Rivalry Posts Sequential Growth in Q1 2024 But Faces Year-Over-Year Decline
Toronto-based esports and iGaming provider Rivalry reported a notable 51% increase in net revenue for the first quarter of 2024, showing sequential growth. However, the company still lags behind its performance from the same period last year.
The first quarter saw net revenue reach $4.5 million, resulting in a net revenue margin of 58.5%—the highest in the company's history. This figure is 13% higher than the margin for the full fiscal year 2023.
For the three-month period ending March 31, 2024, Rivalry's betting handle increased by 11% from Q4 2023, reaching $94.7 million, while gross gaming revenue (GGR) rose by 20% to $7.7 million.
The company attributed these quarterly gains to “ongoing initiatives to increase margins through innovation and adjustments to the product offering.”
Innovation Driving Results
During an earnings call on May 30, Co-founder and CEO Steven Salz highlighted the success of the company's innovation strategy, noting that the record net revenue margin demonstrated that their approach was “delivering results.” Salz also mentioned that scaling back on promotions contributed to this success, as the company found alternative ways to reactivate customers through cost-effective marketing efforts.
Year-Over-Year Decline
Despite the quarterly progress, Rivalry’s financials showed a significant year-over-year decline. Comparing Q1 2024 to Q1 2023, the betting handle dropped by 21.2%, GGR fell by 35.8%, and net revenue decreased by 16.7%.
Salz emphasized the company's commitment to innovation and expressed optimism for moderate growth throughout the remainder of 2024.
Focus on Sportsbook
Rivalry CFO Kejda Qorri informed investors that the majority of the company’s Q1 2024 handle came from casino gaming (59%), while sportsbook handle accounted for 41%.
Salz hinted at future B2B revenue opportunities from the company’s original casino content, expressing eagerness to provide more details soon. Rivalry plans to explore licensing its first-party casino games further.
Qorri noted that sports betting comprised nearly 80% of the Q1 GGR, consistent with the 2023 average. “Given their significant contribution to GGR, the sportsbook segment has been a primary focus for improving margins,” said Qorri. “While gaming generates lower but more predictable margins.”
To enhance margins, the company introduced several new sports betting features during the quarter, including a basketball same-game-parlay product coinciding with the 2024 NBA playoffs, pre-made parlays, and shareable bet slips.
Introduction of New Crypto Token
Rivalry announced the upcoming launch of its native cryptocurrency, Rivalry Token, set for the second half of FY 2024. Salz described the token as a tool to engage the company’s target demographic of under-30s, who are native to the internet. Customers can earn tokens by wagering and referring friends. These tokens will integrate across the sportsbook and casino verticals to boost player engagement, loyalty, and advocacy.
However, the Rivalry Token will not be available in Ontario due to provincial iGaming regulations that prohibit the use of cryptocurrency as legal tender. Salz clarified that the token is intended as a loyalty reward rather than a betting currency, which is why it will not be launched in Ontario.
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I'm a fan of Rivalry’s approach to enhancing player engagement with new features and loyalty rewards. The introduction of the Rivalry Token is particularly interesting. While the decline in financials from last year is a bit worrisome, their continuous innovation gives me hope for the future.
The steady growth quarter-over-quarter is encouraging, but the significant year-over-year drop is concerning. I appreciate the company’s efforts to innovate and improve margins, but they need to find a way to regain their footing from last year.
Rivalry’s focus on innovation is paying off with a record net revenue margin. The different ways they are engaging customers without heavy promotions show a smart approach. I’m excited to see more original casino content and how it impacts their B2B opportunities.
The new Rivalry Token sounds like a cool idea, especially for earning rewards. It's a shame it's not available in Ontario, but I appreciate the transparency. The high net revenue margin is impressive, but I’m curious about how they’ll maintain this growth.
I love the innovative features Rivalry keeps introducing. The new same-game parlays for basketball were a fantastic addition during the NBA playoffs. However, I am a bit concerned about the year-over-year decline. Hope they can turn it around!