Esports betting operator Rivalry reported record revenue in the first quarter of its 2023 fiscal year, driven by growth in both its sports betting and gaming divisions.

The CA$12.0 million (£7.2 million/€8.2 million/US$8.9 million) surpassed Rivalry’s previous record of $9.4 million in the final quarter of last year and was 150.0% higher than $4.8 million in Q1 2022.

The record turnover was accompanied by a quarterly highest betting turnover of US$120.2 million. The operator was also able to reduce the net loss by 47.3%.

Reflecting on the quarter, co-founder and CEO Steven Salz praised Rivalry’s ongoing content and brand strategy and said it will drive continued growth in 2023.

“Our position at the intersection of esports and entertainment continues to create operational impact for the company and drive organic growth,” Salz said.

“Rivalry’s content and brand strategy sets a precedent for betting entertainment in the industry. This allows us to profitably acquire customers and retain them through authentic touchpoints without constantly having to invest additional marketing and advertising expenses for growth.

“It is this approach that is producing breakthrough industry economics and user engagement and providing a path to profitability that we are very optimistic about.”

Record rivalry Q1

Looking at Rivalry’s performance in the three months ended March 31, its sports betting operations generated $10.3 million in revenue, up 119.2% from $4.7 million for the year 2022. Gaming revenue also increased by 4,786.4% from $33,956 to $1.7 million.

Rivalry also noted that user registrations reached 1.5 million at the end of the first quarter, up 114.0% year over year. Millennials and Generation Z consumers made up 97.0% of active users.

In terms of expenses, cost of sales increased 58.5% to $6.5 million, while operating expenses increased 25.0% to $9.0 million. Rivalry’s primary operating expenses were general and administrative expenses, which increased 80.0% to $4.5 million in the first quarter.

This resulted in an operating loss of $3.6 million, an improvement from $6.6 million in 2022. However, when also factoring in a foreign exchange gain of $320,360, the net loss was lower at $3, $3 million.

Rivalry also reported negative foreign exchange differences valued at $654,836 from conversion transactions. This meant that the total damage was $3.9 million, about 47.3% less than in the first quarter of 2022.

“Developing innovative products that contribute to an overall unique and interactive betting experience at Rivalry will remain a strategic focus in 2023,” Salz said. “The competitive advantage of engaging and entertaining products is increased user activity and satisfaction.

“Combined with a profitable acquisition strategy, this creates a flywheel effect within the business, generating constant organic momentum and increasing our operational efficiency.”

Strategic financing

Rivalry also noted the recently announced strategic financing that will allow the company to accelerate its operational goals and pursue strategic growth.

Led by stakeholders across sports betting, technology and payments, Rivalry closed the first tranche of the private placement with gross proceeds on May 5. The initial offering raised $6.9 million through the sale of 4,611,013 subordinate voting shares at a price of $1.50 each.

On May 23, Rivalry completed a second tranche for total gross proceeds of $382,499 through the issuance of 254,999 subordinate voting shares.

Taking brokerage fees into account, Rivalry was able to raise a total of $7.3 million and issue approximately 4,866,012 subordinate voting shares. The closing of a further tranche of the placement is expected to take place by June 23rd at the latest.