In a remarkable display of corporate endurance, Lottery.com has navigated through a financially challenging third quarter, demonstrating a notable reduction in net loss despite a substantial decrease in revenue. The company, no stranger to tumultuous times, reported a Q3 revenue of $285,523, which constitutes a significant 59.9% decrease from the previous year’s $711,477 for the same period ending September 30.
Despite the sharp decline in revenue, detailed financial information from the company’s recently filed Form 10-Q remains scarce. However, it does provide insight into expenditure, revealing a considerable decrease in cost of revenue by 73.4%, amounting to $72,171.
Further financial prudence is evidenced by a 47.7% reduction in operating costs, culminating in savings of $3.4 million across various segments. One notable area of spending for Lottery.com includes depreciation and amortisation expenses, totaling $1.4 million, which reflects a 6.7% year-on-year decrease.
The financial landscape has not been entirely smooth, with interest costs increasing substantially from $4,571 to $246,529. Combined with the aforementioned operating costs, this led to a pre-tax loss of $3.4 million, a significant improvement over the $6.1 million loss in the year-ago quarter.
There were no taxes paid for the quarter; however, the company reported a negative impact from foreign currency translation amounting to $34,256 and recognized an income of $72,277 from non-controlling interests. Consequently, the net loss for Q3 improved, now standing at $3.4 million, in stark contrast to the previous year’s $6.0 million loss.
A longer-term perspective reveals that year-to-date revenue, for the nine months leading up to September 30, plunged by 74.2% to $1.6 million. This drop in revenue brought with it lower associated costs, down to $203,001—a drastic 95.1% drop from last year. Operating expenses saw a hefty cutback of 78.0%, amounting to $11.9 million, and other costs fell by 91.4% to $346,166. This fiscal tightening aided in trimming of the pre-tax loss to $10.9 million, a stark improvement from the daunting $56.4 million loss a year prior.
Similar to the third quarter, no tax payment occurred, but the company did suffer $182,607 in losses from negative foreign currency translation and noted $212,064 in income from non-controlling interests. Overall, the net loss for the nine-month period showed a significant reduction to $10.8 million from the previous year’s staggering $56.1 million loss.
Despite the encouraging figures related to loss reduction, Lottery.com still faces uncertainties, with 2023 proving to be another year of choppy waters. In the executive ranks, turmoil was apparent with the dismissal of Mark Gustavson from his CEO position in July, a mere five months after his appointment. Matthew McGahan has since taken the helm on a temporary basis.
Gustavson had itself taken over from Sohail Quraeshi, whose own tenure as the permanent CEO (following an interim spell) ended after a few short months in October 2022.
Moreover, the company has grappled with allegations of “material weakness” in its accounting practices, facing a class action lawsuit filed in August 2022 by investors and former senior employees. The lawsuit claims that Lottery.com released “materially false or misleading statements” and neglected to maintain appropriate internal accounting controls.
Adding to the legal strife, March brought a lawsuit from John Brier and Bin Tu, founders of lottery data provider TinBu, accusing Lottery.com of not honoring promised compensation after an acquisition.
Fortunately for Lottery.com, not all news has been grim. The business celebrated a resurgence in April, announcing the resumption of ticket sales in Texas through its retail network. The initial week of sales saw over seven million tickets sold for local lottery games. Additionally, Lottery.com entered into an exclusive affiliate agreement with International Gaming Alliance (IGA) to supply Texas lottery tickets in the Dominican Republic.
Another positive development emerged as Lottery.com regained its footing with Nasdaq Stock Market regulations, after overstepping certain listing requirements. In September, Nasdaq’s Listing Qualifications Department acknowledged that Lottery.com had satisfied minimum bid price demands, fixing its earlier non-compliance.
The price of Lottery.com shares, as of the close on November 30, stood at $1.75, painting a cautiously optimistic picture for a company determined to overcome its financial tribulations and regulatory challenges.
