In a significant development for the gaming industry, NorthStar Gaming reported an impressive surge in revenue for the first quarter of 2023, along with a notable reduction in its net loss. This remarkable performance underscores a period of robust growth for the company, driven by strategic initiatives and market expansion.
Revenue for the three months ending March 31 reached an impressive CA$5.9 million (£3.4m/€4.0m/US$4.3m). This figure represents a substantial 63.9% increase compared to the CA$3.5 million reported in the same quarter last year. The significant revenue boost can be attributed to multiple factors, including NorthStar’s strategic expansion and innovative business approaches.
One of the pivotal moments for NorthStar in recent times was its reverse takeover of Baden Resources, completed in Q1 of the previous year. Baden Resources, which owns the Canadian property business Midway Property, merged with NorthStar Gaming Inc. and a wholly-owned subsidiary of Baden. This merger has played a crucial role in driving the year-on-year revenue growth for the company.
Furthermore, NorthStar’s expansion to all provinces and territories in Canada in October 2023 has significantly contributed to this upward trajectory. Previously, the company’s gaming services were only accessible in Ontario. This broader accessibility has opened up new markets and opportunities for revenue generation.
NorthStar also highlighted several key performance indicators (KPIs) that showed substantial improvements. These include a 42.0% increase in active players, a 9.0% drop in the cost per acquisition of a customer (CPA), and a remarkable 54.0% rise in estimated 12-month player values. These metrics indicate a more engaged and valuable customer base for the company.
A notable contributor to NorthStar’s success has been its strategic marketing agreement with Playtech Software. This agreement, recently renewed, is valued at up to CA$4.0 million and extends through October 2024. CEO and Chair Michael Moskowitz expressed confidence in NorthStar’s trajectory, emphasizing that the company is well-positioned for continued growth.
“In Q1, we continued our pattern of strong year-over-year growth, highlighted by record total wagers,” Moskowitz said. “Our premium customer experience and growing brand awareness are propelling higher player retention, strengthened loyalty, and increased player values.”
Moskowitz further elaborated on how these positive trends enhance the efficiency of NorthStar’s marketing expenditures, contributing to improved operating leverage as the business scales.
Delving into the Q1 financial figures, it was revealed that CA$5.8 million of the total revenue was derived from gaming activities, representing a robust 61.
.1% increase. NorthStar’s gaming revenue is generated from both sports betting and casino operations.
The remaining CA$159,327 came from managed services within the Slapshot Media business, which was acquired in 2023. Since this deal was finalized after the first quarter of the previous year, there are no comparable year-on-year figures for this revenue stream.
NorthStar also noted that its revenue growth was bolstered by the expansion of its brand across all regions in Canada. Wagers on the company’s platform, Northstarbets.ca, reached a record high, with a 55.5% increase in total spend, amounting to CA$218.0 million.
While revenue growth was impressive, NorthStar also experienced increased costs. Revenue costs rose by 83.3% to CA$2.2 million due to higher operator participant and service provider fees. However, operating expenses declined by 21.4% to CA$7.7 million, as the previous year’s expenses included CA$2.8 million related to the company’s public listing on the TSX Venture Exchange.
Financial costs for the quarter were CA$976,710, resulting in a pre-tax loss of CA$6.5 million. This figure represents a 25.3% reduction compared to last year’s pre-tax loss. Similar to the previous year, NorthStar did not pay any taxes, so the comprehensive net loss remained at CA$6.5 million.
Moskowitz emphasized the company’s continuous efforts to enhance its service offering. “Our team is making regular improvements to our service offering, such as the recent launch of a VIP Elite strategy aimed at the most active players who drive a meaningful share of our results,” he stated.
Looking ahead, NorthStar has exciting plans for demand creation activities and further innovations to its platform and content. Moskowitz expressed optimism about the opportunities that lie ahead in 2024, reaffirming the company’s commitment to unlocking value for its stakeholders.
In additional news, NorthStar has appointed Dhushenthen, who had been serving as interim CFO since November, to the full-time role of Chief Financial Officer. Dhushenthen previously held the position of vice president of finance and compliance at NorthStar and has extensive experience in financial leadership roles, including a 13-year tenure at CAPREIT, a Canadian provider of quality rental housing.
“Chin has demonstrated strong leadership of the finance team and excellent knowledge of our compliance and financial reporting systems,” Moskowitz said. “I look forward to his continued contributions.”
With these strategic moves and a strong performance in Q1, NorthStar Gaming appears poised for a promising future, as it continues to navigate the dynamic landscape of the gaming industry.
