Canadian media business theScore posted a comprehensive loss of $4.1m during the first quarter of its financial year, primarily due to costs related to its ongoing expansion efforts across North America.
Revenue for the three months to November 30, 2019, amounted to $9.2m, down 3.2% from $9.5m in the corresponding period in the previous year.
theScore reported an increase in direct advertising revenue in the first quarter, but also said this was offset by a decline in programmatic revenue.
This was a result of lower demand from a programmatic partner that, prior to January 2019, was a significant buyer of its programmatic inventory. theScore also noted a more limited programmatic inventory in New Jersey and various surrounding states, related to the launch of theScore Bet app in Q1.
In terms of the performance of theScore Bet, this area of the business generated a handle of $8.8m and gross gaming revenue of $242,000. However, when taking into account promotional costs and fair value adjustments on unsettled bets, this saw the brand lose $26,000 in the quarter.
The launch of theScore Bet during the period and the business’s other expansion efforts led to an increase in spending, with operating expenses climbing 64.5% year-on-year from $9.3m to $15.3m.
Sales and marketing was the main outgoing for theScore, with spending up by 129.2% to $5.5m, while technology and operations costs also increased 146.2% year-on-year to $3.2m.
Other outgoings for theScore included general and administration costs at $2.8m, as well as product development and content expenses at $2.6m. theScore also reported depreciation and amortisation costs of $1.2m for the period.
Higher spending and lower revenue meant theScore posted an operating loss of $6.0m for Q1, a sharp drop on an operating income of $136,000 in the opening quarter of the previous year.
Net loss for the first quarter amounted to $4.1m, compared to a net income of $163,000 in Q1 of last year, while earnings before interest, tax, depreciation and amortisation slipped from a positive of $964,000 to a loss of $4.8m.
Reflecting on the results, theScore founder and chief executive John Levy focused on the business’s growth ambitions, saying that it will build on its performance in Q1 and seek to expand into other US markets including Indiana, through a partnership with Penn National Gaming.
“New Jersey is only the start for us; as we grow our footprint there, we are also moving to quickly expand our presence across the United States,” Levy said.
“Under our existing multi-state market access framework agreement with Penn National, we anticipate launching theScore Bet in Indiana later this year, pending receipt of all relevant licenses and approvals, with more states to follow. At the same time, we continue to actively explore other market access opportunities.”
Levy also spoke positively about how players using its new sports betting app have been using other theScore products, saying this will help with customer retention.
“Our hypothesis that sports app users would engage with our gaming product was reinforced in our first quarter of operation,” Levy said. “Approximately three quarters of fans who placed a wager on theScore Bet in Q1 came directly from theScore sports app, supporting our powerful integration of media and gaming.
“Sports app users are also proving more valuable in terms of handle, gross gaming revenue, and retention than non-sports app users,” he explained. “This is especially exciting given the record user engagement we saw on our sports app in Q1, as well as the robust product roadmap we have in place to further strengthen the connection between our media and gaming platforms, including new product features and cross-promotional capabilities.”
Meanwhile, theScore has entered into a multi-year wagering partnership with the National Basketball Association (NBA).
Under the deal, theScore will serve as an authorized sports betting operator of the NBA, gaining access to official NBA betting data including league marks and logos for use within its theScore Bet app.
“We’re delighted to work with the NBA to create new and exciting sports betting experiences for basketball fans,” Levy said. “This collaboration will help us enhance our offering as we work to provide theScore’s highly engaged media app users a best-in-class integrated betting experience.”
Scott Kaufman-Ross, senior vice president, head of fantasy and gaming at the NBA, added: “theScore is aligned with the NBA on our mission to create the best possible fan experience. This partnership will provide our passionate fans with deeper engagement from a company innovating across the spectrum of sports media and betting.”