Rivalry, an esports betting company that operates in the UK and Ireland, continued to make a loss despite achieving a record $8.7m revenue (PS6.9m/EUR7.9m) for Q3, while its overall loss also increased.
The revenue was up 22.5% year-over-year in Q3. Rivalry has reported growth in both their sportsbook and gambling sectors for the quarter ending 30 September.
The revenue increase in Q3 was offset by increased costs of operations and the foreign exchange losses. The comprehensive loss in the third quarter increased to $6m compared with $5.6m for 2022.
Steven Salz, co-founder of Rivalry and its CEO, lauded the company’s revenue growth in Q3 despite a challenging capital market environment. This will help the company grow in Q4 as well as beyond.
Salz stated, “We’re proud of our record-breaking third quarter and the discipline we maintained on cost management in a difficult capital market environment for growing companies.” With our newly announced capital injection, we can now go on the offensive while maintaining profitability.
Revenue growth is accompanied by an increase in the number of betting handles
Looking at the quarter ending 30 September in more detail, the sportsbook was Rivalry’s main source of revenue. In Q3, revenue from this segment increased by 42.6% to $8.7m.
Rivalry’s casino revenue grew by 50% to $1.5 million.
Rivalry also reported that the total bets across all of its products grew by 50.4%, to $105.7m. Rivalry said that $50.4m of this total came from gaming in casinos. This was due to recent launches including the launch of Casino.exe in Ontario, Canada.
Cost increases year-on-year hit the bottom line
In Q3, the cost of revenue decreased by 5.9% to $4.8m. Operating costs, however, increased 14.8% from $9.3m to $4.8m. The operating loss was $5.3m, which is less than the $6.0m in 2022.
Rivalry reported a loss of $367 457 on foreign currency and incurred interest costs $4 872. The operator ended up with a $5.6m net loss, compared to $6.0m in the previous year.
After accounting for the negative $363,133 foreign exchange difference, comprehensive loss increased to $6m. Rivalry’s comprehensive loss was $5.6m last year after it benefited from a positive translation of foreign currency difference worth $401,071.
A brighter outlook for the entire year
Overall, the Q3 performance has had a positive impact on year-to date results. Revenue for nine-month period ending 30 September was $29.2m, a 69.8% increase.
The Sportsbook Operations accounted for 24.3m, an increase of 50.0% over last year. The gaming revenue in 2018 reached $4.9m, up 345.5% on the $1.1m of 2022.
Operating expenses for the same period were $28,2m, up 19.5%. The revenue increase was so significant that the operating loss decreased from $18.8m down to $15m.
Rivalry has reported a foreign exchange loss of $190 423 and interest costs of $12 435. It ended up with a loss net of $15,2m, compared to $18,8m last year.
The loss after including the $1.4m negative translation of foreign currency difference was $16.7m. This is still less than 2022’s $19.1m.
Salz stated, “Years and years of consistently high performance with flattened operating expenses multiple quarters, triple-digit year-over year growth across all core metrics, including the highest average handle for each customer ever, as well as average revenue per client, along with a record-low cost of acquisition of customers over this same time period, gives me a high level of confidence in Rivalry’s future.”
This proven operational leverage is backed by a better sportsbook margin profile, resulting in a higher revenue per dollar wagered. Growth capital is now driving this opportunity.
This combination gives us the confidence to confirm our profitability forecast for 2024’s first half.
