Rivalry Corp.

Good morning, ladies and gentlemen, and welcome to Rival Record third quarter 2023 financial results call. At this time, all 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 require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, November 29, 2023. I would now like to turn the conference over to John Vincic, Investor Additions for Rivalry Corp. 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 would like to remind listeners that certain statements made during this conference call presentation may constitute forward-looking 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 using 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 annual information form dated May 1, 2023 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. Rodnery delivered solid year-over-year growth in the third quarter, with betting handle up 50%, revenue up 22%, and gross profit increasing 90%, despite a 13% year-over-year reduction in marketing spend. We're also pleased to be tracking toward a strong full-year result, with the year-to-date betting handle having increased 127%, revenue by 70%, and gross profit up 175% over the first nine months of 2022, while OPEC has remained relatively stable in the last three quarters, and again, all achieved while reducing marketing spend. This year-over-year growth is a testament to the inherent operating leverage of the business and merit of our products, supported by the strongest customer KPIs on a year-to-date basis in Rivalry's history. With these strong underlying business fundamentals and the ability to go back on the offensive with marketing spend from our recent financing, which we'll touch on later, we remain on a path for achieving our H1-24 profitability guidance. I'd like to take a moment to remind investors that as discussed in our August Q2 earnings call, Q3 of last year was our first quarter with a meaningful casino offering, having introduced our first casino game in July 2022, which saw rapid initial adoption. This Q3 is now the first time we are lapping that quarter. First, turning our attention to the sportsbook side, where we saw handling increase by 12% year-over-year and revenue up 18%. Esports book results should be viewed in the context of unseasonably low viewership for select esports events in the quarter. In the past, Q1 and Q3 have typically been rivalry's strongest quarters due to several tentpole international events landing in those months. In Q3, global viewership of some major events was lower than usual, and this was due to a number of factors ranging from a lack of compelling matches due to the dominance of certain teams, to the time zones of the events not aligning with large segments of the audience, and particularly those markets and regions where betting on esports is popular and where rivalry is quite active. Despite those headwinds, we still grew year over year and generated the second highest sportsbook handle and revenue of any quarter in the company's history. Additionally, in the past, Rivalry would have been more sensitive to fluctuations in esports viewership, as the segment accounted for over 90% of our sportsbook handle last year, and up until Q3 2022 with the introduction of Casino, that was nearly our entire betting handle base. But as our product mix and brand has continued to mature among an audience of young millennial and Gen Z bettors, The business has become far more diversified geographically and across the product suite, consistent with the initial thesis and premise of rivalry from day one, which is a demographic opportunity led by esports as an acquisition funnel versus esports betting as the end-all, be-all. But more on this point later. More specifically on our geographic mix, we are seeing increasing traction in new international markets, such as those in the Southeast Asia region, where this time last year the company was far less active. That region has now grown materially since last Q3, and we are finding that some of these markets have different seasonal peaks and troughs throughout the year, meaning our overall seasonality patterns as a company are evolving. Additionally, on the market diversification side, in our regulated market of Ontario, we've seen betting handle increase by more than 400% from Q3 2022. We continue to see encouraging trends in Ontario and are benefiting from the crawl, walk, run strategy we discussed in the past and that you can find in our investor material on our IR website. We're optimistic about this market going forward into 2024, given the unit economics and growth that we're seeing. Further on the sportsbook offering itself, esports still represents the majority of our sportsbook handle, but the traditional sports segment on rivalry has been growing. I'll say it again, Rivalry leverages esports as an entry point and top of funnel into a demographic of bettors who can be cross-sold into a broader product mix. The growth we're seeing in traditional sports highlights the success of the strategy. This has been one of the contributors to the increased average handle per customer we're observing over time, which is up 29% on a year-to-date basis this year versus the first nine months last year. We've done particularly well with NBA fans given the global popularity of basketball among Rivalry's demographic. And building on this growth, we recently launched Rivalry Ultimate Fan, a free-to-play fantasy sports app to engage the next generation of basketball fans in a unique way. This app allows us to keep Rivalry users and fans within our branded ecosystem as much as possible, upsell them to real money products, and it has internal monetization mechanics that generate revenue within the app and prizing that is unlocked and utilized on the main Rivalry product. And of course, the best example of our diversification has been the casino segment itself. From a standing start with launch in July 2022, our casino segment generated 30% of our betting handle in Q3 2022 with virtually no marketing or promotional spend. Part of our rapid success in this segment has been driven by Casino.exe, the proprietary platform we launched alongside our initial run of casino games to add to the on-site entertainment value. Casino.exe delivers a unique retro style user experience that's well differentiated from the pack. More importantly, it underscores our thesis in this space that fundamentally entertaining and original products drive organic growth and interest. Since then, we've steadily expanded into new categories, with table games, live dealer, and most recently, slots. In September, we launched a new original casino game developed entirely in-house called Cash and Dash. This innovative product blends elevated graphics, gameplay, and original rivalry IP to meet our audience of millennial and Gen Z users on their entertainment levels. Without the use of marketing spend or free bets, Cash and Dash has already become one of the stickiest games that we offer. Today, CasinoNow makes up roughly half our handle, growing 141% year-over-year in Q3. It's important to note that the growth of Casino has been completely additive, as it has not cannibalized player wallet share, and therefore has been an important contributor to our overall growth. Throughout this evolution and rapid expansion, I believe we've done a good job demonstrating the fundamentals of the business, i.e. the machine works. In the first nine months of 2023, we've seen tremendous growth. Handles up 127%, revenue 70%, and gross profit up 175%. This growth has been achieved with reduced marketing spend down 8% year-to-date due to careful management of costs. Our cost to customer acquisition is lower as well, down 19% year-over-year, off an already low base entering the year. And finally, as mentioned, handle per customer is up by 29% over that period as well. All of this means that for every dollar of marketing spend, we're getting nearly 20% more customers who are then wagering nearly 30% more on average this time this year versus last. We believe we are discovering what works best for this younger generation of consumers. This is something that we do as well or better than anyone in our space. We're developing a proprietary expertise within this demographic that is highly differentiated and creating operating leverage in the business, occasionally tweaking some of the levers available to us in response to the occasional bump in the road. Like any great company, we learn from experience, adapt, and move forward. These strong fundamentals alongside our recently announced $14 million capital infusion gives me high conviction in our ability to deliver growth while managing the business for profitability. I'll return to that in a moment, but first I'd like to turn the call over to our CFO, Keita, to review our financial results in greater detail.