SBC News Rivalry reports record third quarter revenue but net loss remains

Rivalry reports record third quarter revenue but net loss remains

Rivalry has demonstrated a record Q3, reporting reduced marketing spend and flattened opex, as the group publishes its latest financial results.

The period – which ended 30 September 2023 – saw revenue of $8.7m, representing 22% increase year-over-year (Q3 2022: $7.1m) and also the highest yet for the sports betting platform’s third quarterly activity.

Notably, the TSX-listed esports-focused bookmaker also reported its betting handle at $105.7m, an increase of around 50% from $70.3m in Q3 2022, with the casino segment generating approximately half of this total.

Steven Salz, Co-Founder and CEO of Rivalry, commented: “We are proud to have delivered a record third quarter while exercising discipline on costs amidst a challenging capital markets environment for growth companies.

“Now, with our recently announced capital infusion, we will be able to go back on the offensive, while still maintaining our path to profitability.”

Meanwhile, net loss stood at $5.6m for Q3 2023, demonstrating a 6% reduction from a net loss of $6m in the same period of last year, and a 12% decrease sequentially. The company also had $7.4m of cash and no debt as of the end of the period.

In August, Rivalry launched its esports same-game parlay product, which allowed users to combine multiple bets within a single esports match for a higher potential payout. 

This new product feature was made available for top League of Legends, Counter-Strike, and Dota 2 esports matches, and has now contributed to an enhanced margin profile, as set out in the report.

Furthermore, on 15 November, Rivalry announced a private placement offering of $14m principal amount senior secured convertible debentures to scale several strategic verticals across marketing, product development, and geographic expansion.

“Years of consistent performance, flattened opex multiple quarters in a row, demonstrated triple-digit growth year-over-year across core metrics year-to-date with all-time high average handle per customer, average revenue per user, and record low cost of customer acquisition over that same period gives me high conviction in Rivalry’s future,” added Salz.

“It is this proven operating leverage, supported by improving sportsbook margin profile resulting in more revenue per dollar wagered, now fueled by growth capital, that is creating a significant opportunity set for Rivalry.”

Salz explained that it is that combination which gives the company confidence to reaffirm its first half 2024 profitability guidance. 

Rivalry also noted more geographic diversity – with its traditional markets of Ontario, where handle rose 400%, and Australia complemented by an ‘uptick in activity in Southeast Asia’, – and product diversity, with more of its customers betting on traditional sports.

Overall for the first three quarters of 2023, betting handle for the nine-month period was $338.1m, an increase of $189.2 million or 127% from $148.9m in the comparable period of 2022 while marketing spend decreased by 8%.

Revenue was $29.2m, representing an increase of $12.0 million or 70% from $17.2 million of revenue the previous year. Additionally, gross profit was also $13.2m – an increase of $8.4 million or 175% from $4.8m of gross profit a year earlier. 

Finally, net loss of $15.2m represented a reduction of $3.6m compared to a net loss of $18.8 million over the same period in 2022.

Focusing on the Gen Z and millennial demographic had been going smoothly for Rivalry until Q2 this year, when the firm revealed that its margin had been negatively impacted by some behavioural changes among this audience. 

Despite this, Salz explained to SBC following its Q2 earnings call that the group would maintain its strategic focus and engagement with its go-to audience – and onboard lessons from the prior three months.

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