RVLY Rivalry Corp

Rivalry Corp. (the “Company” or “Rivalry”) (TSXV: RVLY) (OTCQX: RVLCF) (FSE: 9VK), the leading sportsbook and iGaming operator for Gen Z, is pleased to announce its 2023 annual letter to shareholders and the filing of its financial results for the three (3) and 12-month period ended December 31, 2023. All dollar figures are quoted in Canadian dollars.

2023 Annual Letter to Shareholders

To our Shareholders,

This time last year I spoke about Rivalry’s evolution from a market leader in esports to a diversified Company setting the standard for Gen Z betting entertainment broadly.

Today, we have a business with revenue distribution across casino, sports, and esports betting, growing market share in new geographies, with increased velocity in core regions, and the strongest customer KPIs in Rivalry’s history.

In 2023, Rivalry recorded $423.2 million in betting handle1, up 82% from the previous year. Similarly, gross gaming revenue2 and net revenue both saw 34% and 66% respective increases, while the introduction of higher margin products released in H2 such as Same Game Combos and Quick Combos are continuing to improve overall sportsbook hold and guide Rivalry closer to profitability.

Our deepened product suite now includes fantasy, additional sports coverage, and new proprietary casino games. All of which are uniquely driving growth among a targeted customer segment and widening our opportunity set in 2024 and beyond – from a 60% increase in traditional sports betting to a burgeoning B2B game vertical. The potential for how far our brand can go is just beginning to unfold.

The year ahead is rife with new, innovative product releases arriving in Q2 and continuing throughout 2024. We are doubling down on core growth opportunities in sports that resonate with our audience, such as basketball and soccer. Further, we are building on a successful casino segment which already represents 50% of our business, enhancing variety, depth, and accessibility, as well as developing new original games which blur the lines between betting and entertainment. We are in the process of additional geographic expansion, and pursuing new licenses to broaden our total addressable market, positioning Rivalry to own the Gen Z gambling opportunity globally.

While Rivalry’s operations have expanded into new high-growth verticals, our north star has remained the same: to define the future of online gambling for a generation born on the internet.

Online gambling in 2024 is radically different than it was just six years ago when Rivalry launched. In that time we’ve seen gaming and internet culture reshape how consumers engage with technology. That shift is broadening the definition of gambling, where product design is influenced by video games, or it exists fully embedded within social apps like Telegram, where content creators are the new affiliates, and much more.

Over the same period, the rise of cryptocurrency and blockchain technology has introduced a new level of speed, access, and security to web-based consumer experiences. Industry estimates now put crypto wagers at up to one quarter of global betting handle3, with 30% year-over-year growth in 20244, and showing no signs of slowing down.

The development of this ecosystem has commercially unlocked online gambling unlike anything since its first transition from land to online many years ago. It has brought in a new global audience, and enriched the customer experience from end-to-end.

Alongside the growth of this technology has emerged new methods of gambling, taking wallet share from more traditional forms at an accelerated rate. The shift in consumer behavior and the signal from our users is clear – interactive, volatile, and crypto-infused product experiences will set the precedent for how the next generation gambles online.

Rivalry, with a brand steeped in internet culture and living at the intersection of this digital economic renaissance, is well-positioned to access this growth opportunity. There is high overlap between Gen Z, gamers, gamblers, and a fast-growing audience of over 420 million crypto users worldwide5 organically aligned with our audience and brand. And we believe that more than half of this audience globally is already wagering with crypto.

It will be Rivalry’s ability to understand, implement, and adapt to this shift more rapidly than our peers that we expect to create first-mover advantages for us. It is for that reason that our vision is now bolder than ever for what’s possible in the online gambling category.

Soon, we will reveal plans for a crypto-enabled product set to enhance alignment between Rivalry and its users, increase network effects, and generally deliver a consumer experience that lives on the internet of 2024.

To that effect, the success of our first-party games and their ability to acquire and engage a captive audience of Gen Z bettors online has validated our original game development strategy amongst industry peers. This has unlocked a new commercial opportunity for Rivalry to license its IP, opening up another line of revenue for the business that has great potential for global scale.

The year ahead is poised to be one of our most ground-breaking, with a myriad of innovative product releases across all of Rivalry’s verticals, adding more dimension to our business, operations, and addressable audience, and building on our competitive moat as the market leader in Gen Z betting entertainment.

We look forward to sharing more details about these upcoming initiatives, the opportunities they will unlock for our Company, and delivering on our promise to create long-term shareholder value and reach profitability. Thank you all for your continued support.

Steven SalzCo-Founder & CEORivalry Corp.

Full-year and Fourth Quarter 2023 Financial Results

Please find Rivalry’s audited financial statements for the fourth quarter and year ended December 31, 2023 (the “2023 Financial Statements”) and related and management’s discussion and analysis now on SEDAR+ at www.sedarplus.ca, and on the Company’s website at www.rivalrycorp.com.

The Company is also pleased to report its audited full-year 2023 and fourth quarter 2023 highlights.

Full-Year 2023 Highlights

• Betting handle was $423.2 million in the year ended December 31, 2023, an increase of $190.4 million or 82% from $232.8 million in 2022.
• Gross gaming revenue6 was $35.7 million in 2023, an increase of $9.0 million or 34% compared to $26.6 million in the previous year.
• Gross profit was $16.2 million in 2023, an increase of $6.4 million or 66% from $9.8 million of gross profit in 2022. Commencing with the 2023 Financial Statements and after consultation with the Company’s new auditors, this figure is now reported as Net Revenue (whereas it has previously been reported as gross profit).
• The Casino segment was a significant driver of growth in 2023, with gross gaming revenues of $6.4 million up 92% from 2022, and representing 52% of betting handle in the year.
• The Company expanded its casino offering significantly during 2023, including the release of a new original game Cash & Dash in September, entry into the slots category in October, and the launch of its iOS mobile app in Ontario, enhancing the mobile casino experience and its accessibility.
• Diversified revenue streams through new segments including traditional sports, which has grown by 60% since FY22, and fantasy, highlighting the elasticity of Rivalry’s brand among Gen Z and broadening TAM.
• Total operating expenses of $38.8 million in 2023 decreased by $1.1 million year-over-year. The decrease was driven by a reduction in marketing expense, offsetting increases in general & administration and technology & content expense incurred to support the growth of the business.
• Net loss was $23.8 million for 2023, a reduction of 24% or $7.3 million from the net loss of $31.1 million in 2022.

Fourth Quarter 2023 Highlights

• Betting handle for the three-month period ended December 31, 2023 was $85.2 million, an increase of $1.2 million or 1.5% from $83.9 million in the fourth quarter of 2022 while marketing spend decreased by 32%.
• Gross gaming revenue was $6.5 million in the Q4 2023, representing a decrease of $3.0 million or 32% from $9.4 million of gross gaming revenue in Q4 2022 due to less favorable sportsbook outcomes compared against an abnormally favorable result experienced in Q4 2022. The Company notes that gross gaming revenue as a percentage of betting handle was near the average achieved throughout FY23, highlighting the abnormally favorable margin outcome in the comparable quarter, Q4 2022.
• Gross profit was $3.0 million in Q4 2023, a decrease of $2.0 million or 40% from $5.0 million of gross profit in Q4 2022. The year-over-year decline follows the relative margin impact noted previously. Gross profit as a percentage of betting handle in Q4 2023 was equal to the average in FY23. Rivalry is also pleased to note that its ongoing efforts to stabilize and improve margin are yielding results, with Q1 2024 trending toward a more than 20% improvement over the average in FY23. Commencing with the 2023 Financial Statements and after consultation with the Company’s new auditors, this figure is now reported as Net Revenue (whereas it has previously been reported as gross profit).
• Net loss was $8.6 million in Q4 2023, a reduction of $3.7 million compared to a net loss of $12.3 million in Q4 2022. Net loss adjusting for accruals, other non-cash items, and one-time expenses, would have been approximately $6.6 million.
• On November 15, 2023, Rivalry strengthened its balance sheet with the announcement of a private placement offering of $14 million principal amount senior secured convertible debentures to scale several strategic verticals across marketing, product development, and geographic expansion.
• Released Rivalry Ultimate Fan, a free-to-play NBA fantasy app, to acquire new users and engage existing customers within the product suite.
• First-party game ‘Cash & Dash’ released in September demonstrated next generation appeal as it became the fifth most-played casino game on our platform and among the top ten highest-grossing with momentum carrying into Q1, creating downstream licensing opportunities for Rivalry’s IP.

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 next generation of fans. 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. Rivalry also holds a sports bookmaker license in Australia and an internet gaming registration in Ontario, and is currently in the process of obtaining additional country licenses. Rivalry’s sportsbook is built on a proprietary tech stack and features a variety of originally developed products geared for Millennial and Gen Z fans including Same Game Combos, an esports parlay product, original casino games, and an interactive casino platform, Casino.exe.

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 & CEOss@rivalry.com416-565-4713

Investor Contact:Oakstrom AdvisorsJeff Codispodiinvestors@rivalry.com

Media Contact: Cody Luongo, PR & Communicationscody@rivalry.com203-947-1936

Non-IFRS MeasuresGross gaming revenue, as reported in this news release, is a non-IFRS financial measure that the Company uses to assess its operating performance. Gross gaming revenue is defined as total wagers less payouts to winning bettors. 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. In the 2023 Financial Statements, after consultation with the Company’s new auditors, the Company now reports gross gaming revenue, whereas it had previously been reported as revenue.

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 Company’s financial results for the three and 12-months ended December 31, 2023, the Company seeking to provide greater support for cryptocurrency and exploring implementation of adjacent crypto-enabled technologies, and opportunities in the B2B vertical to license the Company’s in-house developed games.

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 the Company’s annual information form for the year ended December 31, 2022 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.

Source: Rivalry Corp.

1 The Company defines “Betting Handle” or “Handle” as the total dollar value accepted in wagers, adjusted for cancellations and corrections.2 Gross gaming revenue is defined as total wagers less payouts to winning bettors. 3 Next.io, ‘Tim Heath: Yolo Group's Investment Mastery’4 Medium, ‘The Rise of Crypto Betting: How Digital Coins are Revolutionizing Sports Gambling?’5 Triple A, ‘Cryptocurrency Ownership Data’6 Please see “Non-IFRS Measures”