Moreover, in a substantial year-over-year boost, Rivalry’s betting handle for Q2 2023 came in at C$112.2m, up 192% annually.
In addition, the company managed to reduce marketing spend by 6% year-over-year, while gross profit saw an 86% year-on-year increase to C$3.8m.
Margin volatility
However, it wasn’t all positive news for Rivalry. The company reported a marginal increase in net loss, by 1% to C$6.3m.
Rivalry CEO and co-founder Steven Salz attributed this to several one-time expenses and a unique behavioural betting pattern seen in their primarily Gen Z and Millennial customer base, which resulted in higher margin volatility.
“That said, challenges like this come with our position at the bleeding edge of a demographic shift in online gambling, and it has also allowed Rivalry to learn more than other operators about what is needed to succeed among this coveted cohort,” he added.
Despite the challenges, Salz expressed optimism about the company’s position, stating: “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.
Notably, the company’s casino division contributed towards diversifying its revenue streams and mitigating the esports seasonality slowdown traditionally experienced in Q2.
The division added C$57.5m in handle during the quarter.
Confident outlook
“At consistent industry average margins Rivalry would have been profitable in Q1 and Q2 this year against the betting handle wegenerated,” Salz explained.
He added that through continual adjustments, combined with the inherent advantages of scaling handle through growth that contribute to margin, volatility will decrease.
This, in turn, will have a positive impact on “bottom-line results, and propelling us to profitability in the first half of next year”.
Rivalry recently launched a mobile app in Ontario and a same-game parlay product for esports.
“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,” said Salz.
“We have barely scratched the surface of the feature set on our deep product roadmap, which we are confident will enable us to win this global generational opportunity in betting,” he concluded.
