Canadian sports betting and media company Rivalry has announced its financial results for the second quarter of 2023, achieving a 192% growth in betting handle to $82.85 million (CAD112.2 million).
This surge in handle was coupled with a 6% reduction in marketing spend, indicating a heightened operational efficiency. Additionally, the revenue for the quarter was $6.28 million (CAD8.5 million), marking a 60% year-over-year growth. The gross profit also exhibited robust performance, growing by 86% to reach $2.81 million (CAD 3.8 million).
The company has shown its ability to acquire new customers effectively, with a 44% increase at a cost of customer acquisition that is 41% lower than a year ago. Furthermore, the average betting handle per customer witnessed a growth of 63% compared to the previous year.
The positive momentum of Rivalry's growth extended into the third quarter, with a $34.41 million (CAD46.6 million) in betting handle reported for July 2023. This figure represents an increase of 99% compared to the same period last year.
Steven Salz, Co-Founder and CEO of Rivalry, stated: "In Q2 we delivered a nearly three-fold increase in handle year-over-year. Increased marketing sophistication and enhancements to our core product have led to operational improvements, increased player wallet share, and a material year-over-year reduction in the cost of customer acquisition, positioning us well in the coming quarters."
However, Rivalry's financial statement also revealed a net loss of $4.65 million (CAD6.3 million) for Q2 2023, reflecting a 1% increase from the net loss of $4.58 million (CAD6.2 million) in the same period of the previous year. The company attributed this to a combination of low probability outcomes in esports and sports events, as well as unique behavioral betting habits from Generation Z users and several one-time expenses.
Addressing these challenges, Salz noted that Rivalry's position among young Millennial and Gen Z customers provides valuable insights into betting behaviors within this demographic. He acknowledged the associated margin volatility but emphasized the company's readiness to learn and adapt.
Rivalry's strategic focus on developing a brand among younger demographics remains a key component of Rivalry. The company is keen to address margin normalization and volatility through operational initiatives that cater to the unique preferences of its target audience.
“We are keen to share a number of additional product releases coming in Q3, beginning with Same Game Combos, our own proprietary version of same-game parlays for esports, which we released just last week,” Salz added. “This feature, and others arriving in the third quarter, strengthens our position at the edge of technical and product innovation."
Despite the net loss, Rivalry said it maintains a positive outlook and expects to achieve profitability in the first half of 2024. The company's projection is based on several factors, including sustained year-over-year revenue growth, disciplined expense management, and ongoing product innovation to enhance brand presence and user engagement.