Revenue Lags For theScore Despite Bump In Handle

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Despite an increase in fiscal second-quarter handle, theScore still is not generating sports betting revenue.

TheScore posted a 491% year-over-year handle increase in its second-quarter results, the company announced Tuesday. The $81.6 million bet on theScore Bet was also a 46% increase over the first quarter.

Those giant gains did not move the needle on revenue, however. Net gaming revenue was $2.4 million with promotional costs and unsettled bets subtracted from the $400,000 gross gaming revenue. The company reported net gaming revenue of –$1.4 million in fiscal 2020 and –$2 million in this year’s first quarter.

Questions about revenue challenges

An analyst question during the earnings call centered on the low revenue figures:

“We’re building this business strategically and we’re excited the wagering is going up dramatically,” theScore founder and CEO John Levy said. “Until you get to a critical mass, you’re susceptible to swings in revenue generation from the wagering.

“We’re completely confident that this will normalize over time and we will see the fruits of our labor in generating this wagering in a state-by-state basis.”

TheScore posted an EBITDA loss of $12.9 million in the quarter. The earnings report pointed at the ongoing expansion of gaming operations and the administration costs f0r its US initial public offering as the reason for the loss.

Levy stays optimistic

Despite the losses and lagging revenue, theScore executives stayed upbeat during the call. With more US sports betting market launches on the horizon, the US initial public offering and Canada pushing closer to single-game wagering, Levy likes the position of the company.

“Our gaming business has been extremely active further positioning for continued growth,” Levy said. “We are in excellent position to leverage our two decades of experience to be a leader in a developing industry and seize the great opportunities we see in both the US and Canada.”

The media arm posted a 17% revenue jump compared to last year. The $6.3 million in revenue was a second-quarter record for the company’s media operation. Overall, its media app user sessions grew 8% year-over-year to 488 million in the quarter.

Optics gain for theScore?

While the figures are eye-popping, theScore was live in just New Jersey in its 2020 second quarter. TheScore’s New Jersey handle did increase 195% year-over-year.

The company launched in both Colorado and Indiana late in 2020. With its second-quarter launch in Iowa, the company’s betting app is live in four states.

It also secured market access in Illinois through an agreement with Caesars Entertainment in March. The company now has five market-access partners, which John Levy said points to industry’s confidence in the company and platform.

“Our goal is to be a national operator,” theScore President and COO Benjie Levy said. “We’re pursuing market-access agreements across the US.”

theScore US IPO results

In March, theScore sold 6.9 million Class A shares in its US IPO. The offering raised $186.3 million.

The company plans to use the funds to continue the build-out of the sports betting and media platforms.

“The new capital provides additional resources to further execute on our strategies to integrate sports betting and content to drive deep user engagement and expand our market access,” John Levy said. “We will continue to enhance our media and betting ecosystem through investments in technology to further develop user personalization, unique betting offerings, and in-game prop bets, which are expected to be a significant driver of U.S. sports betting growth.”

Canada remains big opportunity for theScore

The Canadian Parliament is expected to discuss sports betting again later this month. As theScore’s home market, company executives are excited about the opportunity.

According to the company’s March investor presentation, Canada’s gaming operator revenue potential could reach between $4 billion and $5 billion annually.

TheScore is the no. 1 sports media app in Canada with 3.75 million active users, according to the investor presentation.

“This is our home turf,” Benjie Levy said. “Ontario is home base and tremendous user base and more importantly we have a brand and legacy relationship with customers that goes back 20 years. We just can’t wait to unleash the power of that when the market opens up.”