Esports betting operator Rivalry remained at a net loss in Q3 despite posting record revenue of $8.7m (£6.9m/€7.9m), while comprehensive loss at the business also widened.
Revenue was 22.5% higher year-on-year during Q3. Rivalry reported growth across both its sportsbook and gaming sectors in the three months to 30 September.
However, increased operating costs and foreign exchange loss offset the revenue hike in Q3. This meant comprehensive loss for the quarter widened to $6.0m, compared to $5.6m in 2022.
Reflecting on Q3, co-founder and CEO Steven Salz praised Rivalry for revenue growth amid a “challenging” capital markets environment. He said this will stand the business in good stead for further growth in Q4 and beyond.
“We are proud to have delivered a record third quarter while exercising discipline on costs amid a challenging capital markets environment for growth companies,” Salz said. “Now, with our recently announced capital infusion, we will be able to go back on the offensive, while still maintaining our path to profitability.”
Betting handle rise accompanies revenue growth
Taking a closer look at the three months to 30 September, sportsbook was the main revenue source for Rivalry. Revenue from this segment was 42.6% higher at $8.7m in Q3.
Rivalry also reported growth in its casino business, with revenue rising by 50.0% to $1.5m.
Elsewhere, Rivalry said total betting handle across its offering jumped 50.4% to $105.7m. Of this total, $50.4m came from casino gaming, with Rivalry saying this was helped by recent launches, including the roll-out of its Casino.exe brand in Ontario in Canada.
Year-on-year cost increases hit bottom line
As for expenses, cost of revenue was 5.9% lower at $4.8m for Q3. However, operating costs increased by 14.8% to $9.3m. This left an operating loss of $5.3m, shorter than the $6.0m loss posted in 2022.
Rivalry also noted $367,457 in foreign exchange loss at $4,872 of interest expense. Based on this, the operator was left with a net loss of $5.6m, an improvement on $6.0m last year.
However, after also accounting for $363,133 in negative foreign exchange translation difference, this pushed comprehensive loss to $6.0m. Last year, Rivalry posted a shorter comprehensive loss of $5.6m after benefiting from $401,071 in positive foreign exchange translation difference.
Brighter picture in the full year
Looking to how Q3 impacted year-to-date performance, this, on the whole, made for positive reading. Rivalry posted $29.2m in revenue for the nine months to 30 September, an increase of 69.8%.
Sportsbook operations accounted for $24.3m of this total, up 50.0% from last year. Gaming revenue reached $4.9m, rocketing 345.5% from $1.1m in 2022.
Cost of revenue climbed 29.0% to $16.0m and operating expenses were 19.5% higher for the period at $28.2m. However, such was the impact of its revenue growth that operating loss shortened from $18.8m to $15.0m.
Rivalry reported $190,423 in foreign exchange loss at $12,435 in interest expenses. This left it with a net loss of $15.2m, an improvement on last year’s $18.8m loss.
After including $1.4m in negative foreign exchange translation difference, comprehensive loss hit $16.7m, but this was still shorter than $19.1m in 2022.
“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,” Salz said.
“It is this proven operating leverage, supported by an improving sportsbook margin profile resulting in more revenue per dollar wagered, now fuelled by growth capital, that is creating a significant opportunity set for Rivalry.
“It is that combination which gives us confidence to reaffirm our first half 2024 profitability guidance.”
Original Article
