Thank you for standing by, and welcome to the PointsBet Holdings Limited Q4 FY24 Appendix 4C Investor Presentation Conference Call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Sam Swanell, Group CEO. Please go ahead.
Good morning and thank you for joining the PointsBet Holdings Limited Q4 FY24 Business Update. I'm Sam Swanell, and joining me on the call today is our Group CFO, Alister Lui. Please note the safe harbor statement. All the numbers referred to are unaudited and in Australian dollars unless otherwise stated. Turning to slide three. Following the successful final completion of the sale of the U.S. business to Fanatics Betting and Gaming in April, the second capital return of $126.9 million representing $0.39 per share was completed on the 16th of May, 2024. The board is pleased to have returned a total of $442.4 million, representing $1.39 per share, to shareholders across the first and second capital returns.
As previously announced, the company applied for and received a class ruling from the ATO confirming that for Australian tax residents, no part of the first or second capital returns will be assessable as a dividend. Further details of the class ruling can be found on the investor section of the company's website. As previously noted, the completion of the sale of the U.S. business involved a complex technical and operational migration, separation, and reorganization of the business over a 10-month period. I would like to again acknowledge the entire PointsBet team for their significant efforts. The ability to continue to deliver outstanding results while restructuring the business for future growth and success is a true testament to their commitment and skill. Before I speak to the Q4 trading results, I would like to provide some comments on the full-year result.
In May, we upgraded our full-year FY24 Normalized EBITDA guidance to be a loss of between AUD 4 million and AUD 6 million. I'm very pleased to note that Normalized EBITDA is now expected to be a loss of AUD 1.8 million, which is a AUD 2.2 million improvement on the upper end of our previous guidance and represents a AUD 47.2 million improvement from the loss of AUD 49 million in FY23. On slide 4, we can see that this outstanding result has been driven by record full-year group Net Win of AUD 267.1 million, up 16% on FY23. Our improved efficiency and productivity has also been a critical catalyst. We continue to invest for further growth, in particular in our core technology and product capabilities and through our strategic marketing investment. This is driving our market share growth in Australia and Canada and setting the company up for further success in FY25 and beyond.
We will release our audited FY24 full-year results in late August, at which point further details will be provided. In Q4 FY24, the group delivered net win of AUD 68.4 million, up 12% on the PCP. Sports betting net win was AUD 64.7 million, up 12% on the PCP. Our gaming net win contributed AUD 3.8 million, up 4% on the PCP. During the quarter, our gaming performance was impacted by some VIP negative variance. We also increased the amount of casino promotional spending to re-engage our base after completing the Strive migration. Through partnering with Strive, we will be able to bring our customers a broader selection of casino games and enhanced overall experience. We expect this new offering will accelerate the growth of our iGaming business in FY25, helping drive a more favorable game mix over time with higher gross margins, along with enhanced retention and customer lifetime values.
We're also thrilled to report that the company reported a Q4 net cash flow normalized for the U.S. business sale-related items of positive $7.1 million, a record quarterly cash flow performance. Post-capital returns, the company had $28.1 million of corporate cash as at June 30th, 2024 . The company remains well-capitalized to invest in further growth and to execute ongoing operational and strategic plans. Turning to slide 5 to discuss the Australian trading business. The Australian business had another strong quarter. Net win improved 8% versus the PCP, and we continue to gain market share. Having now cycled out of PCP periods where turnover and active client numbers were noisy with some non-genuine clients, it was pleasing to see, as expected, cash active clients again grow at 227,900, up 3% from Q3 FY24. We expect active client growth to continue into FY25 and beyond.
Trading margin of 13% was above our long-term average, and this led to a strong net win margin of 10%. The sustainability of our Australian business continued to improve with net win growth versus the PCP from both our mass market and VIP cohorts. In Q4 FY2024, PointsBet Australia paid AUD 27.3 million in GST, point of consumption tax, and product fee payments to Australian governments and racing and sports bodies. This represents 45% of our net win for the quarter. Sport continued to be our strongest driver of growth in Australia. Sport again delivered strong double-digit net win growth versus the PCP, with the strongest drivers being AFL, NBA, soccer, and cricket. Racing had another quarter of single-digit net win growth versus the PCP.
Our growth in sports wagering aligns with the overall positive trajectory in demand for premium sport in Australia, especially AFL, NRL, the major North American sports, and global sports like soccer and tennis. We have a unique opportunity to win share through sports, given our world-class OddsFactory engine, our ability to personalize generosity investment on a one-to-one basis, and our sports-led brand positioning. A good example of this strategy was our success at leaning into the popularity of Same Game Multis during the recent NRL State of Origin Series. Through excellent product and promotion execution, each game of the series broke the previous record for the number of clients placing a same-game multi in a State of Origin game. This culminated in Game Three of the series breaking the all-time record for the most SGM clients for any NRL game, including all State of Origins and all Grand Finals.
We are well-positioned to carry this momentum into the upcoming AFL and NRL Final Series and into the 2024-25 seasons for NBA and NFL. Turning to slide six. In addition to our ongoing commitment to a best-in-class suite of consumer protection mechanics, PointsBet has voluntarily implemented an advertising strategy that seeks to minimize the risk of promoting wagering products to children and families. We have shaped our FY24 and 2025 advertising strategies against the theme shown on slide six that we believe could be used to form the basis of a pragmatic and fair package of government-led advertising reforms that will meet community expectations. Importantly, our results show that online wagering operators can continue to grow active and net win with this sustainable, safe, and responsible advertising model.
In Q4 FY24, we announced that PointsBet will waive our contractual rights to the major partnership for the Manly Sea Eagles and the stadium naming rights partnership for the Cronulla Sharks for FY25 and beyond. Our major partnerships with the two clubs have been very successful, but we understand that community expectations have changed, and it is no longer appropriate for gambling brands to be presented in or around the field of play for Australian sport. Turning to slide seven to discuss the Canadian trading business. We again delivered strong net win in Q4 of $8.3 million, up 52% on the PCP, as we saw strong engagement throughout the NBA and NHL playoffs, combined with the opening of the MLB season. Sportsbook net win came in at $4.6 million, up 147% versus the PCP.
This growth was driven by significant improvement from the PCP in our trading margin and more targeted promotional spending. Our sports trading margin is consistently ahead of the broader market. Our in-play mix of total handle remains strong at 66%. Our high sports margin and strong in-play handle percentage is a testament to our proprietary OddsFactory capability on the most popular North American and global sports. On the iGaming side, we delivered $3.8 million in net win, an increase of 4% versus the PCP. As mentioned earlier, iGaming performance was impacted by some VIP negative variance, and we also increased the amount of promotional spending in the quarter to re-engage our base after completing the Strive migration.
While improved efficiency-led marketing spend to be down 11% versus the PCP, the excellence of our in-play betting product, combined with a strong focus on driving customer retention and reactivation, drove cash active clients to $45.1 thousand, up 4% from Q3. I will now hand it to Alister Lui to walk through our quarterly cash flow statement.
Thank you, Sam. Turning to slide eight. At June 30th, 2024 , the company held AUD 28.1 million in statutory corporate cash. During the quarter, the company received $50 million from Fanatics Betting and Gaming, representing the final installment of the U.S. business sale headline purchase price of $225 million. The company also completed the second chunk of its capital return, returning AUD 126.9 million to shareholders. In aggregate, the company has returned AUD 442.4 million to shareholders. Q4 net cash flows from operating activities, excluding movement in player cash accounts, was AUD 11.4 million. Receipts from customers for the quarter totaled AUD 68.5 million, and operating cash outflows during the quarter included cost of sales of AUD 23.4 million, non-capitalized staff cost of AUD 9.1 million, sales and marketing of AUD 13.5 million, and administration corporate costs and GST paid of AUD 12.3 million.
We are also pleased to report that as of Q3, the company reported a Q4 net cash flow normalized from U.S. business sale-related items of positive $7.1 million, a record quarterly cash flow spend. The company remains well-capitalized to invest in further growth and to execute ongoing operational and strategic plans. I'll now hand it back to Sam.
Thanks, Al. Turning to slide nine. As set out on this slide, the company has had an outstanding year and based on unaudited results has achieved and in a number of measures exceeded our guidance for the 12 months to June 30th, 2024. These include total net win being 16% higher than FY23, gross profit margins of 52.8%, an increase from 50.2% in FY23. Total marketing expense will be 21% lower than in FY23. Normalized operating expenses, excluding marketing expense, of circa $60.4 million coming in at the lower end of the previous guidance of $60-$70 million. Normalized EBITDA is expected to be a loss of $1.8 million, which is a $2.2 million improvement on the upper end of our previous guidance and representing a $47.2 million improvement from the loss of $49 million in FY23.
In H1, the group delivered a normalized EBITDA loss of AUD 13.3 million. In H2, we have delivered an unaudited normalized EBITDA profit of AUD 11.5 million. As we start FY25, PointsBet is well-positioned to continue its revenue growth and for this growth to drive our transition to full-year profitability. Sports betting and iGaming remains a fast-growing global market, and companies like PointsBet, with a globally powerful product, proprietary technology, and international regulated markets experience, are valuable in this industry. We have a clear vision to leverage what we have built to deliver shareholder value now and into the future. We'll now take questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Rohan Sundram with MST Financial. Please go ahead.
Thank you. Hi, Sam and Alister. Just a question around how are you seeing the competitive landscape at present? And I take on board your comments around the advertising strategy. Is that also? I'll leave it at that, but just keen to get your thoughts on the competitive landscape. Thanks.
Good day, Rohan. Yeah, I mean, look, we see it being pretty rational at the moment. We haven't seen any large sort of uplift of new competitors coming to the market and pushing things into sort of irrational space. So you would see that the likes of Sportsbet, Ladbrokes, TAB, etc., everyone seems to be pretty rational. So we don't see anything on the horizon that is going to disrupt, let's call it, our trajectory and the strategy that we're executing. There's always strong competition from a product innovation perspective, and that's something that we pride ourselves on and our ability to be very competitive there. So we always expect strong competition there. Australia is a pretty mature market from that perspective.
I suppose the only other insight we get asked about a lot is expected consolidation, and we continue to expect that there's going to be attrition and/or consolidation at the low end of the market. The cost of compliance and the ability to compete from a product perspective is going to make it very hard for small operators. So that's probably our overall view of the market right now. I mean, the overall sports versus racing, I think we've given sort of our indications there that sports, from our perspective, continues to outperform racing, and that suits us because I think out of the major operators, we have the largest exposure to sports in the market.
Sure. Thank you. And sorry if I missed any comments you made earlier in the call with regards to the advertising strategy. Are you anticipating (sorry if you said this) but are you anticipating tighter regulation to come, or have you made the conscious decision to just be proactive around it?
Both. I mean, we have proactively moved into a direction that we believe is the right direction to be moving in, but it's also the direction that has proven to be the right approach for us. We don't want to be advertising to an audience that is not interested in our products. We want to be more targeted with our advertising and promotions. We definitely have the capability to do that, and media channels have the capability to do that. I think there has to be some outcome from the House of Representatives Standing Committee recommendations on advertising reform for the industry. There's going to be some change. Where we've presented our model, which we believe could represent a very appropriate model to be adopted, and that it can be adopted without the industry foregoing growth and opportunity.
Thanks, Sam.
Thank you. Once again, if you wish to ask a question, please press star one. Your next question comes from Henry Copley with Jefferies. Please go ahead.
Hi. Thanks for letting me ask a question. I was just wondering, how has 1Q25 started from a market perspective in Australia and Canada, please?
Yeah. Good day, Henry. Look, we will provide our own views of sort of forward-looking commentary at our full-year results later in August. Look, I wouldn't say we're one month into FY25. I'd say the trends that we've spoken to are, just as I answered Rohan's question, just sort of the ones that we're seeing, which is stronger growth in sports versus racing. Market continues to be pretty rational. As it relates to Canada, the Canadian market or the Ontario market specifically continues to grow strongly. I think the regulator put out some figures there that talked to the market growth. I think the market as a whole grew at sort of circa 34%. PointsBet obviously grew superior to that. So again, we're growing our market share. But Canada remains an earlier stage market with more strong growth potential.
But yeah, no specific insights as it relates to July that are any different than that we've been commenting on recently.
Okay. Great. Thanks so much. Good result. Cheers.
Thank you. There are no further questions at this time, and that does conclude our conference for today. Thank you for participating. You may now disconnect.