BetMakers (ASX: BET) EBITDA jumps 205% as margin triples despite modest sales growth

BetMakers Technology Group Limited (ASX: BET) has delivered a substantially stronger FY26 profit profile, with revenue increasing 8.8% to A$92.6 million while adjusted EBITDA jumped 205% to A$14.1 million. Adjusted EBITDA margin expanded to 15.2% from 5.5%, demonstrating significantly greater operating leverage than the headline sales growth suggests.

The racing-technology company also reduced operating expenses to A$49.4 million from A$52.5 million even while revenue increased, while adjusted gross margin improved to 66.9% from 64.1%. Fourth-quarter adjusted EBITDA margin reached approximately 18.2%, giving management a higher exit run-rate entering FY27 than the full-year average.

Statutory profitability remains less advanced than the adjusted numbers. BetMakers reported a net loss after tax of approximately A$5.2 million, although that was dramatically narrower than the A$25.3 million loss reported for FY25. Statutory EBITDA reached A$9.1 million, with the gap to A$14.1 million of adjusted EBITDA reflecting restructuring, acquisition expenses, share-based payments, an inventory writedown and other adjustments.

How did BetMakers turn less than 9% revenue growth into a 205% increase in adjusted EBITDA?

The answer sits in both gross margin and the cost base. BetMakers generated approximately A$8 million of additional annual revenue while simultaneously reducing operating expenses by A$3.1 million, allowing a much larger proportion of incremental gross profit to reach EBITDA.

Adjusted gross margin increased 280 basis points to 66.9%. At A$92.6 million of revenue, every additional percentage point of gross margin is worth roughly A$0.93 million of annual gross profit before operating expenses, so the improvement represents meaningful earnings leverage even before the lower cost base is considered.

Management attributed part of that progression to increased digital revenue and improved commercial economics following restructuring of the Penn Entertainment relationship. Digital products typically carry stronger incremental margins because additional wagering or content activity can scale without proportional increases in physical infrastructure or headcount.

The transformation becomes clearer over a longer period. BetMakers was producing substantial adjusted EBITDA losses several years ago. FY26’s A$14.1 million result and Q4’s higher margin suggest the business has moved from restructuring merely to survive toward testing whether revenue growth can now compound on a much leaner cost base.

Why does BetMakers’ 66.9% gross margin matter more than the 8.8% headline revenue increase?

BetMakers has previously identified approximately 70% as a longer-term gross-margin objective. FY26 brought the business within roughly 310 basis points of that level, while Q4 adjusted gross margin reached approximately 68.5%.

That progression is strategically important because BetMakers operates across several different revenue models. Tote hosting and infrastructure have different cost characteristics from digital wagering technology, content distribution and performance-linked commercial arrangements.

Digital revenue increased strongly during FY26, helping offset weaker reported revenue from Global Tote, where customer churn and currency movements remained constraints. Global Betting Services revenue increased to approximately A$43.3 million from A$34.5 million, while Global Tote revenue slipped to about A$49.3 million from A$50.6 million on a reported basis.

The group therefore does not need every division to grow at the same rate if higher-margin products become a greater percentage of total sales. The long-term earnings question becomes whether digital can continue gaining mix without destabilising the mature Tote revenue base that still provides substantial scale.

How much of BetMakers’ A$14.1 million adjusted EBITDA should investors treat as recurring?

BetMakers starts with statutory EBITDA of A$9.1 million and makes approximately A$5 million of net adjustments to reach the A$14.1 million measure. Those adjustments include roughly A$1.3 million of inventory writedowns, A$1.3 million of share-based payments, A$0.9 million of receivables impairment, A$0.9 million of restructuring costs and A$0.8 million of acquisition-related expenses.

Some of these clearly have non-recurring characteristics, particularly transaction and restructuring costs. Others require more caution. Share-based compensation may recur even if the precise annual amount changes, while receivable and inventory charges can appear periodically in operating businesses.

That makes statutory EBITDA’s move into positive territory nearly as significant as the adjusted result. The company is no longer relying entirely on add-backs to show operating profitability.

Operating cash flow also remained positive at around A$5 million for the year, providing another indication that the earnings improvement is beginning to translate into cash.

Can BetMakers maintain FY26 margin expansion if Global Tote revenue remains under pressure?

Global Tote still represents close to half of group revenue, so sustained customer losses would eventually become difficult for digital growth to absorb. The division remains strategically valuable because tote infrastructure tends to involve deep integrations with racing organisations and wagering operators, creating relationships that can extend over long periods.

The FY26 result shows that modest Tote weakness does not necessarily prevent consolidated profit growth when digital sales expand and costs remain controlled.

Management’s FY27 priorities explicitly include further digital revenue growth, international expansion, continued technology-led cost optimisation and adjusted EBITDA margin above FY26’s 15.2%.

The company will therefore be judged increasingly against its own new economics. Once investors have seen EBITDA triple on single-digit revenue growth, merely maintaining revenue becomes less compelling. BetMakers now needs to prove that the cost reset created sustainable operating leverage rather than a one-year earnings jump produced by restructuring.

Shares remained around A$0.21 following the results, suggesting the market has not yet awarded the company a dramatic valuation re-rating for the profitability improvement.

That restraint may ultimately make sense. FY26 answered whether BetMakers could become meaningfully profitable at its current scale. FY27 must answer a harder question: whether the business can grow revenue without rebuilding the costs that were removed to achieve the 15.2% margin.