In the final instalment of our series, we highlight Racing and Sports [(RAS Technology Holdings Ltd (ASX: RTH)], an ASX-listed company that is carving out a formidable presence in the racing and sports wagering sector. This article follows Parts 1 and 2, where we discussed the broader industry trends and featured two other standout ASX small-cap stocks. Racing and Sports is demonstrating impressive growth through strategic initiatives, financial stability, and a diversified approach to the industry.
Racing and Sports Delivers Impressive FY24 Results, Sets Sights on Continued Growth
In a year marked by substantial strategic advancements and financial accomplishments, Racing and Sports has distinguished itself as a rising force in the global racing and sports wagering industry. The company’s FY24 results reflect its capability to adapt to changing market conditions and lay the groundwork for sustainable growth.
At the core of Racing and Sports’ success is a diversified business model, structured around three key units: Enhanced Information Services, Wagering Technology, and Digital Media. This broad portfolio allows the company to meet the growing market demand for data-driven insights, advanced technology solutions, and engaging digital content across the racing and sports ecosystem. Each unit contributes to a holistic approach that has positioned Racing and Sports to benefit from industry trends while supporting a wide-ranging client base.
Financial Highlights and Milestones
The financial outcomes from FY24 underscore Racing and Sports’ growth momentum. A standout achievement for the year was the company’s first positive before-tax profit of $187,000, a significant leap forward from the previous year’s figures. This profitability milestone highlights Racing and Sports’ successful conversion of its strategic investments into measurable financial gains.
Additionally, the company ended FY24 with a healthy cash balance of $8.3 million, having seen only a modest reduction of $300,000 over the year. This financial stability enables Racing and Sports to fuel its growth objectives, paving the way for strategic reinvestment and operational expansion.
The company’s revenue growth has been impressive, nearly doubling since its ASX listing and reaching $16.2 million in FY24. Furthermore, Racing and Sports achieved over $19 million in annualised recurring revenue, more than doubling in the last two years. This increase reflects the company’s success in developing a loyal, high-margin customer base that is likely to continue contributing to future growth.
Strong Performance Across Business Units
Each of Racing and Sports’ core business units contributed to its positive performance. The Enhanced Information Services division, the foundation of Racing and Sports’ offering, saw a 30% year-on-year increase in annualised recurring revenue, which now stands at $11.7 million. This growth underscores the high demand for data-rich, analytically driven insights, a service that has become essential for operators and stakeholders across the industry.
The Wagering Technology division, a newer and rapidly expanding unit, reached nearly $6 million in annualised revenue, marking an impressive 65% increase from the previous year. This growth reflects Racing and Sports’ ability to capitalise on the ongoing digital transformation of the wagering industry, where technology solutions are critical for operators striving to optimise performance and enhance user experience.
Geographic Expansion and Market Penetration
Racing and Sports has not only strengthened its presence in Australia but also expanded its reach in international markets. In its home market of Australia, the company achieved a 33% year-on-year increase in recurring revenue, demonstrating its resilience and ability to capture further market share even in a mature landscape.
In the UK, a strategic focus for Racing and Sports recurring revenue surged by 43% year-on-year, bolstered by a significant deal with Playbook Engineering. The UK represents a key growth market for the company, and its success there reflects strong demand for Racing and Sports’ offerings and its ability to cater to the sophisticated needs of international clients. Additionally, the company’s “other international markets” segment saw an impressive 167% growth in recurring revenue, highlighting the global appeal and applicability of Racing and Sports’ products and services.
Strategic Partnerships and Growth Initiatives
Looking forward, Racing and Sports is well-positioned for further expansion, with strategic partnerships set to play a key role in its growth journey. The company’s alliance with Waterhouse VC is particularly noteworthy, as it provides access to an extensive network and enhances Racing and Sports’ reach on a global scale. This partnership strengthens Racing and Sports’ competitive position, particularly in the UK and European markets, where it aims to meet rising demand for comprehensive racing solutions.
In addition to partnerships, Racing and Sports is pursuing an active approach to growth through strategic acquisitions. By targeting acquisitions that could enhance its capabilities, broaden its footprint, or open up high-revenue opportunities, the company demonstrates a proactive approach to growth that aligns with its commitment to delivering value to shareholders.
The TAMIM Takeaway
Racing and Sports’ impressive FY24 results and strategic initiatives have solidified its position as a prominent player in the racing and sports wagering industry. With a diversified business model, robust financial foundation, and a clear vision for growth, the company is well-prepared to navigate the opportunities and challenges in the dynamic wagering landscape. With an Enterprise value of circa $50 million and ARR of $19 million and growing, we believe the company is undervalued with industry transactions at multiples of the current market cap of RTH.ASX.
For investors, Racing and Sports represents a compelling opportunity in a rapidly evolving industry. The company’s focus on delivering data-driven insights, advanced technology solutions, and engaging digital content sets it apart, making it a valuable player in both the Australian and global markets. Racing and Sports’ ability to capture high-growth segments within its core business units, combined with its disciplined approach to expansion, reinforces its potential for sustained profitability.
As the final feature in our three-part series, Racing and Sports rounds out our selection of ASX small-cap stocks with significant upside potential in the gambling sector. Each company we’ve highlighted BlueBet, PointsBet, and now Racing and Sports exemplifies unique strengths that align with industry trends and position them for continued growth. For investors looking to gain exposure to the ASX-listed gambling sector, these companies represent a balanced portfolio of high-growth opportunities driven by technology, innovation, and strategic expansion.
Stay tuned for more insights from TAMIM as we continue to monitor the Australian and global gambling industry for emerging trends, key players, and high-potential investments.
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Disclaimer: RAS Technology Holdings Ltd (ASX: RTH), BlueBet Holdings Limited (ASX: BBT) and PointsBet (ASX: PBH) are held in TAMIM Portfolios as at date of article publication. Holdings can change substantially at any given time.
