• Revenue: $10.1 million, up 33% on the prior corresponding period.
• EBITDA: $1.4 million, nearly doubled compared to the prior corresponding period.
• Annual Recurring Revenue (ARR): $18.3 million, representing 33% growth when normalized for changes in key customer arrangements.
• Effective Cash: $10.2 million, including an R&D grant received after the end of the year.
• Cash Flow from Operations: $2.1 million, nearly 100% growth on the prior period.
• Net Profit Before Tax: Approximately $500,000 for the first half of FY25.
• After-Tax Profit: $399,000, the first after-tax profit since IPO.
• Enhanced Information Services Growth: 28% growth on the prior period.
• UK ARR Growth: 68% growth in the first half of FY25.
• Other International Markets Growth: 36% growth on the prior corresponding period.
• Hong Kong Acquisition Revenue: $3.6 million with a profit of just over $400,000.

• Warning! GuruFocus has detected 4 Warning Signs with PERF.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• RAS Technology Holdings Ltd (ASX:RTH) reported a 33% increase in revenue for the first half of FY25, reaching $10.1 million.
• The company's EBITDA nearly doubled compared to the prior corresponding period, with a reported EBITDA of $1.4 million.
• The UK market expansion has been successful, with ARR growing by 68% in the first half of FY25.
• The acquisition in Hong Kong is expected to be accretive to earnings in the first year, with significant growth opportunities identified.
• The company has launched new products, including the Wagering 360 platform and BetBridge product, enhancing its market offerings.

Negative Points

• The Hong Kong acquisition involves $500 million in transaction costs and requires an additional $500 million investment.
• Data processing expenses have nearly doubled, reaching $1 million, primarily due to costs in the UK and France.
• ARR declined from $18.9 million at FY24 to $18.3 million in the first half of FY25 due to a change in arrangements with a key customer.
• The company faces potential risks from the takeover of Pointsbet, which could impact existing contracts.
• The Asian market expansion, while promising, involves significant investment and operational challenges.

Q & A Highlights

Q: Regarding the Hong Kong acquisition, it comes with $500 million in transaction costs and requires an additional $500 million investment. Will the earnings accretive expectation include these costs? A: Tim Olive, CFO: Some transaction costs will be short-term and should wash out through the remainder of this financial year. By FY26, we expect the acquisition to be accretive, despite upfront costs.

Q: Data processing expenses have nearly doubled to $1 million. What are the drivers behind this increase, and are these costs an investment for future growth? A: Tim Olive, CFO: The increase is mainly due to rights costs in the UK and France. These are investments ahead of growth, with some costs being fixed and others variable. As we scale, these will become a lower proportion of total revenue.

Q: What is the current status of the stake.com relationship, and what revenue level does this contract generate? A: Stephen Crispe, CEO: The stake relationship continues to grow with new bet types and territories being added. While we don't disclose individual customer revenues, the deal is performing well, and we are working closely with the stake team to mature and grow the product.

Q: ARR has declined from $18.9 million at FY24 to $18.3 million. What caused this decline? A: Tim Olive, CFO: The decline is due to a change in arrangements with a key customer, moving from a revenue share to a fixed fee deal. This change doesn't materially impact our bottom line, and we expect ARR and revenue to grow strongly going forward.

Q: How significant is the Asian market compared to other global wagering markets, and will you consider additional acquisitions in the region? A: Tim Olive, CFO: Asia, particularly for racing, is a huge part of the global wagering market, with significant turnover from Japan and Hong Kong. We see major growth opportunities and will continue to invest in Asia as a key growth driver.

Q: Has there been much product development in the last 6 to 12 months? A: Stephen Crispe, CEO: Yes, we've been working on new products and refining existing ones, particularly in data and content, wagering technology, and rapidly deployable solutions like the Bridge product. These developments aim to enhance our offerings globally.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.