Release Date: April 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Betting handle increased by 82% to $423.2 million in 2023 compared to the previous year.
- Revenue grew by 34% to $35.7 million over 2022, with a gross profit rise of 66% to $16.2 million.
- Operational expenses remained relatively steady despite significant growth, with a notable 15% reduction in marketing spend year over year.
- Net loss reduced by 22% to $24.3 million in 2023.
- Customer Key Performance Indicators (KPIs) showed positive trends with records set for average handle per customer, average revenue per user, and a record low cost of customer acquisition.
Negative Points
- The fourth quarter showed a slower finish with only a 1.5% increase in betting handle over Q4 2022.
- Revenue in Q4 decreased by $3 million from Q4 2022 due to less favorable sportsbook outcomes.
- Gross profit in Q4 also saw a $2 million decrease from the same quarter in the previous year.
- Unfavorable timing of major e-sports events in Q4 due to geographic locations impacted betting handle negatively.
- The company is still in the process of wrapping up the audit, and full audited financial statements and MD&A are pending.
Q & A Highlights
Q: Can you discuss the balance between growth and profitability initiatives as Rivalry Corp heads into fiscal 2024?
A: Steven Salz, CEO, Co-Founder, Director of Rivalry Corp, explained that the company aims to have revenue exceed expenses, reaching a profitable run rate at some point within the first half of 2024. The strategy involves higher returns on invested capital, improved customer acquisition costs, and increased betting margins. The company is confident in achieving profitability due to these factors, despite increasing marketing spend.
Q: How is Rivalry Corp addressing the impact of major events being held in less favorable time zones for the customer base?
A: Steven Salz mentioned that they had marketing campaigns to encourage betting during inconvenient times, such as providing coupons for energy drinks. He also discussed the potential regulation in Brazil, where Rivalry Corp is prepared to participate in the market once regulation is finalized.
Q: What are the expectations for the B2B licensing and crypto initiatives to impact the P&L, and how should they be considered as potential revenue drivers this year?
A: Steven Salz indicated that B2B licensing opportunities could materialize in the second half of 2024, with global and gray market opportunities potentially being more near-term. As for crypto, the company is working on integrating crypto payments and exploring crypto-enabled technologies to serve their target audience. More details on these initiatives are expected to be shared in the coming months.
Q: How is the company thinking about the Brazilian market and the ongoing licensing there?
A: Steven Salz acknowledged Brazil's importance and mentioned that Rivalry Corp is following the regulatory process closely. While the final details of the regulation are still pending, the company is fully prepared to participate in the Brazilian market once it becomes regulated.
Q: Can you provide more color on the strategic initiatives, particularly the B2B license and crypto?
A: Steven Salz shared that the company is forming relationships for B2B licensing, which could lead to new revenue streams. He also mentioned that Rivalry Corp is exploring greater support for cryptocurrency on their platform and developing crypto-enabled technologies to meet consumer demand. These initiatives are expected to unlock value for the company and its shareholders.
Q: What is the company's approach to customer acquisition and marketing spend?
A: Steven Salz highlighted that Rivalry Corp has seen significant gains in average handle per customer and average revenue per user, while reducing the cost of customer acquisition. The company plans to deploy capital in areas that are driving customer acquisition and revenue, with a focus on marketing strategies that have proven successful.
Q: What impact did the timing of major e-sports events have on betting handle in Q4?
A: Steven Salz explained that major e-sports events like Dota-2 and League of Legends took place in time zones that were unfavorable for the core betting base, resulting in matches occurring in the middle of the night. This negatively impacted the betting handle for October and consequently Q4 as a whole.
Q: What are the company's plans for product releases and developments in 2024?
A: Steven Salz expressed confidence in the company's product roadmap for 2024, which includes new products, original games, and proprietary features. Rivalry Corp aims to enhance the entertainment value of their core product and provide a tailored experience for tech-savvy, next-generation customers.
Q: How is Rivalry Corp planning to leverage its brand and community to maintain a competitive advantage?
A: Steven Salz emphasized that Rivalry Corp's brand and the communities built around gaming fans and tech-savvy users are major competitive advantages. The company is focused on establishing a brand and product form factor that appeals to Gen Z and digitally native users.
Q: What are the company's expectations for the fantasy NBA app and its contribution to growth?
A: Steven Salz mentioned that the standalone fantasy NBA app is acquiring new users and engaging them in Rivalry Corp's product universe. This supports the growth in traditional sports, which has grown by 60% since 2022, and positions the company for sustainable growth in the medium to long term.
