Canadian-based Rivalry Corp. officially released its third-quarter earnings today, showing massive year-over-year growth in Q3... and an even more impressive starting to Q4 when it posted its first profitable month.
Rivalry posted a legal sports betting handle of $70.3 million for Q3 2022, which was a 203% yearly increase from 2021 — not surprising as the online sports betting site officially joined the regulated betting markets of Ontario, Canada and Australia in April and May 2022 — and am 83% improvement from the previous three-month period.
Revenue increased 93% YoY, while the company's gross profit soared by 263% from 2021 to $2.1 million in Q3 2022.
The biggest source of joy for Rivalry Co-Founder and CEO Steven Salz, however, was Rivalry's start to the final quarter of the 2022 Fiscal Year, as the company's profits for October alone were more than double that of Q3, clocking in at $4.5 million — which was also a 501% yearly increase.
"Our leading brand position among Millennial and Gen Z consumers was a catalyst in generating meaningful revenue from esports betting during a period of several tentpole international events, and ultimately driving record results in the third quarter," said Salz. "The momentum we saw during Q3 has continued into this current quarter as we delivered record results in October, including reaching our first profitable month."
Youth movement
Targeting a younger demographic has always been a priority for Rivalry, which puts the vast majority of its efforts into being a premier destination for esports betting... but its success in October signifies that it is also benefitting from the fall sports betting boon brought in by the return of football, hockey, and basketball.
Rivalry reported in October that more than 90% of its sportsbook handle during Q3 was driven by esports betting, while a presentation released today with the official Q3 earnings revealed that 55% of its monthly active bettors are aged 18-24... and more than 80% of them are under the age of 30.
While Salz added that October will likely be the high mark for the company in 2022, he does believe that continued strong growth is in the cards.
"We believe our +20% month-over-month average growth over the past year, successful casino product expansion, and increased market share ownership of esports betting positively signals directionally as to where we are headed on underlying profitability in the future," Salz said.
Eschewing promos to build loyalty
When Rivalry launched in Australia back in may, Salz said that the focus on the younger generation will always be a key to their success.
"We take a very different approach than traditional betting operators, and have been particularly successful among Gen Z and young Millennials across the globe," he said. "As we do everywhere, servicing and helping to grow the esports and gaming community will be a priority for us."
During today's Q3 earnings conference call, Salz reiterated that commitment to bettors between 18 and 25 years old, with a focus on building customer loyalty and brand affinity — not drawing in transient users with bonuses and giveaways.
"Growth at all costs is no longer necessary in the industry," said Salz. "We will take a measured approach going into 2023 based on the model we utilize."
Rivalry continues to develop and improve its user experience to be tailored to its target demographic: New features such as the "Chicken Out" option provides users with a more interactive experience than the traditional cashout options given by rival sportsbooks. As you slide and toggle the egg, legs hatch as you move to cash out in-game bets.
It is an example of how the interface is designed to inject more fun and interaction into the betting experience for Rivalry's younger betting audience. By not basing its approach on offering rewards to new customers, Rivalry is building a reputation and recognizable brand, with a tech-based approach a key in the link between esports and the new generation of bettors.
Avoiding the promotion/bonus-heavy route also allows Rivalry to instead direct marketing expenses towards things that resonate with its audience, such as through sponsoring esports teams in big competitions, having more 125 partnered content creators across key markets, and nearly 700,000 active and engaged social media followers daily.
"Our differentiated strategy and product offering is key in connecting with a demographic that legacy operators aren’t equipped to serve," said Salz. "We’ve created brand equity, loyalty, and consumer engagement that continue to guide our successful player acquisition and retention strategy, enhance customer unit economics, and highlight the operating leverage within the business that increases as we scale."
