Rivalry Corp.

Good morning, ladies and gentlemen, and welcome to the Rivalry Corp year-end and fourth quarter 2022 conference call. At this time, our lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Wednesday, April 26, 2023. I would now like to turn the conference over to John Vincic, Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Our speakers on today's call will be Stephen Saltz, Co-Founder and Chief Executive Officer of Rivalry Corp, and Keita Corey, Chief Financial Officer. Before we begin, I'd like to remind listeners that certain statements made during this conference call presentation may constitute overlooking information and forward-looking statements within the meaning of applicable securities laws. These statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of Rivalry Corp and its subsidiary entities or the industry in which it operates to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. When used in this conference call presentation, such statements use words such as may, will, expect, believe, plan, and other similar terminology. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this presentation. These statements involve known and unknown risks, uncertainties, and other factors, including those risk factors identified in the company's perspectives dated September 17, 2021, under the heading risk factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, other than as required under securities legislation. And now, I'd like to turn the call over to Stephen Saltz. Stephen?

Thank you, John, and thank you, everyone, for joining us today. Although the company has delivered many notable achievements throughout its history, I believe the Q4 full-year 2022 results The preliminary Q1 2023 results and the announcement of a 10 million equity financing all released this morning collectively represents the densest and highest quality catalyst in Rivalry's history. Every period we have reported since becoming a public company has told a consistent story of accelerating growth and a scaling economic profile, demonstrated by narrowing net losses every quarter on our path to profitability. And this report is no different. On a year-over-year basis, we've delivered triple-digit percentage growth across all key performance metrics, all while maintaining our defining position in next-generation betting globally, with a fast-growing user base of millennial and Gen Z customers, accounting for 97% of active bettors in 2022, and a market-leading esports betting product, which generated nearly 90% of the company's sportsbook handle in 2022. In full-year 2022 versus 2021, we more than doubled revenue, tripled betting handle, and quadrupled gross profits. Q4-22 showed even more compelling growth rates, including revenue up more than 4x year-over-year and gross profit up more than 12x. Q4-22 was Rosler's best-ever quarter in terms of handled revenue and gross profit, only surpassed by Q1 of this year, where our preliminary results reached new all-time highs on every measure. In particular, gross profit was $5.4 million in Q1-23, an 8x increase over Q1-22, exceeding our gross profit in the first three quarters of 2022 combined, while marketing expenses declined approximately 10% in Q1 of this year versus Q1 of last year, which we believe clearly highlights the operating leverage intrinsic to our approach that we speak about so regularly. This core strategy built on product differentiation, brand equity, and a targeted demographic of users reduces our reliance on bonuses and linear spend to capture and engage customers, allowing us to avoid the pitfalls many of our competitors in the space fall into, while simultaneously sharpening our customer economics that, as we mentioned a moment ago, increased with scale. This is further evident by the ongoing trend of reduced net losses sequentially that we're seeing across the company. In Q1-23, our preliminary reported net loss of $3.5 million is down from $6.6 million in Q1 of last year, the lowest since we've gone public and continues to chart a path to profitability for the company. Contributing to our growth over the past three quarters has been our launch and expansion in the casino segment. This began with a single third-party game in Q3 of last year, contributing 30% of betting handled, 15% of revenue in that quarter, despite little to no marketing efforts. Since then, we expanded the offering with a half-dozen games in Q4-22, along with the debut of our interactive and proprietary platform, Casino.exe. We followed that up in Q1-23, further bolstering our casino offering with table games and live dealer, as we continue to develop this segment with a selective curation of games that cater to our core audiences. of digitally native users and their unique consumption habits. In this brief timeframe, Casino has already started to generate just under half of our total betting handle, smoothing out the seasonality of the esports calendar and stabilizing margin profiles amid the relative volatility of a Sportsbook product versus a Casino offering. The success of Casino has validated several fundamental aspects of our overarching product strategy and thesis. One, with Casino.exe, we focused on creating a truly differentiated offering that is unique to Rivalry further distinguishing our platform from competitors and tailoring the user experience to the next generation of bettors. The output from these product initiatives are economically rewarding, establishing an entertaining and proprietary experience that increases engagement among our users and spreads organically through word of mouth, enabling us to achieve the level of betting activity that we're generating today with almost $0 spent on direct casino marketing efforts. This also demonstrates our ability to convert brand loyalty into economically rewarding products and activate our customers. And finally, while Casino continues to deliver material growth, Sportsbook is also trending positively on a year-over-year basis, and we're seeing almost no cannibalization in user wallets with the introduction of Casino bringing net increases to customer economics. On that note, Sportsbook revenue reached a record of $7.1 million in Q4, an increase of $1 million from the prior quarter, despite a seasonally slow event calendar during that period. And we exceeded that record by a wide margin in Q1 of this year, surpassing $10 million of revenue on our Sportsbook product, Sportsbook Vertical, for the first time. These results are encouraging as we look ahead to the rest of 2023. It is worth reminding that all growth has been organic since the launch of the company in 2018. And finally, I want to touch on the announced $10 million equity financing this morning. We are very pleased to have world-class global bookmaker Pinnacle, alongside other gaming technology and payment stakeholders, participating in this financing round. We believe the terms at $1.50 per share and the strategic value of the stakeholders participating in this round represents a vote of confidence in our one-of-a-kind team, market strategy, and unique ability to execute within this emerging vehicle, Vertical. As evident by the momentum we've demonstrated in our results today, this investment arrives at a transformative point in the company's journey where our overarching strategy and unique position at the intersection of esports and betting is increasingly being validated as one with uncapped upside and incredible torque. And this financing, when combined with our ongoing trend of narrowing net losses and the plus 17% average month-over-month growth in revenue we've achieved on both a trailing 12-month and trailing two-year basis, has us very encouraged that we are equipped to scale to the next phase of company growth and continue the trend toward profitability. I'll touch on some broader points and outlook in a moment, but at this point, I'll turn the call over to our CFO, Keita, to review our financial results in greater detail.

Thank you, Stephen. My remarks will focus on our fourth quarter 2022 results. The first quarter 2023 figures we released today are preliminary, and we will provide greater detail in approximately one month when we announce full results for the quarter. The fourth quarter represented a very strong finish to the year for us, establishing new all-time highs for rivalry on several key metrics. Betting handle was 83.9 million in Q4, exceeding the previous record of 70.3 million that we had just set in Q3. Despite an increase in revenue on the Sportsbook sequentially in Q4, as Steven noted, Handel was down 14% sequentially in Q4, as expected, due to the timing of major esports tournaments. November and December were both relatively quiet months following a very active October. I should note that Sportsbook Handel was up 72% over the directly comparable fourth quarter of 2021 due to the ongoing growth in our user base and customer engagement. We have spoken about the seasonal nature of esports betting in the past, but its impact on our results is declining. The decrease in sportsbook handle was more than offset by the growth in casino handle, which nearly doubled sequentially to 41.3 million, accounting for roughly half of total betting handle in the quarter. As Steven mentioned, our casino product offering expanded in Q4 compared to the single third-party game we introduced in Q3. The product diversification continues to reduce the seasonality we saw historically. With its consistency relative to Sportsbook, Casino should also help to smooth out our gross margins. Fourth quarter revenue of $9.4 million was the highest in the company's history, up 32% sequentially and 338% year-over-year. Both segments contributed to the growth, with Casino revenue more than doubling versus Q3. Sportsbook revenue was also up sequentially in Q4, despite the slight drop in handle due to normal variability in winning percentage we see from quarter to quarter. Gross profit was $5 million in the fourth quarter, again, a record high for us, and just like handle and revenue, we exceeded that record in Q1 2023. The rate of growth in gross profit has far exceeded that of revenue. Gross profit was up 139% sequentially and more than 1,000% year over year. We believe these improvements are largely due to operating leverage as we scale the business. As a percentage of revenue, gross margin of 53% in Q4 was also a record for us, Margins in our business are always subject to variability from quarter to quarter, but we have experienced a clear step up in recent quarters. Until a year ago, we typically saw a gross margin percentage in the 15 to 20% range, including the preliminary Q1 2023 results. We have now reported four quarters in a row in the 30 to 50% range. The growth in gross profit relative to operating expenses has resulted in an improved bottom line. Other than share-based compensation, which is a non-cash item, the three line items that comprise the majority of our OPEX are marketing, advertising, promotion, general and administration, and technology and content. Those three items combined for a year-over-year increase of $5.7 million in the fourth quarter, roughly double Q4 2021. Over the same timeframe, from a base of just $400,000 in Q4 2021, gross profit increased by $4.6 million. The increase in those expenses was planned and has helped drive our rapid growth, but the rate of increase has slowed significantly while gross profit continues to expand. As for share-based compensation, we recognize the 6.4 million expense in the fourth quarter compared to 10.4 million in Q4 2021. This expense was a result of the further vesting in 2022 of restricted shares and RSUs issued as incentives when rivalry went public in 2021. We do not expect this amount to recur in 2023 due to the limited number of grants available under our equity incentive plan. A net loss of 12.3 million in Q4 could be viewed in the context of the 6.4 million expense, as well as another non-recurring 1.1 million expense. If we were to back out these non-recurring items, net loss on an adjustment basis would have been 5 million in the fourth quarter. By that measure, we have seen a narrowing net loss on a sequential basis for the past five quarters. We ended 2022 with 12.2 million in cash and equivalents, plus restricted cash of 4.2 million, totaling 16.4 million and no debt. The financing we announced earlier today, once closed, will further strengthen our balance sheet and provide foundation for further execution and growth. And finally, we provided preliminary Q1 2023 results in our earnings release this morning. These results established another new all-time high record of KPIs that exceeded that of Q4. Betting handle was $100.2 million, an increase of $80 million or 199% from $40.2 million in Q1 2022 and up 43% from the previous quarterly record. Revenue was $12 million, an increase of $7.2 million or 151% from $4.8 million in Q1 2022 and up 27% quarter over quarter. 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 9% from Q4. And importantly, continuing the trend of narrowing net loss every quarter, the preliminary net loss in Q1 2023 was 3.5 million. This compares to a net loss of 6.6 million in Q1 2022. At this point, I will turn the call back to Stephen to discuss our outlook.

Thank you, Kata. It is my strong belief and something I've said since our early shareholder communications, going back to our founding, that rivalry is executing against a generational opportunity in sports betting. And to do that, since day one, our strategy has needed to be quite visibly different from our peers. Specifically, we've always prioritized what we believe is now becoming recognized as the new blueprint for success in sports betting, which is winning on true product innovation and differentiation, brand equity, and organic word-of-mouth marketing and and tailored strategies targeting specific demographics and communities. Great consumer products and category leaders win through a combination of these three things and the continuity that connects an engaging brand to a product heightens the experience for customers. And I believe that approach is particularly resonant now as sports betting and iGaming stakeholders navigate saturated and unpredictable markets in a current economic environment that is raising the stakes even higher in an already deeply competitive industry. The days of easy money are over, and the cheap capital, which underwrote strategies driven by endlessly subsidizing player activity through bonus and promotion, are drying up, and operators who once pushed growth at all costs must now shift that loaded approach. They are scrambling to correct in real time as their market share slips on these bonus-driven marketing strategies, which are void of lasting consumer touchpoints. Ultimately, this is a race to the bottom with the erosion of margin profiles and any inherent operating leverage going with it. In this environment, product and brand has remained stagnant, where outside of marginally better bonuses, customers see an uninventive experience with little difference between one sports betting product to the next. All of this highlights the industry's underlying retention problem. Acquiring, engaging, and retaining a habitually transient customer base is only temporarily solved with the provision of player subsidy. In this model, competitive advantages are dictated by balance sheets instead of innovative products and experiences. It's why we obsess over product at rivalry, engineering interactive entertainment across our sportsbook and casino to create a deeply custom betting experience tailored for an emerging demographic of sports bettors. These initiatives are technically challenging but economically rewarding, giving us an important proprietary edge in a space where most products are perceived as the same. We believe this is a key value-add of our business. Contributing to our economic viability is a content and brand strategy built on entertainment, not marketing. This approach opts to creating real value for fans that drives increased brand loyalty and organic word-of-mouth awareness. This approach delivers profitable customer acquisition costs and keeps users engaged while reducing our reliance on linear spend to achieve growth. And underpinning that strategy is gaming and internet culture, which is now a universally understood language connecting online communities globally. And one we tailored our brand around as a common ground that authentically connects us to this emerging demographic. An intimate understanding of these communities, more than 100 brand partners and a dozen social media properties equip us with the tools needed to attract and engage an audience of the internet that legacy operators can't. The business impact of this is operating leverage. When you cultivate true brand love, every dollar of marketing goes further and customer retention is greater. Rivalry's unique approach and DNA is a result of our incredible team and culture. And it's thanks to them that I get to say these words and the company can deliver these record-breaking results with such consistency. Finally, Rivalry has an exciting road ahead with a number of strategic and measured investments in 2023 that will enable us to reach the next phase of company growth and ultimately long-term profitability. These initiatives include expanding our esports offering to deepen our core product, continued evolution of our interactive casino.exe platform and the release of additional proprietary and third-party games, launch of a mobile app in our regulated markets, geographic expansion to increase our addressable marketing customer base, expanding brand execution through premium content, create our partner programming and community activation, further solidifying Rival's leadership position among next-generation consumers, and continuing to grow our investor base through proactive capital markets outreach. We look forward to another record-setting year in delivering on our promise to produce long-term value for our shareholders and reach profitability. I'll stop there and open the call for Q&A. So, operator, can you please provide the instructions?

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the one on your touch-tone phone. You will hear a three-tone prompt acknowledging your request. If you are using a speakerphone, please lift the handset before pressing any keys. First question comes from Adhier Catvey at 8 Capital. Please go ahead.

Hey, good morning, guys. Congratulations on the results here, just really good results. So I wanted to talk about these marquee events that you kind of see towards the end of, or sorry, the beginning of Q4, you know, the Dota 2 of the international, you know, we call it six months out of those events. How do you see that cohort of users from those events that you acquire? How are they behaving on the platform in terms of kind of like, you know, engagement? Are they kind of just continuing just to bet on esports? Are they now kind of delving into the casino product? Just kind of want to understand that cohort and their behavior.

Yeah, I could probably compare it even to like the prior year, just because the big difference this year, obviously, is the addition of casino, which, you know, as we kind of said in the script, and as most operators experience, it's there to smooth out seasonality in a sportsbook product, because not even just esports, it's obviously sports seasonality. The relative churn of that cohort was definitely less than we experienced the prior year because we were able to sustain a cohort of those users into the casino product. And then we went into even, you know, World Cup and other events that were a bit abnormal this year. So I'd say on a relative basis, we performed much better with those marquee events we did prior years. But certainly there still is like this Super Bowl effect where it's the spikiest moment of time in the entire year for acquisition and also therefore, you know, has the most pronounced churn relative to the rest of the year because you do have the same as you have people that just come to bed on the Super Bowl one time a year. You definitely have a cohort of esports bettors that are fundamentally similar where they just come to bed on these marquee events one time a year. They're there for the one to two week length of the event. And in many cases, now that we've been operating for a few years, we'll potentially see them next year. So Um, yeah, we, we saw a lot of that, but certainly on a relative basis, we, we benefited significantly from the additional casino and even some of the other stuff that went out throughout the, um, the rest of the calendar year. So it was, uh, yeah, better than expected for sure.

Okay. Excellent. And then just really on the casino product, like how are you thinking about that product moving forward? Obviously the, it's been, you know, doing very well, limited marketing spend, uh, continuing into that product. Um, Do you think like you with the, with the financing, do you kind of push the, push the pedal a little bit on that, on the marketing front for that product? And how are you just kind of thinking about that product moving forward?

Yeah, we're going to continue to add games to the portfolio. Generally the approach we have with the demo that we, we target and represent our active users. We want to have like a curated selection of games rather than like a dump of hundreds of, casino games that you would find elsewhere in a spreadsheet-style grid. We just don't think that creates a delightful and cohesive user experience. So we're going to continue to introduce new games. I think the big thing, which I probably should have mentioned a bit more in the script, is we are really continuing to build and engineer original titles as well. So we're expecting to put out a number of original games as well this year, in addition to adding more third-party games into the casino.exe platform. So that will always function as like the broader platform experience that connects everything. But yeah, we're definitely investing more behind both developing more of the casino.exe experience and just the, you know, thoughtfully bizarre overall approach that we have there. And then, yeah, we will add more third-party games and we will definitely, be talking more about original game development throughout the course this year. So yeah, definitely an important part of like piece of innovation, I guess, for us this year.

Understood. And then, you know, you're, you're, I want to switch gears a little bit to the path to profitability, you know, declining net losses every single quarter. Yeah. How are you thinking about that portion of the business moving forward? You know, especially from a marketing spend, you know, we continue to see your results outperform, but marketing is kind of going down as a result, and that's obviously your strategy is working. So how are you thinking about marketing spend and broader profitability on the platform? Is the heavy lifting really done in terms of, you know, kind of building this fan base that you don't need to continue to do marketing? You kind of just bear the fruit? Or just kind of talk to us about how you're thinking about profitability, marketing, and the bottom line into 2023 and then 2024.

Yeah, so we've got this approach that we've talked about, this crawl, walk, run. When we launch a new market, we keep marketing spend as low as we possibly can. And then only when we start to see healthier and essentially break even, even economically increase it. And essentially like the weight of profitable, more mature markets, outweighs the newer markets and the company increasing trends to profitability, which is what's happening right now, where we're finding a lot of that intrinsic operating leverage in some of these longer dated markets that we've been in. So I think we're going to continue to launch new markets, which means there will be moments in time where marketing may spike on a relative year-over-year basis. But I think because of that inherent torque we're finding in our older markets, as you saw in Q1, we had a massive result with a 10% reduction year-over-year in marketing spend. I'm not exactly certain if that will continue for the rest of the year, but it definitely will be probably quite stable on a year-over-year basis while we continue to drive the top-line growth and therefore continue to drive to profitability. So in a sense, it's a little bit of a function of how many new markets we want to launch in and the rate at which we find success in those markets and therefore dial-up spend. But as I said, we only really dial-up spend when there's healthy unit economics, so it wouldn't really impair this overall path to profitability, which is why we've been on that track that we've been on. And overall, we haven't really provided profitability guidance, but I just think that people can look at our year-end cash balance. They can look at the record loss, low net loss in the preliminary Q1. They can look at the ongoing trend of that narrowing every single quarter. They can look at plus 17% month-over-month revenue growth for two years, combine that with the announced financing, and do the math on where we're headed. So, yeah, I think we're in a position that we feel extremely confident and very good in across the board on that.

Okay, excellent. Thank you for that color. And then just maybe on the mobile app, I think last quarter you mentioned a bit of a rigorous process to kind of get onto the Apple App Store. Any update on that front?

Yeah, yeah. I mean, if people are customers in Ontario right now, they may have received an invite to the live and active beta. So we are essentially approved in doing live beta right now and hoping to be out in a more meaningful way in the market, talking about it quite soon. But yeah, people who are either investors or customers of RobWare, we'll have been seeing, you know, little sprinkles of stuff we're doing on the mobile app very recently. So it is in fact coming quite soon now, even though I know I've said that a few times, but it is this time.

No, understood. And then maybe just on the back of that, and this will be my last question, just is this going to kind of spur a little bit more marketing spend in the more in the, in the regulated markets of Ontario and Australia, you've been in both of those markets kind of, for a year now and that crawl, walk, run strategy that you have, do you kind of think you have enough to kind of put the pedal into those markets?

Yeah, definitely.

I mean, we're for sure seeing more encouraging results as of late in both of those markets and we're pretty pleased. So we think that definitely in Ontario, we introduced Casino quite recently. That helps the same way that it helps the overall global business. Mobile app and beta going live soon. That will also certainly help. So We're continuing to put the pieces together to get those standalone P&Ls, which is the way that we look at it internally, profitable. So we definitely have confidence internally that they're both trending to, yeah, big standalone profitable P&Ls, and they'll increasingly contribute to a larger percentage piece of the overall business, definitely.

Awesome. Thanks a lot, guys. Appreciate all the color, and congrats again on the results, and I'll pass the mic.

Thanks. Appreciate it. Thank you. Ladies and gentlemen, as a reminder, should you have any questions, please press star 1. Next question comes from Brian Kinslinger at Alliance Global Partners. Please go ahead.

Hi, Steve. Thanks for taking my questions. Hi, Brian. It's nice to see the ramp in casino markets. Can you quantify roughly what percentage of your active sportsbook users have played casino games and the strategy to get those active users to play casino games themselves? And then what's a reasonable long-term percentage of conversion that will use both?

Yeah, so it's about 40%, which is what we've seen consistently for a little bit now, which also aligns with the fact that nearly 40% of the handle are on any given basis now is casino, and in some cases more, depending on the seasonality that's happening in esports. So, and I think that's like a really key piece also of the business is that, and something that we've been building to methodically, which is there's a pretty close to one-to-one relationship on any given month between the number of monthly active bettors in a category, whether it's sportsbook or casino or esports betting, traditional sports betting, whatever it may be, and the total percentage of the handle a wage that it represents. So yeah, it's been about a 40% I'd say crossover. And then that 40% of active users that are in casino represent approximately 40% of casino handle. As I think, you know, Brian, because you've been covering the sector, especially in casino, you would find it's like a, you know, low single digit percentage of customers in casino represent 40, 50, 60, even sometimes 70% plus of the total wagers for most operators. And that is the more classic model. So yeah, We've continued to try to deliver on a casino outcome that aligns with the core business model, which is volume of our demo and not overly indexing to particularly large customers and servicing them in like an asymmetric way, but giving an even experience to everybody. So I think that's also why the casino product has been successful so far.

Great. And then with the strategic investment, can you talk about, How, if at all, Pinnacle can be a strategic partner and help elevate your business? I believe they, too, are a sports book, which assumes they're a competitor. So just talk about how the two companies can work together, if that is part of the plan.

Yeah, that's always been a natural tension, even. We've been leveraging and using Pinnacle on an off-making basis for some time now, and we think they've got the best offering in the market, especially for esports. And yeah, there is that natural tension where they operate globally in many markets where we operate globally. We, we don't really have an issue with it for the same reason why we don't really have an issue with anyone else to compete with because of how we approach the market, the demo that we go after and the approach we have has been like super successful in that regard. So whether it's Pinnacle or anybody, it doesn't really make a huge difference. And in fact, like we've been with other odd makers in the past when we first launched the company and a part that I think we really like about receiving the feed from Pinnacle, the support is that, They also have skin in the game, whereas what's more often is you have odd makers that their entire sole business is just bookmaking. They don't actually take risk on the things they're producing. And I'm not saying they do a bad job of it because of that, but it's the same as kind of anything. I mean, we prefer people that have skin in the game. It just creates a lot more alignment. So That skin in the game in terms of all the making of what I think makes the product so robust and the risk management so robust and it's been really good for us. And then from a partnership perspective, it's the same thing. We are certainly a really successful outward facing case study for the capability of their product, which is a benefit to them. And in between us, there's a lot of collaboration between the teams. Our engineering teams are quite symbiotic. They support us certainly in a really good way with producing bespoke markets for events that we run that's tied to really unique marketing that we do. And overall, we just got a lot of high touch attention from them because we're bringing a lot of intelligence from the market on what we're seeing in esports, which helps them produce a better product for us and for others. And to the skin of the game comment, them investing in rivalry and having that further alignment just bring that whole piece even closer together. So, So, yeah, it's just continuing that overall strategic alignment that we've had for a number of years and just getting deeper on it. So, you know, when we collaborate, we all feel much better about it. It's been great, to be honest.

Great. Last question I've got is there was a comment on the gross margin being, I don't know, high 30s to low 50s, which is a wide range. So how should we think about that going forward? Are we thinking about the more casino means the higher margin? Is that a mix? Is that the more handle you get, the more you're going to leverage some fixed costs? I mean, just take us through understanding that big window that you've provided.

Yeah. So, I mean, even though casino is, let's say, 40% of our handle, as I think Kate has said, right, it's 15% or 20% of the revenue. So it's proportionally smaller revenue because, back to the way that we've created and like crafted this casino offering is we went deliberately with higher RTP or return to player games, meaning that it's theoretically lower margin for us, which is just part of the brand ethos in terms of how we like interface with the community and treat customers and what we're trying to achieve. So even though it drives a huge amount of handle and creates a massive amount of stability because it's like consistent margin, it is slightly lower. Sportsbook on the other side is definitely higher margin, And for the most part, it has been higher margin for us. But the reason why the gross margin can deviate a little bit and certainly more so historically is, yeah, there's just that inherent volatility in Sportsbook, whereas Casino is stable and consistent but slightly lower. Sportsbook is mostly higher but has some volatility, which means that the gross margin can still range a little bit. The one thing that I would say though, is we are finding it is narrowing like that, you know, that 30 to 50% band is getting narrower and narrower, more consistent, obviously one casino, but two, just the natural math involved with improving the overall liquidity and total volume we see in our sports book, i.e. driving more handle because as we take more wagers, the probability of balancing the sports book in a consistent narrow wage increases. And then any, let's say large winning event or loss event is, um, offset more frequently, I would say. So the combination of casino, the combination of the business just fundamentally growing in the math involved with that on the sports book, that narrows the margin over time because of the enhanced liquidity. I think it's going to get tighter, but that's why still today there is still a little bit of volatility, but it sure as hell is better than it was, you know, a year, a year, a year and a half ago. So we're getting closer to something more consistent, which is going to make your modeling job more easier. So we'll get there. Great. Thanks so much.

Yeah. No problem.

Thank you. There are no further questions at this time. You may proceed.

Thank you, operator, and thank you, everyone, for joining us on our year-end results call, and we're happy to continue the discussion offline if anyone has any additional questions, and have a great day.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.