the Alcohol and Gaming Commission of Ontario and we will be on the starting line on April 4. We are dedicated to delivering a brand and experience that is genuinely Canadian. The deals that we have executed with DailyFaceoff.com, the nation network, Kerlin Canada, the National Hockey League, Alumni Association and the Trailer Park Boys up all true to this strategy. In launching PointsBet Canada into Ontario, the Canadian team will leverage not only the proprietary technology and market-leading product the company has built, but also the global scale we now possess with a one-team approach supported by staff in numerous continents. This is our first opportunity to hard launch into a North American jurisdiction on the starting line. For all future new jurisdiction launches, PointsBet plans to be hard margin on day 1 of the market opening, and we're excited by the undoubted upside this will bring. Turning to Slide 6. As previously disclosed in our Q1 and Q2 activity reports, the global trading business has delivered net win growth of 77% for the 6 months to 31 December 2022 to be referred to as the reporting period as compared to the prior corresponding period of 6 months to 31 December 2021 to be referred to as the PCP. I will now hand over to Andrew Mellor to walk through our financial results.

Thank you, Sam. Now turning to Slide 8. I will speak to our normalized results today. Have a please note that there is a summary of our statutory results on Slide 34 and a reconciliation of the normalized results to the statutory results included in the review of operations and on Slide 35 of this presentation. The group's net win for HY '22 was $146.7 million. Net revenue is then calculated post adjustments being made for GST paid in Australia, B2B revenue from PointsBet Europe, revenue earned via our U.S. racing ADW business and other relevant fair value adjustments. For the reporting period, PointsBet reported net revenue of $139.1 million, a growth of 85% versus the PCP. Gross profit of $54.7 million represented growth of 114% over the PCP However, it should be noted that we had short-term trading variances in the U.S. during the PCP, which saw U.S. PCP gross profit margin lower than would be in a normalized trading environment. Group gross profit margin for the reporting period was 39% lower than the gross profit margin of 45% we achieved for FY '21. This was mainly due to a lower gross profit margin in Australian trading business due to lower net win margins in H1 FY '22 compared to FY '21 as well as the increase in some taxes and product fees, including an increase in the point of consumption tax in the state of Victoria from the 1st of July 2021. Pleasingly, the U.S. business H1 FY '22 gross profit margin increased as compared to FY '21. As previously disclosed in our Q1 and Q2 activity reports, group sales and marketing expense was $124.1 million for the reporting period with Australia accounting for $44.7 million and the U.S. accounting for [ $78.3 ] million, being USD 57.2 million. This increased marketing investment assisted in the delivery of 232,000 cash active clients in Australia and 211,000 cash active clients in the U.S. as at the 31st December 21. Further details about our previously disclosed 12-month cash active clients can be found on Slides 14 and 18. The U.S. strategy does require upfront marketing investment to establish and grow market share and drive future revenue growth, and the U.S. marketing expense is expected to proportionately increase as our state footprint expands. We do note commentary from some of our U.S. competitors, some of whom spent at least 10x more than PointsBet in Q4 regarding their intention to significantly cut marketing spend and promotions. As we have called out since the start of the NFL season, there is no doubt that some operators have overinvested from a marketing and promotions perspective, and this led to challenging economics for the entire sector and a skewed view of some operators through market share. We believe market share gained on the back of over aggressive promotions will be eroded as these promotions are wound back. Through the half, during a period of aggressive marketing spend from our competitors, we maintained our disciplined and ROI-focused approach to marketing and promotional spend. A pullback in competitive marketing and promotion in question will lead to a greater share of voice for PointsBet's continued disciplined marketing investment, provide greater client exposure to our ever-improving market-leading product and service offering. As referenced our Q2 results last month, the Australian marketing expense will be significantly lower in H2 versus H1, and I'll provide additional commentary on this later in the presentation. When combining marketing plans across the U.S., Australia and Canada, it should be noted that we expect group marketing expense for H2 to be only marginally higher than H1. Employee benefits expense increased over the reporting period in both Australia and the U.S. Employees at the 31st of December '21 grew to 539, up 65% from the 31st of December 2020. More than half of these employees are part of our product and technology teams. In addition, we also used the services of third-party service providers. We expect headcount to grow over H2 with the majority of the additional staff added to product and technology. Product and technology expenses increased versus the PCP. During the reporting period, the company was operational in Australia and 8 U.S. states: being New Jersey, Iowa, Indiana, Illinois, Colorado, Michigan, West Virginia and Virginia. And as a result, compared to the PCP, costs related to new state rollouts have increased as well as our bidding volumes and the costs associated with developing, hosting, operating and securing our technology and data platforms across the 9 jurisdictions. As we launch into potentially 5 additional jurisdictions in H2, we expect the product and technology costs will increase compared to H1. The normalized EBITDA loss was $126 million for the reporting period. As always, we continue to take a disciplined and focused approach to cost management and always remain nimble and able to make relevant adjustments to expenditure where we determine it to be appropriate. Turning to Slide 9. I will now speak to our business segments. Further details can be seen in Note 2 of our consolidated financial statements. On a statutory basis, the Australian Trading segment recorded net revenue of $97.6 million, an increase of 27% versus the PCP and an EBITDA loss of $16.1 million in the reporting period compared to EBITDA profit of $8 million in the PCP. To be clear, we expect the Australian trading business to be EBITDA positive for the full year. As communicated at the quarterly update in January, the company's FY '22 marketing strategy was to front-end the marketing expense significantly into H1 to take advantage of the Shaquille O'Neal campaign and through the spring racing carnival. As a result, the H1 FY '22 marketing expenses was $44.7 million, which contributed to an EBITDA loss of $16.1 million for the reporting period. We look at the business on a full year basis and understand well the seasonality nuances across the financial year. Therefore, we chose to upfront the marketing in H1, and this has delivered positive business momentum into the second half, mainly significantly improved brand awareness and importantly, growth in H1 active customer base, which will help contribute significantly to second half revenue. On the back of this positive momentum created, it allows the marketing expense to be reduced significantly in H2, and we expect it to be approximately circa $16 million for this coming half. As the result the company expects the Australian trading business to be EBITDA positive for FY '22. On a statutory basis, the U.S. Trading segment recorded net revenue of $40.3 million and an EBITDA loss of $94.2 million in the reporting period. This loss was driven primarily by the U.S. marketing expense of AUD 78.2 million, as we expanded operations across 8 U.S. states and as we continue to grow our U.S.-based execution team. The Technology segment derives its revenues from licensing fees charged to the Australian trading business group subsidiaries in the United States as well as from B2B operations. The Technology segment recorded intersegment revenue of $12.2 million in the reporting period. Please note this revenue is eliminated in the company's consolidated results. In addition, during the period, the Technology segment recorded B2B revenues of $1.2 million derived from PointsBet Europe. On a statutory basis, EBITDA for the Technology segment for the reporting period was a loss of $6.8 million compared to the PCP loss of $3.7 million. Corporate administrative costs are costs that cannot be readily allocated to individual operating segments. Statutory EBITDA for the corporate segment for the reporting period was a loss of $13.5 million compared to a PCP loss of $6.4 million which was largely driven by increased listing company costs, costs associated with the August '21 capital raise as well as an increase in the number of corporate employees. Also, as Canadian operations are not yet live, the Canadian operational costs have been allocated to the corporate segment. The statutory EBITDA loss for the group was $130.6 million for the reporting period. After accounting for net finance costs of $4.5 million, net foreign exchange gains of $1.6 million and a depreciation and amortization expense of $12.9 million, the statutory loss for the reporting period was $146.4 million. Turning to Slide 10. The balance sheet was strengthened over the reporting period with the group having net assets of $742.8 million as of the 31st of December 2021. Net asset movements as compared to 30 June '21 are driven primarily by cash received upon completion of the $400 million capital raise in August '21. Intangible assets increased from $143 million to $189 million firstly, as a result of continued investment in our betting platform through the capitalization of product and technology employee costs; and secondly, as a result of investment in U.S. licenses and market access fees, including a USD 25 million payment to the New York Gaming Commission for market access to the state of New York. The prepayments balance includes prepayments for future marketing spend relating to equity previously issued to NBCU, representing a future offset to total marketing commitment under that partnership. Liabilities include a financial liability relating to the fair value of the debt component of the share options issued as part of the NBCU transaction. The $80.6 million includes the notional interest charge in fair value loss in the financial liability for the reporting period. Liabilities also included an amount received as part as a partial New York license fee reimbursement from Resorts World Bet, a subsidiary of Genting Group. As part of our B2B platform provider agreement to power the Resorts World Bet online sportsbook operation in New York State. This amount will be proportionally recorded as revenue over the life of the agreement. This strategic B2B agreement should be viewed as an accretive and valuable partnership for the company, but not indicative of a larger B2B strategy of PointsBet. Turning to Slide 11. I will briefly touch on the cash flows as these have been previously disclosed and detailed as part of our quarterly 4C reporting obligations in October '21 and January '22. In summary, net cash outflow used in operating activities, excluding the movements in player accounts for the reporting period was $94 million. Net cash outflows from investing activities was $55.3 million and net cash inflow from financing activities was $422.9 million. The company held $523.3 million in corporate cash as of the 31st of December '21 and has no corporate debt. I will now provide an overview of the Australian trading business. Turning to Slide 13. The Australian Trading business continued its strong performance and in the reporting period with turnover of $1.3 billion, up 27% compared to the PCP and net win of $107.9 million, up 27% from the PCP. Gross win margin and net win margin was 13.3% and 7.9%, respectively, for the reporting period. Further commentary about the Australian Trading business's performance can be found in the quarterly activities report for Q1 and Q2. Our ability to operate a growing business in the advanced and competitive Australian market, backed by continually improving product and growing brand recognition, provides confidence in the continued execution of our U.S. strategy. Given the growing scale of the Australian trading business, during Q2, we established dedicated technology and product structures to focus on Australian-led initiatives as we continue to improve our Australian offering. Recruitment for an Australian CEO is progressing well as we seek to find the ideal candidate to drive the next stage of growth in Australia. We were also pleased to join responsible way during Australia, the independent peak body for Australian licensed wagering service providers in January. RWA is committed to ensuring that Australia has one of the best conducted socially responsible wagering industries in the world. We look forward to engaging with the key stakeholders on behalf of PointsBet and the wider corporate bookmaking industry. I will now hand back to Sam to talk to the U.S.

Thanks, Andy. Turning to Slide 16. For the reporting period, the U.S. business achieved a sports betting gross win of $70.8 million at a gross win margin of 7.5% compared to gross win of $17.7 million in PCP, with a sports betting net win of $31.3 million at a net win margin of 3.3% compared to a negative net win of $2 million for the PCP. As communicated in January 2021, the December 2020 quarter for handle gross win and net win result was impacted by short-term trading variances, which reversed in January 2021 and as such, the PCB comparison growth rates should be viewed with this in mind. In addition, the U.S. business achieved iGaming net win of $7.6 million. This delivered an overall U.S. net win of $38.8 million for the 6 months to 31 December 2021. The trading results of the individual states for the half can be seen in the Q1 and Q2 activities reports released in October '21 and January '22. As a reminder, our U.S. focus is aimed at ensuring every client we acquire is capable of being net revenue generating. Rather than focusing on the sheer number of actives, our team are focused on targeting, procuring and retaining the right clients. PointsBet's blended U.S. online handle market share in states where operational consolidated to 4.2% for Q2 FY '22 compared to 4.5% in Q1. Now turning to Slide 17. For the reporting period, marketing expenses were USD 57.2 million, and as previously reported, overall U.S. working media cost per FTB was under USD 500 for the half. We continue to invest in marketing and growing the brand across the U.S. Cash actives for the 12 months to 31 December grew to $211,000, up 210% compared to the PCP. It should be noted that this metric also reflects our retention efforts, not just acquisition volumes. A sizable portion of the reporting period's marketing investment was into audiences outside of our operational states. This investment acts to build brand awareness and a database to assist upcoming state launches, investment into RSNs in Washington, D.C., New York and Philadelphia during the half has delivered heightened early-stage acquisition volumes for Virginia, New York and Pennsylvania since launching in most states in the last 2 months. We noted in the FY '22 Q1 call that there was an opportunity to better utilize our tactical promotions. A number of optimizations were made during Q2, refining our approach with a focus on rewarding our higher-value engaged client cohort and gaining an improved share of wallet from them. We reinvested a smaller proportion of gross gaming revenue on promotions in Q2 compared to Q1. As made public by the New York State Gaming Commission on 13th of August 2021, PointsBet as an approved platform provider will also provide resorts weld a wholly owned subsidiary of Genting Group with B2B mobile sports wagering services in the state of New York. As noted by Andy, this strategic B2B agreement should be viewed as an accretive and valuable partnership for the company, but not indicative of a larger B2B strategy of PointsBet. Aside from the unique opportunity presented by this partnership, we remain focused on our B2C Sports book and iGaming operations. Turning to Slide 19. The NBC and PointsBet partnership entered its second year at the start of September, and the partnership continues to drive results and break new ground in the category. We are pleased with how the partnership continues to divide and excited for the innovation we have planned in the second half. An example of this has already been seen PointsBet being the first ever sports book operator to be integrated into the coverage of a super bond. The coming period will include an increased digital plan, incorporating NBC's new regional connected TV and over-the-top solutions spot on. There are also additional opportunities for inclusion on the quickly growing streaming platform, Peacock. This combination of national and regional networks, along with local television assets gives us the ability to create bespoke marketing strategies to reach our target audience. It should be noted that at the end of the half, only 16.5% of the total NBC predictor lead base was a direct first-time better opportunity for PointsBet. However, that number has now jumped to approximately 26% following the launch of both New York and Pennsylvania and will continue to grow even higher over the calendar year. Turning to Slide 20. As just mentioned, Super Bowl was an exciting day for PointsBet. We were the first ever sports betting operator to integrate into Super Bowl programming, including pregame segments, NBC ticker integration with a viewership in the tens of millions. This was complemented by purchased adjacent ad spots in key live U.S. states and led to record activity on the game. From a tech and product perspective, as can be seen in the table on this slide, using New Jersey as an example, PointsBet offered the most in-play and game day markets on the game. Automated trading models seamlessly processed the high volumes with 99.9% of bets placed within one second and circa 90% of all bets placed within 250 milliseconds. Having an easy-to-use and instant bet placement function, while maintaining trading margins delivered a great client experience. Turning to Slide 23. Industry analysts keep increasing the estimated size of the U.S. sports betting GGR TAM opportunity. As we launch new states in 2022, our coverage of the U.S. population and with that, our TAM opportunity continues to grow considerably. We've seen some estimates point to an online sports betting payment maturity of USD 42 billion and on top of that, USD 18 billion for iGaming. We would note that horse racing is not commonly included in U.S. TAM estimates. However, from the Australian experience, we do think there is future upside in this category to be realized in the U.S. Hence, why we bought PTC a U.S. advanced deposit horse wavering business last year. In addition, we are progressing our plans for a fixed horse racing launch. With the recent launch in Pennsylvania, the 10 states points that is currently live and represent the total target population of 72 million people within an approximate sports book TAM of USD 13 billion at maturity. Adding a near-term launches of Ontario, Louisiana, Tennessee, Maryland and Ohio represents a further type population of 37 million and an additional 4.7 billion Sportsbook TAM opportunity. Turning to Slide 25. From day 1, we have said that product will ultimately win. The entire product experience will be the differentiator between those operators who succeed and those who do not. With a one-team global approach across North America, Europe and Australasia, we can leverage learnings from around the world for key product developments into Australia, the U.S. and Canadian markets. Importantly, owning our 100% proprietary In-House platform allows us to customize and localize these products to suit the local jurisdictions. As noted in the last market update, in November, we were thrilled to deliver our first major in-play product upgrade following the acquisition of Banach Technologies, now known as PointsBet Europe. The impact on our NFL KPIs has been impressive and provides huge encouragement regarding the path we are on. In-play handle was up 44% post the upgrade. MDA has also been upgraded and college basketball is imminent. Sports betting is the product that is leading the expansion of online betting across the U.S.A. To win market share and deliver success in the U.S. market will require excellence in sports betting product and execution. As sports betting is legalized across the U.S., we anticipate that 75% of all online bets were placed in play, that is one match has already started. PointsBet's new in-place Same Game Parlay has proven popular with our clients and providing them with the opportunity to place these bets during again is a further example of how PointsBet is hitting its stride, leveraging the capabilities of our proprietary technology and models. Turning to Slide 26. As noted earlier, we were thrilled that our U.S. app was ranked second of 34 in the latest [ Isles and Crytek ] app by app testing, with an overall score of 17.3 positioned just behind [ FanDuel ] score 17.6 and ahead of all other U.S. operators. The metrics consists of 5 scoring categories that reflect the most important aspects of acquiring and retaining customers as well as maximizing time and spend on the app. Pleasingly, we improved from fourth of the last review with improvements in the areas of live streaming and data visualization with our cash-out option receiving particularly high praise from the judges. PointsBet's 100% owned Tech Stack is customized for the North American market and is a huge asset to the company and puts us in a true unique position. I'm excited about the additional improvements slated for H2 and beyond. We already have a market-leading product. However, we see great opportunities to further distinguish ourselves from our position. Turning to Slide 29. Our people are our greatest asset. And in August, PointsBet announced the creation of our U.S. Diversity, Equity and Inclusion Committee. The committee will include a minimum of 3 PointsBet employees as well as 4 independent external senior advisers with deep experience and expertise in the world of sport. The committee is tasked with steering the PointsBet management team on diversity initiatives, ensuring points that recruits and retains a diverse and inclusive workforce, creates an environment for employees to be at their best and ensures that PointsBet workforce reflects the communities it operates in. Slide 31. Before concluding, I want to make some brief comments on New York. We have deliberately taken a more disciplined approach than some of our competitors, but despite this, are seeing some very promising results when compared to other state launches. True market shares will only be known once competitive churn from promotions washes through, but PointsBet is off to a promising start. One call out is the popularity of our proprietary and unique PointsBet product with a financially setting New York market significantly over-indexing on this product versus other states. Also deposits from first-time depositors in New York are on average 3x higher than in other life states. As can be seen on the slide, the company continues to put the building blocks required to succeed in place, and it has been another half of significant progress in this regard. Australia continues to go from strength to strength. Canada is on the verge of an exciting hard launch, which will leverage our global capabilities with a brilliant local strategy, and the U.S. is now gaining scale being live in 10 states. As it relates to North America, PointsBet is better positioned itself as an indispensable significant player in the market. We have a market-leading product and modern Tech Stack that is fully proprietary customized for North America and hugely valuable. One only needs to see what has been paid for much lesser platforms to appreciate the strategic value of what we have built. We have a long-term official sports betting partner of NBC, providing us access to significant strategic value in the critical area of marketing. The way NBC have embraced a growing level of integrations into their live sports coverage demonstrates the positive value add our analysis, data and personalities can bring to a live coverage and where the 2 parties can take this relationship. We have live operations in hard-to-access states such as New York, Illinois and Pennsylvania. We have a best-in-class team that together with our platform is scaling across an ever-increasing TAM. Those operators that own their technology and can execute a national strategy will be the operators that can maximize profit margins and maximize this huge North American opportunity. Happy to take questions.

[Operator Instructions] Your first question comes from Rohan Sundram from MST Financial.

A couple for me. Firstly, on the U.S. and given the pace of legislation and new state launches and your assets on the ground, is your confidence in being able to get to 19 North American states by the end of the year increased? Or maybe how good is your line of sight into that given what you said earlier in the call as well.

I think it's a pretty good line of sight, Rohan. I mean, we mentioned, I think I mentioned Ontario, Louisiana, Tennessee, Maryland and Ohio. So you're starting to get up there. There's a small state like Wyoming that's available to be watched into whenever we want to schedule that. So I think it is subject to maybe some states like Massachusetts. But no, we're confident, let's say, [ 17 ] U.S. states, plus on Parlay, I think, will be the current expectation.

Okay. And the second one is just more of a general one. Given all that's going on in equities markets, the sector valuations have derated so significantly across the board. Just keen to hear your thoughts on how, in any way, could this affect your strategy or how you're thinking about cash flow and balance sheet management as well going forward?

Yes. I mean I think we -- as we said in the script, we called out from NFL season that advertising and promotions, we believe, have got too aggressive. We expected that some of the results that our competitors would see from that period would be reasonably challenging and ugly. We've seen some competitors exit the market. We've seen some competitors talk about that they will be significantly reducing their spend. Through that period, we've maintained the same disciplined approach. We didn't get caught up in that. We would expect that as they pull back, and we continue with the same disciplined approach that our effectiveness of our marketing investment can only be stronger. And I think in terms of the market overall, we can only control what we can control. And since, let's call it, the market volatility hit in the last 5 months, we've launched 3 massive markets. We've seen our app improve from a rankings perspective. We've led the market with innovations. And yes, we're really looking forward to the next stage of hard launching in jurisdictions like Ontario. And from a cash perspective, we've got -- we do have $0.5 billion of corporate cash as of the end of December. I can tell you the board and the management team are really comfortable where we sit. We've got levers to pull if we want to. But right now, we're very confident with the cash runway that we have.

Next question comes from Larry Gandler from Credit Suisse.

Andrew, I've got a similar question to Rohan. You said during the prezo strategy is, we think product will win. My question is, what if you're wrong? And you've got a time window and a capital sort of resource to work with that's finite. And I'm not making an acquisition by saying you are wrong. I'm saying, what if you're wrong, can you pivot? Are you working to pivot? And we just need to look at a few consumer products industries, take the wine industry, for example. Oftentimes, the best-tasting wine is not the biggest brand. So you've got the best product [indiscernible] accommodation was fantastic, an exemplary of the great work you guys are doing. But what if it's not product, what if you need another dimension?

Yes. No, no, Larry, I think, look, it's product ultimately wins, but there are other factors that obviously are important. And we've talked about brand recognition. We don't have the brands that some of our competitors have, and we don't have the database that some of those have. So those factors are not insignificant. We've never said that they were. But history would tell you that some consumers will gravitate to the best product. And it's not just us saying that within the sector. I mean if you listen to DraftKings, I think they use exactly the same line, FanDuel and others always use that light. I mean, it's been proven in Australia. It's been proven in Europe. Products will ultimately win out. But that doesn't mean we don't have to overcome the fact that we don't have the brand with our competitors. We've never shied away from that. But in a market where operators were giving away sort of $3,000 free bets, it's not hard to get your head around the fact that that's going to be very attractive to the average person, and that might be where they go first. But obviously, once that's no longer available, they work through that, ultimately, consumers will end up at the product that gives them the best service. The second part around cash. As I just said, we're very confident in the cash runway that we've got. We expect that our product-led strategy, and I think most in the industry expect that a product-led strategy is going to gain increasing momentum through calendar '22.

Okay. And I guess one area I was exploring with that is if there is these other dimensions where maybe product is super important, but not necessarily the entire end game. Are you exploring any avenues to maybe bring brand into the PointsBet sort of partnership network?

Well, I think we're looking to close that gap ourselves, Larry. This is why we're spending money, some portion of our marketing budget on national assets. Obviously, at the moment, we can monetize those in 10 states. We've got the predicted database. And I often use -- try and use a reasonable example here. If Texas goes live for sports betting, let's say, '23, '24, it's going to be a completely different trajectory for PointsBet as it has been launching, let's call it, all the states that we've launched up until now. One, we would be on the starting line. We will have that market-leading product. We'll have a database in the hundreds of thousands from the Predictor app. And it's one thing to have a, let's call it, tens of thousands of leads from Predictor when you enter Virginia many months after your opposition because those 20,000 or however many leads you've got have already opened an account with one of your competitors. But if you're on the starting line, and you have that database. And you have a brand that has some recognition because you've been investing in it to grow it. So our ability to close the gap from a brand and database perspective we are working on it. And I think our strategy is sound.

Your next question comes from Joe Stauff from SIG.

I wanted to ask a couple of questions just on trends, in particular, in the U.S. and then maybe on Australia, but the Super Bowl was a favorable bowl event for the bookmakers in general with respect to sports yields. And I was wondering how overall February was just in terms of sports yield or hold for you guys?

I'd probably point you, Joe, to obviously the state reports to see what the industry is doing. I mean I'd put it this way. I haven't noticed that our yields are particularly strong or particularly compared to our longer-term trends.

Okay. And as you launched in Virginia, Pennsylvania and New York, especially prior to the Super Bowl, I guess, what did you see with respect to, say, user acquisition and/or activity subsequent to those launches, especially during the Super Bowl and maybe a couple of weeks after?

Yes. I mean we did -- even though we weren't from the starting line in Virginia or Pennsylvania, in New York, we're only a couple of weeks behind. And as I said, the next priority is definitely to ensure that for all new jurisdiction area we are in that starting line. But we did have the ability to sort of warm up those states. We were -- as I've said before, we were investing in the Washington, D.C. [indiscernible] and the SNY, so we did get off to strong starts. There's no doubt that our start in those states have been stronger than what they were historically, and we would expect them to be because we had been doing some investing to ensure that, that was the case. And when it comes to Super Bowl, exactly the same. You would expect that activity to be record. It was a pleasing day.

And for Canada, you had mentioned you were the first or one of the first licensed commercial operators. I'm wondering what you expect in Canada in terms of launches? Will it follow a sequence maybe like New York where a couple go at a time. And so maybe there is some edge for you to be in the first cohort debt launches. Do you guys know it this at this point?

No, we don't know at this point. We do know that there's only I think 3 that have been awarded licenses under the new process. I expect the likes of FanDuel and others, I think, have come out and said that they're planning on getting licensed and being there. But obviously, until they receive that license, you just don't know if that'll be on the starting line. I think we want to get off to a fast start in Ontario, as I've sort of been saying. This is our -- this is a great opportunity for us to demonstrate everything that we've built. The product is now elite. We now have scale as a business. We've got a great strategy on the ground in Ontario. This is our first opportunity to hard launch. So we always talk about the fact that in most states where we've been a share of wallet booking because every client we've attained, we had to win it off MGM, FanDuel, DraftKings, et cetera. Here's an opportunity for us to get clients first onto our platform. And once they go into our platform, even if they do go to take advantage of offers elsewhere or -- and that's one thing about the Canadian-Ontario market. There's a tighter promotions [indiscernible] which suits PointsBet that the fact that some of our competitors can't go and throw huge free bets around. It will be a more product-led market, which is fantastic for us. So all of those factors mean we're really looking forward to this. And we're going to have iGaming and sports betting live on the same day. So our progress today in North America and the U.S. markets, there has been an element of catch-up. We were a smaller player coming into that marketplace. And now we've grown. And one of the results of that was we've been catching up on these states. But for Ontario, Maryland, Ohio and other new states, there's only upside to come because we've got the product. We've got the team now, and we've got databases and marketing strategies to really hit the ground running. So yes, the environment in Ontario is still a bit of clarity to come exactly who will be there, but we'll be hitting the ground fast from the first minute.

Your next question comes from Sacha Krien from Evans & Partners.

And just a question on the marketing spend, first of all, in terms of the outlook you've given a bit of guidance there that you can be marginally higher in the second half. I mean how should we think about it going to next year, given you're going to be in a bunch of more states since we expect the natural evolution that continues to grow?