3 minute read
Stephen Crispe, the CEO of Racing and Sports, talks to Maria Petrakis about the company's plans for international expansion and exporting the company's successful formula of providing data and content about racing to wagering operators.
RAS Technology Holdings Limited (ASX: RTH), or Racing and Sports, is a company that provides data like results and content to wagering operating and racing bodies. It's raising $29 million through an issue of new and existing shares at $1.50 a piece and Ladbrokes, a unit of Entain PLC, one of the world's largest sports betting and gaming groups, has already arranged to take a 10 per cent stake in the company. The offer closes on 12 November and the shares begin trading on the 23rd.
We're speaking today with Stephen Crispe, the CEO of the company.
Stephen, firstly, there seems to be a number of people sharing the surname Crispe involved in the company. I was wondering if you could explain the relationship and the connections?
Certainly. My father, Gary Crispe, was actually one of the founders of the company back in 1999 and obviously he's been in the racing industry for a very long time and has a global brand and reputation. I've obviously worked with him for a large part of that 20 years on and off, starting early in the company with him and working on strategy and global expansion over the past three to five years and taking the great opportunity to come back down and work side by side with him now for the global expansion of the next phase of the business.
And there's another Crispe, I think?
There's Wayne Crispe, his brother, as well who's also a shareholder but he's not actually involved in the day to day operations.
Post the IPO, what sort of stake holding will your father have? Because I think your father has the biggest shareholding, is that right?
I think by a couple of points. Yeah, it's very small between him and Robert Vilkaitis and Wayne of retaining around 57 per cent of the company to post IPO.
It appears the company began primarily as a website back in 1999, but then it quickly evolved into offering data and content on a wholesale basis, am I right in saying that?
Yes, yes, of course. The website started essentially as a public resource, noting there was a gap in the market for anything like it at its time and I still think even today, there's nothing really quite like the Racing and Sports website, it's always been a leader and an innovator of the racing industry. All the content on there is free for the public so it's a really great news and analysis-based resource for punters. Obviously, that data was very useful for a wholesale purpose and I think very quickly found a market for that information to the bookmakers.
Where does R&S stand now in relation to the racing market? Are you the leading provider of data?
Racing and Sports has been around for 20 years and we service the top tier wagering operators in Australia, but also around the world with high content, information and statistical information. We believe our information and content is second to none and the market does tell us that consistently as well. Just through the stickiness of our customers, Racing and Sports has not lost an enterprise customer and that number is certainly growing in the last financial year from 12 to 16 as well so very encouraging for us and obviously we have a lot of smaller clients as well who we service and provide that high quality information too as well.
How much of the business is business to consumer and how much is business to business?
Business to business is the primary part of Racing and Sports's revenue. B2C is a small part and certainly something we're going to be working on over the next 12 months to actually build out a bigger footprint in that direct B2C revenue stream and products in that space as well, but certainly we've traditionally been a B2B company and that's what will retain the majority of that revenue going forward.
What are the margins for B2B versus B2C?
It varies. B2C is actually quite a good business for us given that the database we produce actually contains all the analytics and information. Now, presenting that to a B2C audience is always the challenge to provide them something that hits the mark. However, the margins are strong for both because it's essentially, once we build information, we can reproduce it in a variety of formats for different clients, different audiences. As we go forward, we've streamlined a lot of our business, we've automated a lot of our business, using artificial intelligence, machine learning techniques to automate as much as we can and produce that high quality information we've become known for.
I just wanted to ask, the business has been going for 22 years, how come it's only just turned a profit? I think you had a profit in the last financial year, is that right?
Racing and sports has been profitable for its whole time in operation, so very strong fiscal management across the last 20 years of running through Gary and Robert's careful management of the company, they've never sort of spent outside of the income coming into the business so it's always been on a very careful trajectory. But now is the time for growth for the business, this is what we're anticipating with the advent of the US, our moving into the UK and Europe, to obviously build the business more so into those domains and hire people to help us take the business that way.
I just wanted to go back to the financial performance last year, what sort of sales did you have? You had a net profit compared to a year earlier loss, I think, is that right?
Yeah, the pro forma EBITDA from '20 to '21, we've had a big increase in '21 and part of that was caused by the early impacts of COVID on the industry, which obviously bounces back very quickly and then we saw the rise in wagering operators and the movement to online and really seeking that high quality information to differentiate themselves. Racing and Sports has had a really good FY21 and we're seeing that trajectory continue into '22 as well.
Stephen, you're raising $29 million in this IPO, how will you be placed for cash after the IPO and what do you think the majority of that money will go to towards helping? You were talking about growth?
Yeah, definitely, the majority of the money is going to go towards our international expansion and product development, so continuing of the wholesale data content side to include some additional racing products, but also some sporting products as well using the knowhow that we've developed over 20 years to push the wholesale B2B sporting analysis products to operators, but as well as building out our trading pricing platform as well which has been hugely successful in a very short amount of time. That's been both here in Australia as well as overseas in the UK and something which we're fielding a lot of enquiries about at the moment. So really, to bolster the team, enable and support our growth into new geographic regions. We've already got a footprint over in the UK and we're also building a footprint over in the US and on the look for a senior person to join the team in that region as well.
Entain, or Ladbrokes, is taking a 10 per cent equity stake through the institutional offering. This seems pretty important. What does it actually mean?
The Entain piece is a really great vote of confidence for the racing and sports business. They see that Racing and Sports has been around for a very long time and providing the highest quality information and technology and they really wanted to give us a vote of their confidence in the business and also look to use Racing and Sports for some joint opportunities down the track. Nothing's been agreed and nothing's been decided at this point but certainly something we will look at once we get clear of the IPO process and identify joint opportunities to explore together just in a commercial relationship. Important to that, they don't have access to any sensitive information or private information of any of our clients, they're simply just a shareholder in the company at this stage and I think it'll make for a good opportunity for us to look at opportunities in the US, the UK obviously where they've got a large footprint and also here in Australia and Asia.
Do you think that their existence, their minority stake there, is a deterrent to forging other strategic partnerships that you might want to proceed with or does it help?
I don't believe it's a deterrent at all, I think actually it just shows the industry that Racing and Sports has got support from internally within the industry and we've still got a lot of support from our existing clients as well who have all come out very supportive of the move and a lot of praise as well. Entain are one of those brands that have been around for a long time, they have global recognition and they really understand the value that Racing and Sports brings in terms of the data and technology supplier.
I'm just wondering if they are the strategic partner that you've been looking for -- are you looking for other sorts of partnerships? What sort of value would a partnership bring you? Can you be more specific about what sort of thing you're looking for in a strategic partner?
We are actually talking to other strategic partners at the moment as well in different regions. We've got one in the UK as well as one in the US who we've been working with. The Entain relationship may be as simple as we look to co-develop a product, we supply them information for products that they're developing internally, or we look for a joint play into the US potentially. All those things are navel-gazing, they're all possibilities. However, the partnership model is important to us irrespective of where we are in the world. We do rely on partners for different things and they rely on us in the same way from our media and digital footprints with the Racing and Sports website and digital material which we hold, and that's a global resource attracting visitors from over 200 countries. The partnership model is very strong for us and certainly part of our growth plans.
Racing and Sports seems to be primarily focused on the racing business, so what's the expansion strategy both for the racing business and for anything outside it?
Within the racing business, we're looking at increasing the information we're providing to our corporate bookmakers. With our team of data scientists and data workers, we're actually looking to build different analytics and different products and different visualisations that can actually be provided to our B2B customer set, so that's exciting in itself, so really is looking to upsell additional content, additional services into those customers that we already have today. There's also the wagering technology side of the business which is probably the newest side of Racing and Sports and that really leads to the trading and pricing management capabilities that we have today, as well as the white label wagering platform we're launching in 2022 and some other interesting wagering products that haven't been seen before anywhere in the global market. The real growth area in the racing industry are across the wholesale data and wagering technology sides of the business. But then also as I've alluded to, the sporting side, applying the know-how and knowledge that we've built up over the 20 years using the data science models to essentially look at the different feature sets of sports and providing a similar sort of high fidelity product to wagering operators and also that B2C customer set as well, which are obviously the next part of the Racing and Sports growth.
We have the digital assets of Racingandsports.com, we're in the process of building some apps out and looking to actually really commercialise that part of the Racing and Sports enterprise.
Does that mean you would become a waging operator, sort of cannibalising your customers?
No, not a wagering operator. We would just be still providing content and information. Really, that's our sweet spot, is the analytics, the content. We don't have ambitions to become a wagering operator ourselves, they're our customer set and we'll obviously continue to provide them with that information and those technology based services that they need to run their operations.
Can you tell me a little bit more about the 360 degree White Label wagering platform?
Yes, that would enable – if you were a bookmaker, for example, and you wanted to start an online business, you would be able to come to us and we'd be able to set you up with your own branded and hosted wagering platform. We'd be able to set you up with a trading capability and a pricing capability to manage your pricing model for you, as well as all the high quality content that Racing and Sports provides today onto your website. Then to finish off the deal, we'd also be able to provide you with an advertising/marketing component to actually start to push people to your new bookmaking brand from the Racing and Sports website.
Just to give you an idea, the Racing and Sports website attracts over two million unique viewers every year and they're a highly concentrated wagering and racing enthusiast base of people, so a really valuable resource for us to have to be able to supercharge the customer acquisition for those new wagering operators.
I just wanted to ask what you've seen in terms of governments and regulatory authorities getting tougher on the gambling and wagering businesses and if that's affected your business in any sense?
It hasn't affected our business because we're somewhat removed from that whole regulatory side of the conversation, that's really for the wagering operators at the pointy end. They take that obligation very seriously, we know just from our discussions with those wagering operators that it's first and foremost on their minds about how they conduct their own business, they don't want any bad publicity and they actually want to look after the punters who bet with them as well so it's really important that they keep on the right side of those conversations and Racing and Sports is a provider to all those wagering operators and provide the information for them to provide to their punters.
Thank you so much, Stephen, for being with us, this has all been very interesting and best of luck with the IPO.
Thanks very much, Maria, I do appreciate it.
That was Stephen Crispe, CEO of Racing and Sports.
Online article taken from Eureka Report, published on Thursday, 11th November 2021, Author, Maria Petrakis.