NorthStar Gaming Sees Revenue Surge but Faces Net Loss in Q3

Canada’s online gaming market, recently announced its Q3 financial results, revealing a notable rise in revenue despite remaining in the red. The operator also highlighted efforts to secure further funding to bolster its long-term growth plans.

Q3 Revenue Growth and Key Metrics

For the three months ending September 30, NorthStar Gaming recorded gross gaming revenue (GGR) of CA$8.4 million (approximately £4.7 million/€5.7 million/US$6.0 million), reflecting a 52.7% increase compared to CA$5.5 million in Q3 2022. After factoring in bonuses, promotional expenses, and free bets, the operating revenue stood at CA$6.8 million, up 44.7% from the previous year.

The company’s Northstarbets.ca platform generated the bulk of this revenue, with total wagers on the site reaching CA$234.0 million—an impressive 69.6% rise year-on-year.

Operating expenses for Q3 totaled CA$5.5 million, marking a 5.2% reduction compared to last year. This decline occurred despite increased spending on marketing, general operations, and istration. A major contributing factor was a drop in share-based compensation costs, which were CA$1.7 million in Q3 2022.

After adding CA$213,710 in finance costs, NorthStar reported a pre-tax loss of CA$3.1 million, a significant improvement from the CA$4.2 million loss recorded in the same period last year. Since no income tax was payable, the net loss for the quarter mirrored the pre-tax figure.

Michael Moskowitz, NorthStar Gaming’s chair and CEO, emphasized the company’s advancements toward profitability. “Our consistent revenue growth and improved economies of scale have enabled gross margin to fully cover overhead costs – a significant milestone in our journey toward profitability,” Moskowitz noted.

He also pointed out that marketing expenditures, as a proportion of revenue, have declined substantially, dropping from two-thirds last year to roughly half in 2023. This reduction underscores the company’s focus on improving operational efficiency and refining its strategic priorities.

Year-to-Date Performance Overview

From January to September, NorthStar’s GGR reached CA$24.1 million, a 56.5% increase over the same period in 2022. Operating revenue, including other managed services, rose to CA$20.2 million, up 55.4% year-on-year.

Total wagers on Northstarbets.ca amounted to CA$677.0 million, representing a 54.6% growth compared to last year. Operating costs for the nine-month period were reduced by 5.3% to CA$21.4 million, despite higher marketing expenses. After ing for CA$930,435 in finance expenses, NorthStar’s pre-tax loss stood at CA$14.3 million, an improvement from the CA$18.0 million loss in 2022.

Plans for Future Growth

NorthStar management has prioritized securing additional funding to its growth strategy. The company expressed confidence in accessing the necessary capital, with updates expected in the coming weeks.

Additionally, FY24 will mark the first complete calendar year of operations for the expanded NorthStar business following its reverse takeover of Baden Resources in Q1 2023. This merger brought together NorthStar Gaming Inc. and Midway Property, a Canadian real estate enterprise owned by Baden.

“The marketing investments and product launches we executed in Q3 have set us up for a strong finish to the year, as the fourth quarter is typically a seasonally robust period,” Moskowitz added.

With growing momentum and a focus on operational leverage, NorthStar remains optimistic about delivering significant value to its shareholders in 2025.

Source:

”Canada’s NorthStar seeks additional funding to build on Q3 growth”, igamingbusiness.com, November 28, 2024.