Rivalry Announces Record Fourth Quarter, Year-End 2022, and All-Time High Quarterly Revenue In Preliminary Q1 2023 Results

Rivalry Corp., an internationally regulated sports betting and media company, today announced its financial results for the three and 12-month periods ended December 31, 2022. The Company also announced preliminary results for the three-month period ended March 31, 2023. All dollar figures are quoted in Canadian dollars.

“Our market strategy and operational excellence continues to build upon consecutive record-setting quarters, driving a strong finish to the year and a robust Q1, while simultaneously demonstrating sequential narrowing losses on our path to profitability,” said Steven Salz, Co-Founder and CEO of Rivalry. “Underpinning our growth is significant brand loyalty among the Millennial and Gen Z audience and true product innovation in online betting, enabling every marketing dollar to go further, enhancing retention, and creating a distinctly unique platform. Rivalry continues to be economically rewarded for taking an inventive approach to the betting experience and tailoring it for a demographic with unique consumption habits.”

Full-Year 2022 Financial Highlights

• Betting handle was $232.8 million in 2022, an increase of 198% compared to $78.2 million in 2021.
• Revenue was a record $26.6 million in 2022, an increase of 140% from $11.0 million in 2021.
• Gross profit was $9.8 million in 2022, an increase of $7.6 million or 349% from $2.2 million in 2021.
• Net loss for the year was $31.1 million, compared to a net loss of $24.3 million in 2021. The 2022 net loss includes $8.2 million of share-based compensation expense, a non-cash item, compared to $10.5 million of share-based compensation expense in 2021.
• The Company had $16.4 million of cash and no debt as at December 31, 2022.²

Fourth Quarter 2022 Financial Highlights

• Betting handle was $83.9 million in Q4 2022, a year-over-year increase of 237% compared to $24.9 million in Q4 2021, and up 19% sequentially from the previous record quarterly handle of $70.3 million in Q3 2022.
• Revenue was $9.4 million in Q4 2022, a year-over-year increase of 338% from $2.2 million in Q4 2021, and represented the Company’s highest-ever revenue up to that point. Revenue was up 32% sequentially from $7.1 million in Q3 2022.
• Sportsbook revenue of $7.1 million in Q4 2022 was $1.0 million higher than in Q3 2022, driven by a very strong month in October. Gaming revenue of $2.3 million was up by $1.2 million or 119% over Q3 2022, as the Company began offering a wider set of casino games on its Casino.exe platform.
• Gross profit was $5.0 million in Q4 2022, a year-over-year increase of $4.6 million from $0.4 million in Q4 2021, and up 139% sequentially from $2.1 million in Q3 2022.
• Net loss for Q4 2022 was $12.3 million. The net loss included $6.4 million of share-based compensation, a non-cash expense that is not expected to recur in future periods, as well as non-recurring spending of $1.1 million. Absent those non-recurring items, the Q4 2022 adjusted net loss was $4.9 million³, in line with a trend of narrowing losses over the past four quarters.

First Quarter 2023 Preliminary Results⁴

• Betting handle for the three-month period ended March 31, 2023 was $120.2 million, an increase of $80.0 million or 199% from $40.2 million in Q1 2022. Betting handle increased by $36.2 million or 43% from the previous quarterly record of $83.9 million in Q4 2022.
• Revenue for Q1 2023 was $12.0 million, an increase of $7.2 million or 151% from $4.8 million in Q1 2022, and up $2.5 million or 27% over Q4 2022 revenue of $9.4 million.
• Gross profit was $5.4 million in Q1 2023, an increase of $4.8 million from $0.7 million of gross profit in Q1 2022, and up $0.4 million or 9% from Q4 2022 gross profit of $5.0 million.
• These results were achieved with a 10% reduction in marketing spend YoY.
• Net loss was $3.5 million for Q1 2023, compared to a net loss of $6.6 million in Q1 2022.

Operational Highlights

• Rivalry obtained licences in its first two fully regulated markets, commencing gaming operations in Ontario on April 4, 2022 and in Australia on May 9, 2022.
• The Company added mobile esports to its sportsbook in March 2022, enabling customers to wager on a variety of competitive esports played on mobile devices.
• The Company entered the casino segment with its first third-party game in Q3 2022 and launched its proprietary platform Casino.exe in the fourth quarter with several additional games.
• Customer registrations increased to approximately 1.5 million by the end of Q1 2023.
• Rivalry’s creator partner network and owned media properties reached a total of 85 million followers, deepening reach, acquisition, and engagement among core target audience.
• Company brand strategy helped maintain market-leading position among next generation of bettors, with Millennial and Gen Z consumers accounting for 97% of active users in 2022.
• Esports betting continues to drive significant growth, representing nearly 90% of sportsbook handle in 2022.
• The Company expanded its casino offering in January 2023 with eight new titles including live dealer and table games, and debuted Casino.exe in its home market of Ontario in March 2023.
• On April 26, 2023, Rivalry announced a private placement for gross proceeds of up to $10 million (the “Private Placement”) with participation from key sports betting, technology, and payments stakeholders, signaling a vote of confidence in the Company’s user economics and ability to execute within this emerging vertical. The Private Placement is expected to close in one or more tranches commencing on or about May 5, 2023.

Outlook

“We have reached an inflection point in the business where the economic return of our strategy and unique position at the intersection of esports and betting has outlined a clear path to profitability,” Salz added. “We are well-positioned to scale efficiently throughout the year, with a collection of near and long-term initiatives that will contribute to our disruptive product and brand.”

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Initiatives the Company expects to drive continued growth in 2023 include:

• Expanding our esports offering to deepen our core product, attract new customers, and establish the most comprehensive product globally.
• Continued evolution of our interactive Casino.exe platform and release of additional proprietary and third-party games that cater to our core demographic and further establish a betting experience unique to Rivalry.
• Continued product development, including new betting markets and proprietary platform features, to meet shifting consumption habits of Millennial and Gen Z consumers.
• Launch of a mobile app in our regulated markets to increase accessibility of our product and player acquisition.
• Geographic expansion to increase our addressable market and customer base.
• Expanded brand execution through premium content, creator partner programming, and community activations to enhance customer engagement and retention, solidifying Rivalry’s leadership position among next generation consumers.
• Continuing to grow our investor base through proactive capital markets outreach.