Rivalry invests CA$10m in product development after clearing 2022 goals

Rivalry has updated its investors on 2023 ambitions and strategy, having recorded continued financial momentum in its Q4 and full-year 2022 trading results.

Gen Z driving full-year growth

The company, based in Toronto and active in the Canadian and Australian betting and gaming markets, outlined full-year revenue of CA$26.6m (2021: CA$11m), up 140% on the year prior.

This was accompanied by a total betting handle of $2323m, up 198% on 2021 comparative of $78m, pushing gross profit up 349% to $7.6m (£2m), although increased investment did drive up a net loss.

Closing 2022, Rivalry entered the new year with a net loss of $31m – including $8m in share-based compensation expenses, less than the $10.5m the year prior – against $24m in 2021.

Notable developments for the company last year included its launch into Ontario on day one of the market’s trading on 4 April and securing market entry in Australia on 9 May.

On product development, Rivalry completed the incorporation of esports into its mobile sportsbook, whilst also taking its Casino.exe igaming product live to its international customer base.

Group Founder and CEO, Steven Salz, complemented the group’s marketing strategy for its 2022 achievements. With a Gen Z and millennial-focused approach, the firm’s tactics have seen 97% of its customers come from these demographics, and was discussed by Salz in the latest SBC Leaders magazine.

Commenting on 2022 trading, Salz remarked: “Our market strategy and operational excellence continues to build upon consecutive record-setting quarters, driving a strong finish to the year and a robust Q1, while simultaneously demonstrating sequential narrowing losses on our path to profitability,”

“Underpinning our growth is significant brand loyalty among the Millennial and Gen Z audience and true product innovation in online betting, enabling every marketing dollar to go further, enhancing retention, and creating a distinctly unique platform. 

“Rivalry continues to be economically rewarded for taking an inventive approach to the betting experience and tailoring it for a demographic with unique consumption habits.”

Closing Q4 and projecting new year profits

Breaking down figures from the final quarter of last year, Rivalry reported continued growth, with revenue up 338% from the year prior at $9m ($2.2m) and 32% from $7.1m in Q3 2022.

Betting handle also rose by year-on-year and sequentially by 237% and 19% respectively to $90m (2021: $25m and Q3 2022: $70m), with sports betting earnings proving to be the biggest earner.

Looking at the group’s produce verticals, sportsbook revenue stood at $7m, up from $6m in Q3, whilst gaming revenue from the Casino.exe division was up 119% sequentially at $2.3m ($1.1m).

Rounding off the quarter, Rivalry reported a gross profit of $5m, up 80% year-on-year from $400,000 and 139% sequentially from $2m the previous quarter.

On the other hand, investment saw Q4 account for a substantial proportion of Rivalry’s net losses, with $12m reported during the quarter, including $6m in share-based compensation.

Looking ahead to 2023 trading, Rivalry anticipates continued momentum across its Australian and Canadian markets, reporting preliminary Q1 revenue of $12m, an increase of 102% ($6m).

This has in turn driven gross profit of $5.4m, according to the firm’s preliminary outlook, up 9% on the aforementioned Q4 2022 figure of $5m. The group has also chipped away at its net losses by around 50%, cutting the number down from $6.6m to %3.5m.

Rivalry emphasised that these results were achieved with a 10% YoY reduction in marketing spend, despite its heavy emphasis on promoting its products to Gen Z and millennial bettors with new and unique techniques, as explained to SBC Leaders.

Investing for success

Seeking to ensure momentum is maintained going into Q2 2023 and beyond, Rivalry has announced further investment in its esports offering and wider product range of $10m.

Recognising the significance of esports driving 90% of sportsbook handle last year, the company aims to launch new betting markets and titles for this segment of its business, seeking to meet the ‘shifting consumption habits’ of its audience.

Broader product development will see investment in Casino.exe, including the addition of proprietary and third-party games, specifically targeting the group’s ‘core demographic’ of Gen Z and millennial consumers.

Lastly, Rivalry hopes to develop a mobile app in its regulated markets of Australia and Canada whilst eyeing up geographic expansion to unlock new addressable markets and customer bases and continue expanding its investor base.

In an interview with SBC News last year, Salz explained that Isle of Man-listed rivalry is interested in a range of markets, detailing a plan to ‘build up some pace’ before embarking on European expansion, but also recognising the potential of esports betting in regions such as South America and Southeast Asia.

“We have reached an inflexion point in the business where the economic return of our strategy and unique position at the intersection of esports and betting has outlined a clear path to profitability,” Salz concluded. 

“We are well-positioned to scale efficiently throughout the year, with a collection of near and long-term initiatives that will contribute to our disruptive product and brand.”