Canadian media business theScore has revealed that an increase in spending, mainly related due to its expansion efforts in North America, led to it posting a net loss of $14.6m in the first half of its financial year.
Revenue in the six months to February 29, 2020 amounted to $15.9m, a decline of 2.5% on the corresponding period in the previous year.
Gross gaming revenue for the first half amounted to $685,000 from a handle of $22.6m, but when taking into account all promotional costs and fair value adjustments on unsettled bets, this resulted in negative net gaming revenue of $221,000.
Revenue from media activities totalled $16.1m, down from $16.3m last year, with theScore saying that growth in direct advertising revenue was offset by a decline in programmatic revenue.
This, according to theScore, was primarily the result of reduced demand from a programmatic partner and more limited programmatic inventory in New Jersey and surrounding states following the launch of theScore Bet.
In terms of spending, total operating expenses for the period came in at $31.9m, an increase of 67.0% on $19.1m last year, with costs up across the board. The business’s main outgoing was sales and marketing, with spending in this area doubling from $4.8m to $9.6m.
Elsewhere, technology and operations expenses jumped 138.7% to $7.4m, while general and administration costs climbed 37.3% to $7.0m. Product development and content costs hiked 20.5% to $5.3m, while depreciation and amortisation spend increased 56.3% to $2.5m.
Higher spending, coupled with a decline in revenue, meant theScore reported an operating loss of $16.0m, compared to $2.8m last year. After taking into account a deferred income tax expense of $3.1m, theScore posted a net loss of $14.6m for the period.
Total comprehensive loss was slightly higher at $14.7m, due to foreign currency translation differences from foreign operations.
Looking at the second quarter in particular, revenue was down slightly to $6.6m, with the betting operation posting a loss of $195,000 and media revenue coming in at $6.7m.
Spending was up by 69.4%, with operating loss for the quarter widening from $3.0m to $16.6m. Net loss hiked from $3.0m to $10.5m and total comprehensive loss also increased from $2.0m to $10.6m.
Despite the losses, founder and chief executive John Levy was upbeat about the business, pointing out how it achieved a new Q2 record for engagement on its sports app.
Other highlights in the second quarter included securing market access to offer mobile sports betting in Colorado via an agreement with a subsidiary of Jacobs Entertainment. Levy said it expects to launch theScore Bet in Colorado, as well as in Indiana under its market access framework agreement with Penn National Gaming, later this year, while efforts are ongoing to go live in other states.
“We saw great momentum across our core media and gaming operations in Q2 F2020, including exciting growth in sports betting handle, a new Q2 record for engagement on our sports app, powerful reach on our social channels, and continued esports audience growth,” Levy said.
Levy also spoke about the impact of the novel coronavirus (Covid-19) outbreak, describing it as an unprecedented time for the industry. On March 16, theScore adopted a mandatory work-from-home program, with many staff now working remotely so that it can remain operational throughout the pandemic.
“Our first priority has been to protect the safety and well-being of our team, which led us to quickly implement a mandatory work-from-home policy for all staff in mid-March,” Levy said.
“At the same time, we have been responding to the anticipated revenue impact of the sudden disruption in the sports calendar by aggressively managing our costs and availing ourselves of applicable government programs.
“By moving early and decisively, we have been able to keep our team at full strength, empowering them to continue to keep sports fans as engaged, entertained and informed as possible, and to execute on our key product development priorities, which will position us well for when sports resume.”