Topline numbersQ2 2023, marking the highest ever for any second quarter in its history.
Additionally, Rivalry’s betting handle for Q2 2023 reached C$112.2m, reflecting a noteworthy 192% year-over-year increase.
In H1 2023, revenue reached C$20.5m, a year-over-year increase of 103%. Betting handle hit C$232m, up 196% on H1 2022.
Rivalry has set its sights on achieving profitability by the first half of 2024.
The company has made significant strides in the second quarter of 2023, with a remarkable 86% increase in gross profit (C$3.8m) compared to the same period last year.
Despite this progress, a one-percent worsening in net loss (C$6.3m) has highlighted the unique challenges the company faces in its pursuit of profitability.
The increased net loss was attributed to a selection of low-probability esports and sports outcomes, as well as distinctive betting behaviours exhibited by Gen Z users. These factors led to heightened margin volatility, thus negatively impacting revenue.
Additionally, the incorporation of various one-time expenses further contributed to the expansion of the company’s net loss.
CEO Steven Salz acknowledged these challenges and revealed the company’s strategies to address them. To tackle this, Rivalry plans to diversify its marketing efforts through media channels and enhance its product suite.
Salz maintained optimism about Rivalry’s profitability target, citing ongoing product innovation and brand maturity as crucial factors.
In Q2 2023, the company attracted 44% more new customers year-over-year while cutting customer acquisition costs by 41%.Moreover, the expansion of the offering beyond esports and traditional sports markets to casino added C$57.5m in betting handle during the quarter, partially offsetting esports seasonality.
During the earnings call, CEO Salz was asked to offer further insights into the profitability guidance and to expand upon the strategies and mechanisms that have been implemented to attain profitability.
In his reply, Salz highlighted the introduction of new products and releases, specifically mentioning the success of the recent casino addition that organically boosted the company’s performance, with “literally $0 in marketing spend”.
Rivalry expects to see a similar uplift from new product releases, he added.
Moreover, he said that with increased volume, the company can attain more consistent margins over time due to the “law of large numbers”.
He also mentioned efforts to strategically enhance the margin mix, including the introduction of higher-margin products like same game combos, which contribute to improved profitability.
Lastly, Salz also touched on operational optimisation, which allows for modest increases in selected margins without compromising the company’s reputation for trustworthiness.
“It’s a combination of all those things that we feel will get us there,” he concluded.
Current trading and outlook
Rivalry continued to exhibit strong performance as it entered Q3 2023 as the company generated betting handle of $46.6m for the month of July 2023.
This achievement not only marks a significant milestone but also reflects a substantial 99% year-over-year surge compared to the same period in the preceding year.
Looking ahead to the upcoming year, Rivalry plans to reach profitability during the first six months.
These projections are rooted in the expectation of consistent revenue growth across successive quarters, a focus on prudent cost management and the sustained introduction of innovative products.