theScore's Q2 Report Reveals Record Handle With Net Losses

Toronto-based Score Media and Gaming is out with the Q2 earnings report that ended February 28, 2021, and it reveals a mixed bag consisting of some impressive growth along with highlighting the cost of doing business. Betting activity on theScore Bet app has been brisk but the price of gaining a tangible market share has been steep at the same time.

theScore has been on an acquisition/partnership and betting app-launch tear the last six or so months. At the end of March alone, the emerging wagering provider became an official betting operator of the PGA Tour across the U.S. and Canada and it was also able to launch in one of the true up-and-coming markets of Illinois that same week.

During Q2, Score Media and Gaming grew its presence to five states, it was able to go public on the New York Stock Exchange and was able to grow its reach to over 3.9 million monthly users on its app for live scores, sports news, and stats.

The Good

theScore Bet app was able to hit record levels over the last three and six months, mostly because of the company being able to go live in some heavy-hitter states within the US legal sports betting industry. Along with Illinois, the sixth most populous state in the country, theScore has a presence in New Jersey, where it saw a 195% increase in gaming handle during the quarter, Colorado, Indiana, and Iowa.

"We achieved record gaming handle and another quarter of solid media revenue growth in our fiscal 2021 second quarter. The strong second quarter results highlight theScore’s ongoing momentum and our users’ active, growing engagement with our mobile offerings," said John Levy, Chairman and CEO of theScore.

Score Media and Gaming reported a total handle of $81.6 million in Q2 which represents an impressive year-over-year spike for the internet-based platform of 491% and an increase of 46% from the first quarter. Total revenue for the quarter came in at $5.6 million.

The company also recorded their highest-ever second quarter media revenue, with 17% year-over-year growth. A record $6.3 million was generated in Q2 from theScore's media wing.

The Not-So-Good

The price of doing business dragged theScore's numbers down in Q2 of the fiscal year. The company had a negative net gaming revenue of $2.4 million.

Gross gaming revenues because of promotional costs and fair value adjustments on unsettled bets resulted in that $2.4 million loss. Additional expenses incurred in connection with the ongoing expansion of its gaming operations and the costs and professional service fees related to the recently completed US initial public offering were also cited for the shortfalls.

EBITDA (earnings before interest, taxes, depreciation, and amortization) losses for the second quarter came in at $12.9 million compared to an EBITDA year-over-year loss of $8.6 million during the same period last year.

Going Public

In an attempt to further grow their brand in the US, theScore was able to successfully generate much-needed cash to fund their expansion plans, thanks to its US IPO and the company being able to sell 6.9 million Class A shares.

"During the second quarter, we raised US$186.3 million of gross proceeds through our U.S. initial public offering which we intend to deploy towards the ongoing build out of our industry-unique integrated sports betting and media technology platform. 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. 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. At the same time, we are working to expand our access into new U.S. states while continuing our preparations for the anticipated legalization of single-game sports wagering in Canada" said John Levy.

Outlook

theScore remains one of the sports betting providers to keep an eye on going forward. Levy, on the future of Score Media and Gaming said: “Our unique combination of media and betting is a powerful differentiator in a growing marketplace. We intend to leverage our position as the only digital sports media company in North America that operates a sports betting platform to further grow our US business and capture meaningful market share in Canada when the market opens.

“With our fully integrated sports media and betting experience and technology focus, we are perfectly positioned to efficiently acquire and engage new customers while driving strong customer loyalty and attractive margins which will help drive the long-term enhancement of shareholder value.”

theScore is on the cusp of becoming a Heavyweight name within the US legal sports betting space and when Canada opens up, they will be the top name in that market. While not quite a widely recognizable name in the US, their recent moves could propel them into rarified air. The record Q2 handle is welcome news. Now their goal is to get a grip on their cost of doing business.