Rivalry hails diversification impact as revenue rises in 2023

Rivalry’s strategic expansion into diverse market segments has propelled year-on-year revenue growth by an impressive 34%, reaching $35.7 million (£28.3 million/€33.0 million) in 2023. Simultaneously, the betting operator successfully reduced its net loss, establishing a promising trajectory for sustainable expansion.

In its preliminary results announcement, Rivalry reported that the surge in revenue was complemented by an increased betting handle and robust gross profits. These combined factors contributed to a substantial 22% reduction in net loss, highlighting the operator’s financial resilience in a competitive landscape.

Reflecting on this pivotal year, co-founder and CEO Steven Salz credited diversification as the cornerstone of the company’s success. “Growth in traditional sports, casino, and fantasy sectors, alongside our core esports offerings, has enabled us to evolve into an increasingly diversified enterprise,” he stated.

“In 2023, we gained significant traction in new segments, broadening our opportunities and positioning for medium- to long-term sustainable growth,” Salz added. “Closing the year with record customer economics and diversified revenue streams underscores our fortified competitive advantage in Gen Z betting entertainment and experiences.”

Rivalry’s Strategic Diversification

This diversification strategy has facilitated Rivalry’s entry into various new markets. Notable advancements in 2023 include significant product launches within the regulated Ontario market in Canada.

In March, Rivalry unveiled its online casino product, marking a groundbreaking expansion into this lucrative segment. Shortly thereafter, the operator extended its Casino.exe sports betting brand into Ontario, further solidifying its market presence.

This expansion aligns with a growing demand for in-house casino game licensing, which is accelerating the development of Rivalry’s B2B vertical, setting the stage for further growth in 2024.

“Our operational excellence across product and brand marketing last year is reflected in positive key performance indicators (KPIs) and consistent year-over-year growth,” Salz emphasized. “We are demonstrating our ability to attract and retain the coveted Gen Z demographic through an entertainment-driven product suite, culturally relevant branding, and a fearless team committed to challenging industry norms.”

Record-Breaking Performance in 2023

While Rivalry has yet to release its complete financial results for 2023, key figures demonstrate substantial progress. Revenue was predominantly driven by a remarkable 92% increase in casino revenue, totaling $6.4 million. Casino betting accounted for 52% of the annual betting handle, which grew by 82% to $423 million.

Rivalry also reported an all-time high average handle per customer—up nearly 30%—and a record low customer acquisition cost, which decreased by 15%. Additionally, total player registrations surpassed two million in 2023, showcasing the operator’s effectiveness in customer engagement.

These achievements contributed to a significant 66% increase in gross profit, amounting to $16.2 million. Furthermore, total operating expenses saw a reduction of $1.0 million, bringing the total to $38.9 million, aided by decreased marketing expenses that balanced out increases in general administration and technology-related costs necessary for supporting growth.

As a result of this revenue growth coupled with reduced expenditures, Rivalry reported a lower net loss of $24.3 million for the year.

Mixed Q4 Performance Yet Strong Overall Outlook

Despite delivering robust preliminary figures for the year, Rivalry experienced a mixed performance during the last quarter of 2023. In Q4, revenue declined by 32%, falling to $6.5 million. The operator attributed this decrease to less favorable sportsbook outcomes compared to the exceptionally beneficial results of 2022. Nevertheless, betting handle slightly increased, rising from $83.9 million in 2022 to $85.2 million in 2023.

Gross profit also reflected the lower revenue, decreasing by 40% to $2.0 million. Conversely, net loss improved, reducing from $12.3 million to $9.0 million. After adjusting for accruals, non-cash items, and one-time expenses, the adjusted net loss would have been approximately $7.0 million.

Future Directions for Rivalry

Positioned to build on its successes from 2023, Salz outlined Rivalry’s strategic initiatives going forward. In Q1, the operator is strategically allocating capital from Q4 investments toward enhancing customer acquisition and revenue growth. This approach includes amplifying effective marketing strategies, launching higher-margin products, and developing proprietary betting experiences.

Salz anticipates these efforts to yield results in the first half of 2024 and beyond. The company has reiterated its guidance, expecting to achieve profitability in that timeframe.

“The upcoming year is filled with innovative product launches slated for Q2 and continuing throughout 2024,” Salz stated. “Along with the strengths of our core offerings, we are poised to unlock what we perceive as two of the most significant advancements in our business model since our inception in 2018:

“The first is a B2B vertical for licensing in-house developed games. The second encompasses exploration within the burgeoning crypto ecosystem—both of which represent impactful catalysts for growth as we aim for profitability this year.

“I have never been more confident in our product roadmap and the trajectory for Rivalry this year. Beyond launching new products, original games, and unique features, we are focused on enhancing the overall entertainment value of our core offerings, delivering a distinctly tailored experience for the tech-savvy, next-generation customer within the competitive sports betting landscape.”