https://www.realluckgroup.com/news/real-luck-group-files-2022-results
The company has filed if FY 22 results and provided some basic figures for the first time to start to substantiate our investment thesis:
Full year expenses amounted to c.C$9m, but as this included some exceptional consulting and professional fees for listings and capital markets consultants as well as the full re-development of the platform, we assume a run rate of C$8m. For FY 22, the business generated C%160,000 revenue from C$3.2m betting handle, equating to 5% revenue as a % of handle. In the single month of Mar-23 the business generated C$5m of handle, which at 5% equates to C$250,000 revenue for the month. The company has previously stated it needs C$12m in handle to breakeven and this is now supported by the figures disclosed – C$12m in handle at 5% is C$600,000 monthly revenue, equal to C$7.2m annual revenue which is close to our C$8m of run rate expenses.
With the company expecting to be at breakeven on a monthly basis in H2 23, they need to go from C%5m of handle in Mar-23, up from $2.8m in Feb-23, to $12m in (probably) Jul-23, which looks achievable given the current growth trajectory i.e. Feb to Mar growth was 79%, so for the 4 months Mar-Jul they would ‘only’ need 25% monthly growth. Our previous C$2.5m annual EBIT estimate implies revenue of C$10.5m which at 5% of handle implies C$210m annual handle or C$17.5m monthly handle. We hope that the company continues to publish monthly updates so that we can monitor the trajectory.
This all, of course, excludes any revenue from the new B2B micro-betting product to be launched late in the year, for which development expenses have been included in the FY 22 and run rate costs.
However, in the notes the company also discloses an ongoing placing, resulting in equity dilution which is unfortunate at the current price despite previous statements that the business is funded through breakeven. Upon public announcement of the placing in the coming days, we are very interested to understand what this funding will used for to justify the dilution at current prices.
“The Company has commenced a non-brokered private placement offering up to approximately $2,400,000. The issue price is $0.12 per unit and each unit shall consist of one common share of the Company and one common share purchase warrant. Each warrant shall be exercisable into one Common Share of the Company for a period of 36 months from closing at an exercise price of $0.24 per common share. The closing date is expected to be on or about May 5, 2023.”
