Lottery.com cuts net loss despite revenue drop in Q3

Lottery.com, which has had something of a turbulent few years, posted revenue of $285,523 (£225,800/€261,703) in Q3. This was 59.9% down from the $711,477 reported in the three months to 30 September last year.

The business did not go into further detail about Q3 revenue performance on its Form 10-Q. However, it did set out information over spending, including the fact that cost of revenue was down 73.4% to $72,171.

Operating costs were also reduced 47.7% to $3.4m after savings across the board. The main outgoing for Lottery.com was depreciation and amortisation at $1.4m, with this falling 6.7% year-on-year.

Higher interest costs meant other expenses rocketed from $4,571 to $246,529. Coupled with operating costs this meant a pre-tax loss of $3.4m, compared to $6.1m in Q3 last year.

Lottery.com did not pay any tax but noted $34,256 in negative foreign currency translation impact. It also accounted for $72,277 in income from non-controlling interests. As such, net loss for Q3 hit $3.4m, an improvement on last year’s $6.0m.

Lottery.com slashes costs in year-to-date

Looking at the year-to-date, revenue in the nine months to 30 September dropped 74.2% to $1.6m. However, this also meant lower revenue costs of $203,001, down 95.1% from last year.

Operating expenses were also slashed by 78.0% to $11.9m in the period, while other costs were 91.4% lower at $346,166. This left Lottery.com with a pre-tax loss of $10.9m, which was in contrast to last year’s $56.4m loss.

No tax was due for the period but Lottery.com did note $182,607 in negative foreign currency translation. The business also noted $212,064 in income from non-controlling interests.

As such, net loss for the nine-month period was $10.8m, a significant improvement on last year’s $56.1m loss.

Concerns remain for Lottery.com

While the reduced net loss will offer some respite to Lottery.com, concerns remain over its future, with 2023 being another turbulent year for the business.

Key developments include Mark Gustavson being removed as CEO in July despite only taking on the role in February. Matthew McGahan took temporary charge of the business.

Gustavson had been appointed to replace Sohail Quraeshi. Incidentally, Quraeshi also only held the position for a few months, after he was named as permanent CEO in October of 2022 following an interim spell.

Meanwhile, Lottery.com in May revealed it faces “material weakness” over accounting non-compliance. This was in the face of an ongoing class action suit served in August 2022 on behalf of investors and former high-ranking employees.

The suit alleges that the business made “materially false or misleading statements”, as well as failing to disclose that the company lacked adequate internal accounting controls.

In addition, Lottery.com was served with a lawsuit by John Brier and Bin Tu, the founders of lottery data business TinBu, in March, alleging it failed to give them promised compensation after the company was acquired.

Some glimmers of hope?

However, amid this turbulence, there has been some good news for Lottery.com. In April, it announced the resumption of ticket sales to support affiliate partners through its Texas retail network.

During the first week of operations, Lottery.com said it sold more than seven million tickets for Texas lottery games. the business also signed an exclusive affiliate agreement with International Gaming Alliance (IGA) to supply Texas lottery tickets in the Dominican Republic.

More recently, Lottery.com regained compliance with Nasdaq Stock Market rules over a year after falling foul of regulations. In September, Nasdaq’s Listing Qualifications Department confirmed the broker evidenced compliance with minimum bid price requirements. 

Nasdaq Listing Rule 5450(a)(1) states ordinary shares cannot fall below $1.00 over the previous 30 consecutive business days. Nasdaq contacted Lottery.com in August last year to say that it had breached this rule.

Lottery.com shares closed yesterday (30 November) at a price of $1.75.