An upstart operator of esports-focused sports betting sites is forecasting its financials will finally flip into the black in the first half of next year.
Toronto-based Rivalry Corp. announced Tuesday its financial results for the period that ended June 30, which included rising handle, revenue, and gross profit. The company offers Ontario sports betting and iGaming, in addition to holding a bookmaking license in Australia.
Rivalry also said it “projects to reach profitability in the first half of 2024,” contingent on a few factors, such as ongoing revenue growth, slower cost increases, and successful product innovation, like the company’s recently launched same-game parlays for esports.
“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,” said Steven Salz, co-founder and CEO of Rivalry, in a press release. “This feature, and others arriving in the third quarter, strengthens our position at the edge of technical and product innovation, and more broadly, our ability to continue delivering a market-leading betting experience catered to young Millennial and Gen Z consumers.”
Interesting. @rivalryca, which recently announced it will offer same-game parlays for esports, says it expects to be profitable in the first half of 2024: pic.twitter.com/4X8dCTy6VG
— Geoff Zochodne (@GeoffZochodne) August 29, 2023
The path to profitability laid out by Rivalry is big for the legal sports betting upstart, suggesting its youth-oriented strategy and the market opportunity provided by esports can lead to positive earnings. It also underlines the power of online casino gambling (which Rivalry launched in Ontario in March) and the same-game parlay, which other operators are leaning on as they seek profitability.
Rivalry reported its betting handle for the three months ended June 30 was $112.2 million, up 192% from the second quarter of 2022. The company noted that its online casino operations have helped offset a slower calendar of esports events, accounting for $57.5 million in handle in the second quarter.
Revenue for Rivalry was a record $8.5 million for the second quarter, the bookmaker said, an increase of 60% from a year earlier. Gross profit hit $3.8 million for the three months ended June 30, up 86% from Q2 of 2022. However, the company reported a net loss of $6.3 million for its most recent quarter, slightly worse than the $6.2-million deficit it recorded a year earlier.
That wacky Gen Z
Rivalry chalked up the bigger loss in the second quarter to some unfortunate esports and sports outcomes (for the book), “alongside unique behavioral betting habits from Gen Z users,” which helped cause some negative financial consequences. Even so, the company noted it had $14 million in cash and still no debt as of the end of June.
“Adjusting for non-recurring items in the Company’s operational expenses over the last four quarters, Rivalry is pleased to note that its operational expenses have remained nearly flat, while simultaneously delivering triple digit year-over-year growth in betting handle every quarter,” the company added. “It is this clear operating leverage trend, combined with concerted efforts to increasingly stabilize margin at scale, that has led the Company to provide its H1/24 profitability guidance.”
