Rivalry Corp. says their strategy of focusing more on Millennials and Gen Z consumers is paying off, as evidenced by the release this morning of third-quarter results, while also announcing their first-ever profitable month in October.
Rivalry offers regulated online wagering on e-sports, traditional sports, and icasino.
The company reported a record handle of CAD$70.3 million in Q3 2022 (up 203 percent year over year and 83 percent quarter over quarter) and record revenue of $7.1 million that quarter (93 percent and 35 percent increases).
But Rivalry co-founder and CEO Steven Salz said that what happened through October, the first month of Q4, is especially telling. The company that month had their first-ever profit, a single-month record handle of $37.2 million, revenue of $4.5 million, and gross profit of $2.1 million.
The company launched its first casino game in Q3 and reports that it garnered 30 percent of betting handle and 15 percent of revenue that quarter. Rivalry prioritizes e-sports, internet culture, and building brand affinity with this next generation of bettors, pushing organic growth with minimal marketing expense.
Eighty-two percent of active users are under the age of 30, while 90 percent of sportsbook handle came from e-sports in Q3.
“Much of Rivalry’s success is our ability to tap into the cultural zeitgeist of our audience, with an average age of 25, and the launch of our casino has been no different,” Salz said during an investor call Tuesday morning. “Delivering a clean net profit on a normalized basis is a promising validation of our overarching strategy, which prioritizes sustainable user economics first and scaling spend second.
“This is true operating leverage and to us the intrinsic strength of our business, as compared to the more traditional models used in our sector, which heavily rely on bonuses and promotion to drive desired customer activity. Bonusing is not the way to salvation in this industry. If bettors are coming to you for the latest promotion, then your only competitive advantage becomes your balance sheet. We’re relying on brand equity, great original product, internet culture, and e-sports to create a brand people love.”
Salz says they’ve spent “almost zero dollars” on market spend promoting their new casino offering.
Salz added that the World Cup and their casino offering will help blunt the financial impact of the e-sports off-season, which runs from mid-November to January, typically resulting in a quieter fourth quarter at Rivalry.
He added to expect the same going into Q4: disciplined spending and capital allocation as evidence by the reduced burn and profitability seen so far in October.
“This is not a declaration of victory,” Salz said. “We have a lot of hard work ahead of us.” He noted that additional casino and table games will be coming over the next few months and they’re putting the finishing touches on a mobile app for regulated markets.