Canada’s NorthStar seeks additional funding to build on Q3 growth
Gross gaming revenue during the three months to 30 September was CA$8.4 million (£4.7 million/€5.7 million/US$6.0 million). This is 52.7% ahead of $5.5 million at NorthStar in Q3 last year.
NorthStar, which published the results yesterday (27 November), also showed revenue after deducting bonuses, promotional costs and free bets. When including revenue from other managed services, this left $6.8 million in operating revenue, up 44.7%.
The operator generates revenue from its Northstarbets.ca website. During Q3, total wagers placed through the site hit $234.0 million, a rise of 69.6% from last year.
Q3 costs reduced despite higher marketing spend
Spending-wise, operating costs were cut by 5.2% to $5.5 million, despite a rise in marketing and general and administrative expenses. NorthStar, however, benefitted from lower share-based compensation expenses, which last year hit $1.7 million.
After a further $213,710 in finance costs, pre-tax loss was $3.1 million, an improvement on last year’s $4.2 million. As NorthStar did not pay income tax in Q3, nor did it in the same quarter last year, bottom-line net loss figures were the same as pre-tax.
“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,” NorthStar chair and CEO Michael Moskowitz said.
“Additionally, marketing expenditures as a percentage of revenue have declined substantially, dropping from two-thirds last year to roughly half year-to-date, further demonstrating our continually improving operational efficiency and strategic focus.”
Similar story for the year-to-date at NorthStar
Looking now at the year-to-date, gross gaming revenue in the nine months to 30 September was $24.1 million. This surpasses last year’s total by 56.5%.
Total after bonuses but with revenue from other managed services hit $20.2 million, a rise of 55.4%. Total wagers on Northstarbets.ca were also 54.6% higher at $677.0 million.
Operating costs were reduced 5.3% to $21.4 million, again despite higher marketing spend. After $930,435 in finance expenses, pre-tax loss was $14.3 million, short of the $18.0 million reported last year.
In terms of bottom line, no tax was payable in the period, meaning net loss was also $14.3 million for Q3.
NorthStar eyes further growth
Looking ahead, NorthStar also noted management is currently working to secure additional funding to support growth. The operator said it is “confident” about accessing this capital, with an update due in the coming weeks.
FY24 will be the first full calendar year of the enlarged NorthStar business. In Q1 of last year, NorthStar completed the reverse takeover of Baden Resources. Baden, which owns Canadian property business Midway Property, combined with NorthStar Gaming Inc and a wholly owned subsidiary of 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 said.
“With the continued momentum in our business and operating leverage driving improved financial results, we are highly optimistic about our ability to deliver significant shareholder value in 2025.”