Rivalry Reports Third Quarter 2024 Results; Rivalry Token Momentum Leading Company’s Crypto-Native Future; Reveals Organizational Realignment, Major Product Revamp

Rhea-AI Summary

Rivalry Corp (RVLCF) reported Q3 2024 results with betting handle of $79.9M and adjusted revenue of $6.0M, including $3.0M in deferred revenue from Rivalry Token (NUTZ). The company completed a major organizational realignment, reducing operating expenses by approximately 50% and headcount by 50%. Average net revenue per user increased by 51% compared to 2024 YTD average and 70% versus three-year trailing average.

The company executed its largest product overhaul, implementing a crypto-first strategy. Crypto wallet-connected customers generate 200% more revenue than baseline users, with 30% higher retention rates. Rivalry closed a second tranche of non-brokered private placement for $1.0M, bringing total proceeds to $3.0M.

Positive

• Operating expenses reduced by approximately 50%
• Average net revenue per user increased 51% vs 2024 YTD
• Crypto wallet-connected customers generate 200% more revenue than baseline users
• Customer retention rates 30% higher for crypto users
• $3.0M in deferred revenue from Rivalry Token
• Secured $3.0M through private placement financing

Negative

• Net Revenue declined to $3.0M in Q3 2024
• Nine-month net revenue down 8% from 2023
• Marketing spend reduced by 30% year-over-year
• Cash position at $2.1M as of September 30, 2024
• Company withdrew H2 2024 profitability guidance

Rivalry Token Captures $3.0 Million in Deferred Revenue; Company Executes Significant Organizational Realignment Throughout the Third Quarter to Reposition Product, Brand, and Team for Crypto Gambling Market; Delivers Substantial Reduction in Operational Expenses; Closes Second Tranche of Non-Brokered Private Placement for $1.0 Million

• As of today, the Company has completed the largest product, brand, and marketing overhaul in its history to support a global, crypto-first strategy and maximize wallet share of high value players (“HVP’s”).
• Average net revenue per user has hit all-time records, increasing by 51% as compared to the average of the trailing 2024 period, and by 70% as compared to the trailing three-year average since launching the initial set of new product features in October.
• Rivalry’s current run rate operating expenses are approximately 50% lower as compared to those in this Q3 2024 report. This is a result of its third quarter organizational realignment, and the associated cost savings now being nearly fully realized.
• Crypto-native strategy, led by Rivalry Token, is delivering strong results, with crypto wallet-connected customers generating 200% more revenue than baseline users and retention rates 30% above the average.
• Rivalry closes the second tranche of its previously announced financing for aggregate proceeds to date of $3.0 million, fortifying its balance sheet. The Company was pleased to see support from insiders, family and friends, and long-term shareholders, validating its meaningful organizational transformation executed throughout the third quarter.
• Third quarter betting handle of $79.9 million¹.
• Adjusted Revenue of $6.0 million².
  

TORONTO, Nov. 29, 2024 (GLOBE NEWSWIRE) -- Rivalry Corp. (the “Company” or “Rivalry”) (TSXV: RVLY) (OTCQX: RVLCF) (FSE: 9VK), the leading sportsbook and iGaming operator for digital-first players, today announced financial results for the three- and nine-month periods ended September 30, 2024. All dollar figures are quoted in Canadian dollars.

“From the start of the third quarter through to the release of these results, we have undergone the most substantive evolution of our business since founding,” said Steven Salz, Co-Founder and CEO of Rivalry. “This work was done to better attune ourselves to an evolving online gambling market where cryptocurrency has become the global payment method of choice, and to align our offering with the experiential expectations of the players driving this industry-wide shift. These initiatives were set in motion during the second quarter alongside the announcement of Rivalry Token, and I’m proud to say we are emerging out the other side of this undertaking as a fundamentally leaner company, and better positioned for growth.”

“Over this period we have completely rebuilt every core element of our product, intentionally designed to service crypto-native users and high value players. We’ve also undergone a comprehensive rebrand, and significantly drawn down marketing spend associated with our prior strategy. Our native crypto token has developed materially, becoming more integrated with our VIP strategy and overall growth plan, allowing us to better scale in this category. On an organizational level, we reduced our headcount by 50% through two workforce rationalizations and adjusted our performance culture, resulting in a more robust and higher output organization, with measurable output climbing over 200%.”

“The immediate financial results of this high-conviction business evolution is that short-term net revenue is down, however we are beginning to go back on the offensive with a completely evolved product, brand, and marketing approach, as well as an operating footprint that presents a much smaller gap to profitability to close. Despite this transitional net revenue impact, we are already observing high signal from our work; in just the two short months since we began to deploy the initial set of crypto and HVP-targeted product releases, our average net revenue per user has hit all-time record levels, increasing by 51% as compared to the 2024 year-to-date average, and by 70% as compared to the trailing three-year average.”

Operational Update

“Earlier this week we finalized the most substantial product overhaul in Rivalry’s history, including a revamped registration flow, login, sportsbook, new crypto-first cashier, completely redesigned casino offering, and a comprehensive VIP rewards program,” Salz added. “We’re confident this entirely rebuilt product set, debuted alongside a more mature, digital-first rebrand, will accelerate Rivalry’s position as a global, crypto-native operator and enable us to capture a high-value player audience.”

“The breakneck pace in which this massive body of work was completed is a testament to the Rivalry team's motivation to show our multi-year track record of growth and innovation is not just capable of delivering profitability, but also demonstrating market leadership. This will to win is backed by the confidence and conviction that these initiatives will enable us to execute our growth strategy with more torque, underpinned by an overall significantly reduced company cost basis.”

• Sportsbook Overhaul: Rivalry has completed a major overhaul of its sportsbook product, adding over 40 new sports, embedded live streams, match statistics and information, a simplified interface, and more to enhance the user experience.
• Casino Enhancements: Redesigned the casino experience to improve functionality, added a significant amount of new content, and released Casino Races, an interactive way for players to compete against one another and earn rewards based on their wagering activity, all of which builds on Rivalry’s fast-growing iGaming vertical.
• Crypto Payment Integrations: Introduced a crypto-first cashier for faster and more flexible deposit and withdrawal options, enhancing the global user payment experience and positioning Rivalry to gain greater crypto market share. In addition to crypto depositing, players can now also wager with digital currencies, an important offering that deepens the experience for users.
• VIP & Rewards Program Launch: Launched a new VIP program featuring cashback, free spins, monthly, weekly, and daily rewards to strengthen player retention and drive user activity, particularly among high-value players. This asymmetrically rewards larger play so Rivalry’s most loyal players have more reasons to play every day, driving HVP wallet share.
• CRM & Reactivation: Materially enhanced and rebuilt all customer relationship management flows based on deeper business intelligence to improve conversion and reactivate churned players.
• Optimized Registration Journey: Refined the registration journey to reduce friction and expedite user onboarding while remaining compliant.
• Strategic Rebrand: Rivalry has begun rolling out a strategic rebrand across its product and marketing channels to better target crypto gamblers and digital-first players, reinforcing product-market fit among this audience.
• Executive Salary Reduction: Rivalry’s Chief Technology Office Ryan White and Chief Operating Office Kevin Wimer have taken a voluntary 100% reduction in their salaries as of August and September, respectively, while Chief Executive Officer Steven Salz voluntarily reduced his salary by 100% as of October, and now by 50% as of November.

“As part of our broader cost-saving measures and motivation to reach profitability, Rivalry’s founders and executive leaders have all agreed to take a voluntary reduction in compensation,” Salz added. “It’s important that the leadership team share in the sacrifices we’ve asked of our team and shareholders in the near-term as we complete this top-to-bottom realignment and strategy shift which we can now build off of.”

NUTZ (Rivalry Token)

“Our native token continues to create a strong level of alignment with players and act as a cornerstone of our crypto-first and HVP strategy,” Salz added. “In six months, the pre-release of NUTZ, previously known as Rivalry Token, has demonstrated its ability to grow our crypto market share, attract higher-value players, enhance retention, and create long-term engagement loops across our offerings. NUTZ are now deeply connected with our newly released VIP program, together they offer a highly customer-centric experience that will continue establishing lasting player loyalty, increased wallet share, consistent betting activity, and generate higher average player revenue profiles.”

“NUTZ has delivered an additional $3.0 million in deferred revenue within the third quarter, which we see as a great signal of the token finding market-fit among the target audience and within our offering. We expect to generate additional token sales in the fourth quarter, and first quarter next year, with an anticipated launch in early 2025. We have an extensive roadmap ahead of launch, and shortly after, designed to maximize the value proposition of this product for existing users, acquire new customers, and generate revenue for Rivalry.”

• In Q3 2024, NUTZ drove an additional $3.0 million in deferred revenue³. Additional deferred revenue is expected to be accrued for the business throughout the remainder of the fourth quarter and into Q1 2025.
• On average, crypto wallet-connected players generated 200% more revenue than the average non-crypto player on Rivalry.
• Nearly one third of all HVP’s on Rivalry have connected their digital wallet and engaged in our pre-release NUTZ farming program, showcasing high crossover between VIP players and crypto offerings.
• Retention rates for customers opted in to earn NUTZ is 30% higher than non-opted in users.
• Rivalry will soon be releasing a Telegram-native product to generate more user acquisition and engagement for its NUTZ token.
  

Third Quarter 2024 Highlights

• Betting handle for Q3 2024 was $79.9 million, down modestly sequentially.
• Adjusted Revenue in Q3 2024, inclusive of $3.0 million in deferred revenue for NUTZ, was $6.0 million. Net Revenue was $3.0 million in Q3 2024. The nine months ended Net Revenue was $12.1 million, down 8% from the comparable period in 2023. This is primarily a result of a reduction in marketing spend, and an increasing mix of casino betting handle, which although more stable is lower margin than sportsbook. Additionally, a portion of the recorded marketing spend in the quarter were agreement exit costs, and did not drive player acquisition.
• Average net revenue per user has hit all-time records, increasing by 51% as compared to the average of the trailing 2024 period, and by 70% as compared to the trailing three-year average since launching the initial set of new product features in October.
• Rivalry’s current run rate operating expenses are approximately 50% lower as compared to those in this Q3 2024 report as a result of its third quarter organizational overhaul and the associated cost savings near fully realized. This cost structure is expected to support reaching a profitability inflection point.
• Casino accounted for 62% of betting handle and 40% of Net Revenue in the third quarter, up 14% and 2% year-over-year, respectively. Rising casino share is attributed to new content, exclusive games, and continued product development.
• Marketing spend was $2.0 million, down 30% year-over-year. Rivalry had scaled back marketing efforts in the second and third quarters amid its crypto strategy shift and is expected to restart in early December alongside its recently revamped product set and strategic rebrand.
• The Company had $2.1 million of cash as at September 30, 2024.⁴ Rivalry’s recently closed non-brokered private placement for aggregate gross proceeds of $3.0 million further supports balance sheet and shows endorsement from insiders and investors in strategic business realignment.
• The Company is updating its H2 2024 profitability guidance. “Our efforts in the third quarter have set the foundation for renewed growth, and while we expect near-term profitability, we are temporarily stepping back from providing specific guidance during this transitional period," Salz added.

Second Non-Brokered Private Placement Closing

The Company also announces the second closing (the "Second Closing") of its non-brokered private placement of units of the Company ("Units"), previously announced on November 26, 2024 (the "Offering"). Under the Second Closing, the Company issued 6,984,891 Units at a price of CDN$0.15 per Unit, for gross proceeds of approximately $1.05 million. The Company may complete one or more additional closings, for aggregate gross proceeds (together with the proceeds raised under the initial closing and Second Closing) of up to approximately USD $3.0 million. The Company intends to use the proceeds from the Offering for corporate development and general working capital purposes. The subordinate voting shares and warrants, and any securities issuable upon exercise thereof, are subject to a four-month statutory hold period, in accordance with applicable securities legislation. The Company has paid an aggregate of $4,174.98 in finder's fees in connection with Second Closing.

Staff Stock Option Reprice

The Company also announces that it intends to amend the exercise price of certain previously granted options (the “Subject Options”) to purchase an aggregate of 1,600,828 subordinate voting shares of the Company (“Subordinate Voting Shares”) pursuant to the Company’s 2021 Equity Incentive Plan, as amended from time to time. The Subject Options have exercise prices ranging from $0.81 to $1.10 per Subordinate Voting Share. The Company intends to amend the exercise price of the Subject Options to $0.18 per Subordinate Voting Share. All other terms of the Subject Options will remain unamended. The amendments to the Subject Options are subject to the approval of the TSX Venture Exchange.

“Rivalry’s talent is the most critical determinant of our success. With the changes we have undergone through the third quarter, retaining talent is more critical than ever, and directly linked to ensuring Rivalry’s continued success,” said Salz. “We believe that these contemplated amendments maximize alignment, incentive, and motivation for the team.”

Board of Directors Change

The Company also announces that Kirstine Stewart has resigned as a director of the Company, to be effective December 20, 2024. The Company has identified several new independent director candidates to fill the vacancy to be created by Ms. Stewart’s resignation and expects to provide additional information once available.

“It has been a great pleasure serving on this board and being a part of the incredibly talented and dynamic team at Rivalry for the last three years,” said Kirstine Stewart. “I have utmost confidence that they will continue to redefine the online gambling category and remain a committed and enthusiastic shareholder in that future success.”

"I want to thank Kirstine for her tenure with us as a Director,” Salz said. “Her expertise over the years as we grew from our public listing until today was essential. As we make a strategic shift toward a global crypto-first approach, we will take this opportunity to add to our board and support this exciting new direction for the Company.”

Investor Conference Call

Management will host a conference call at 10:00 a.m. EDT on Friday, November 29, 2024 to discuss the Company’s third quarter 2024 financial results.

Dial-in:	1-800-717-1738 (toll free) or (+1) 289-514-5100 (local or international calls)
Webcast:	A live webcast can be accessed from the Events section of the Company’s website at www.rivalrycorp.com or at this link.
	A replay of the webcast will be archived on the Company’s website for one year.

Rivalry’s financial statements and management discussion and analysis for the period ended September 30, 2024 (the “Q3 2024 MD&A”) are available on SEDAR+ at www.sedarplus.ca, and on the Company’s website at www.rivalrycorp.com.

About Rivalry

Rivalry Corp. wholly owns and operates Rivalry Limited, a leading sport betting and media company offering fully regulated online wagering on esports, traditional sports, and casino for the digital generation. Based in Toronto, Rivalry operates a global team in more than 20 countries and growing. Rivalry Limited has held an Isle of Man license since 2018, considered one of the premier online gambling jurisdictions, as well as an internet gaming registration in Ontario, and is currently in the process of obtaining additional country licenses. With world class creative execution and brand positioning in online culture, a native crypto token, and demonstrated market leadership among digital-first users Rivalry is shaping the future of online gambling for a generation born on the internet.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

Company Contact:
Steven Salz, Co-founder & CEO
ss@rivalry.com

Investor Contact:
investors@rivalry.com

Media Contact:
Cody Luongo, Head of Communications
cody@rivalry.com
203-947-1936

Non-IFRS Measures

Adjusted Revenue, as reported in this news release, is a non-IFRS financial measure that the Company uses to assess its operating performance. Adjusted Revenue is defined revenue, plus deferred revenue from the Company’s native crypto token NUTZ and which is expected to be realized by the Company as revenue upon the launch of NUTZ. This data is furnished to provide additional information and is a non-IFRS measure and does not have any standardized meaning prescribed by IFRS. The Company uses this non-IFRS measure to provide shareholders and others with supplemental measures of its operating performance. As other companies may calculate this non-IFRS measure differently than the Company, this metric may not be comparable to similarly titled measures reported by other companies.

Cautionary Note Regarding Forward-Looking Information and Statements

This news release contains certain forward-looking information within the meaning of applicable Canadian securities laws (“forward-looking statements”). All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “anticipate”, “achieve”, “could”, “believe”, “plan”, “intend”, “objective”, “continuous”, “ongoing”, “estimate”, “outlook”, “expect”, “project” and similar words, including negatives thereof, suggesting future outcomes or that certain events or conditions “may” or “will” occur. These statements are only predictions. Forward-looking statements in this news release include, but are not limited to, statements in respect of the future profitability of the Company, the increase in net revenue per user subsequent to September 30, 2024, the launch of NUTZ and Rivalry’s crypto-first and HVP strategy and the potential impact thereof on the Company’s business prospects.

Forward-looking statements are based on the opinions and estimates of management of the Company at the date the statements are made based on information then available to the Company. Various factors and assumptions are applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Forward-looking statements are subject to and involve a number of known and unknown, variables, risks and uncertainties, many of which are beyond the control of the Company, which may cause the Company’s actual performance and results to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Such factors, among other things, include regulatory or political change such as changes in applicable laws and regulations; the ability to obtain and maintain required licenses; the esports and sports betting industry being a heavily regulated industry; the complex and evolving regulatory environment for the online gaming and online gambling industry; the success of esports and other betting products are not guaranteed; changes in public perception of the esports and online gambling industry; failure to retain or add customers; the Company having a limited operating history; negative cash flow from operations; operational risks; cybersecurity risks; reliance on management; reliance on third parties and third-party networks; exchange rate risks; risks related to cryptocurrency transactions; risk of intellectual property infringement or invalid claims; the effect of capital market conditions and other factors on capital availability; competition, including from more established or better financed competitors; and general economic, market and business conditions. For additional risks, please see Q3 2024 MD&A under the heading “Risk Factors”, and other disclosure documents available on the Company’s SEDAR+ profile at www.sedarplus.ca.

No assurance can be given that the expectations reflected in forward-looking statements will prove to be correct. Although the forward-looking statements contained in this news release are based upon what management of the Company believes, or believed at the time, to be reasonable assumptions, the Company cannot assure shareholders that actual results will be consistent with such forward-looking statements, as there may be other factors that cause results not to be as anticipated, estimated or intended. Readers should not place undue reliance on the forward-looking statements and information contained in this news release. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws.

Financial Outlook

This news release contains a financial outlook within the meaning of applicable Canadian securities laws. The financial outlook has been prepared by management of the Company to provide an outlook for revenue derived from Rivalry’s native token NUTZ and expected to be realized upon the launch of NUTZ, and may not be appropriate for any other purpose. The financial outlook has been prepared based on a number of assumptions including the assumptions discussed under the heading “Cautionary Note Regarding Forward-Looking Information and Statements”. The actual results of the Company’s operations for any period will likely vary from the amounts set forth in these projections and such variations may be material. The Company and its management believe that the financial outlook has been prepared on a reasonable basis. However, because this information is highly subjective and subject to numerous risks, including the risks discussed under the heading "Cautionary Note Regarding Forward-Looking Information and Statements", it should not be relied on as necessarily indicative of future results.

This news release does not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of any of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any applicable state securities laws and may not be offered or sold within the United States unless registered under the U.S. Securities Act and applicable state securities laws, or an exemption from such registration requirements is available.

Source: Rivalry Corp. 

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¹ The Company defines “Betting Handle” or “Handle” as the total dollar value accepted in wagers, adjusted for cancellations and corrections. 
² Adjusted Revenue is calculated as revenue plus deferred revenue of $3.0 million generated through prepayments for Rivalry’s native token NUTZ. See “Non-IFRS Measures”, “Cautionary Note Regarding Forward-Looking Information and Statements” and “Financial Outlook”. 
³ This amount represents prepayments in respect of Rivalry’s utility token NUTZ. Such amounts are expected to be realized by the Company as revenue upon the launch of NUTZ, which is currently expected in early 2025. Preliminary and unaudited financial results are subject to customary financial statement procedures by the Company and its auditors. Actual results could be affected by subsequent events or determinations. These preliminary results represent forward-looking information. See “Cautionary Note Regarding Forward-Looking Information and Statements” and “Financial Outlook”. 
⁴ Includes cash and cash equivalents and restricted cash.

FAQ

What was Rivalry's (RVLCF) betting handle in Q3 2024?

Rivalry's betting handle in Q3 2024 was $79.9 million.

How much did Rivalry (RVLCF) reduce its operating expenses in Q3 2024?

Rivalry reduced its operating expenses by approximately 50% compared to previous Q3 2024 levels through organizational realignment.

What percentage of Rivalry's (RVLCF) Q3 2024 betting handle came from casino operations?

Casino operations accounted for 62% of betting handle and 40% of Net Revenue in Q3 2024.

How much deferred revenue did Rivalry (RVLCF) generate from NUTZ token in Q3 2024?

Rivalry generated $3.0 million in deferred revenue from NUTZ token in Q3 2024.