Rivalry has announced a non-brokered private placement financing for gross proceeds of up to $10m as the company elevates its growth strategy.
The investment arrives through the issuance of up to 6,666,666 Subordinate Shares at a price of $1.50 per SS as Rivalry seeks to ‘establish its market-leading position among digitally native consumers’.
This latest development arrives on the back of record-breaking results for the sports betting and esports betting firm in 2022 and the early stages of this year.
Explaining the investment, Steven Salz, Co-Founder and CEO of Rivalry, said: “The terms and strategic value of the stakeholders participating in this round represent a vote of confidence in our one-of-a-kind team, market strategy, and unique ability to execute within this emerging vertical.
“Our playbook is built around a generational opportunity to capture and engage a next generation audience through world class creative, proprietary and engaging products, and market leading brand equity in esports.
“We are growing rapidly with a successful strategy in place and talented team behind us, and with this funding we anticipate both continuing our pace of growth and our trend toward profitability.”
Esports expansion & Millenial/Gen Z focus
Rivalry is targeting a couple of key areas of its business with this investment. Firstly, capital raised will be used to expand its esports offering, which generated nearly 90% of sportsbook handles in 2022. Secondly, the firm is mindful of continuing to create and evolve products for its core audience of Millenial and Gen Z users, which accounted for 97% of active users last year.
The strategic financing round will be led by sports betting, technology, and payments stakeholders including global bookmaker Pinnacle, which has a commercial relationship with Rivalry spanning ‘several years’, providing its esports and risk management solution to the Toronto-based firm’s users.
The non-brokered private placement financing is expected to close in one or more tranches commencing ‘on or about’ May 5, and is subject to the approval of the TSX Venture Exchange, where Rivalry recently listed its shares after leaving the Canadian Securities Exchange.
“As a leader and innovator in online betting, Pinnacle is constantly looking for like-minded partners to help further grow the industry and our global footprint,” said Paris Smith, Pinnacle CEO. “That is what led us to Rivalry, and it is impressive how in a short period of time, they have carved out a powerfully unique position in the field of online betting.
“The company’s long-time focus on product innovation, brand equity, and next generation consumers is disrupting traditional ways of thinking in the industry and blazing a trail for industry economics that were previously not thought possible. As a long-standing commercial partner of Rivalry, we’ve had a front row seat to their incredible growth and are confident in the company’s trajectory.”
Q4, FY22 & Q1 prelim results
The final quarter of 2022 saw the firm record its highest-ever revenue ($9.4m) up to that point, up 7.2% sequentially on Q3 ($7.1m), driven by sportsbook revenue of $7.1m (Q3: $6.1m).
Gaming revenue of $2.3m was up 119% over Q3 ($1.1m) as Rivalry began offering a wider set of casino games on its Casino.exe platform, and its expanded offering resulted in higher betting handle of $83.9m in Q4, up 19% sequentially from the previous record quarterly handle of $70.3m in Q3, and a YoY increase of 237% compared to $24.9m/ in Q4 2021.
Meanwhile, Rivalry saw triple-digit growth across all key metrics in FY2022, with full-year betting handle up 198%, revenue up 140%, and gross profit up 349%, positioning the firm to make more records in its preliminary Q1 2023 results, in which it recorded betting handle of $120.2m (up 199% YoY), revenue of $12m (up 151% YoY), and gross profit of $5.4m (up 698% YoY).
Salz commented: “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.
“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.”