Blue Hat Announces First Quarter 2021 Financial Results, Highlighted by 343% Increase in Revenues to $9.9 Million and 62% Increase in Net Income to $1.2 Million

 
 

Blue Hat Interactive Entertainment Technology ("Blue Hat" or the "Company") (NASDAQ: BHAT) a leading producer, developer and operator of augmented reality ("AR") interactive entertainment games, toys and educational materials in China today announced its unaudited financial results for the quarter ended March 31, 2021 .

 

  First Quarter 2021 Financial Highlights  

 
  • Total revenues of US$9.9 million , compared to US$2.2 million in the first quarter of 2020, driven by increased sales across all lines of business particularly the mobile games and communication services businesses, which saw strong growth following the strategic acquisitions of Xunpusen Technology Co., Ltd. ("Xunpusen") in late 2020 and Fuzhou Csfctech Co., Ltd. ("Csfctech") and its two subsidiaries in January 2021  
  •  
  • Gross profit of US$4.1 million , up 143.8% from US$1.7 million in the first quarter of 2020
  •  
  • Income from operations of US$1.7 million , up 96.7% from US$0.9 million in the first quarter of 2020
  •  
  • Net income of US$1.2 million , up 62.0% from US$0.8 million in the first quarter of 2020
  •  
  •   US$14.7 million in cash and cash equivalents at March 31, 2021  
  •  

  Management Commentary  

 

Mr. Xiaodong Chen , CEO of Blue Hat, stated, "We were pleased with the strong performance across all of our business segments, which resulted in phenomenal top line growth driven by US$5.3 million in contributions from our new IDC business and by a US$2.4 million increase in contributions from mobile games following our acquisition of 51% of Csfctech and its two subsidiaries in January 2021 . We achieved 62.0% growth on the bottom line to US$1.2 million during the period and anticipate margins will improve over the course of 2021 as our businesses continue to grow and the expenses normalize from initial highs. We recently announced the official launch of our new AR+ series curriculum, which is an upgrade from our original Augmented Reality Immersive Classes ("ARIC") and has been developed and tested over the past six months. We expect the five urban partnerships that we have signed for the AR+ series curriculum will accelerate the future growth of our AR education business. We are beginning to see tangible results from this development that has strengthened the foundation of our business over the course of the past year, and we anticipate it will provide us with significant long-term growth potential for our product and service offerings."

 

  Recent Operating Highlights  

 
  • In April 2021 , Blue Hat signed a two-year licensing agreement with Tencent QQ ("QQ") to use its intellectual property, specifically, the QQ penguin logo and QQ emoji, on Blue Hat's toy products and related marketing materials, effective March 1, 2021 . QQ launched in 1999 and has become one of the most commonly used instant messenger applications in China . According to QQ's self-disclosed report, there were approximately 617 million active monthly users on their messenger application in 2020. The QQ penguin logo and QQ emoji are dominantly recognizable in Chinese pop culture.
  •  
  • In April 2021 , Blue Hat announced that its subsidiary company, Fujian Zhongqing Hand in Hand Education Technology Co., Ltd. ("Zhongqing") signed a three-year cooperation agreement of "Augmented Reality Plus", or "AR+" series curriculum with five partners in different cities: Quanzhou in Fujian Province , Huizhou in Guangdong Province , Danzhou in Hainan Province , Fuzhou in Jiangxi Province , and Yinchuan in the Ningxia Hui Autonomous Region. We anticipate rolling out this new curriculum to approximately 150 schools in these five regions as part of this partnership.
  •  

  First Quarter 2021 Results  

 

  Total revenues were US$9.9 million for the quarter ended March 31, 2021 , an increase of US$7.7 million , or 343.1%, compared to US$2.2 million in the first quarter of 2020. The significant revenue growth was primarily attributable to increased contributions from Blue Hat's two recently acquired subsidiaries, Xunpusen in late 2020 and Csfctech in early 2021.

 

  Revenues from sales of interactive toys (game series) were US$1.9 million for the quarter ended March 31, 2021 , compared to US$1.7 million in the first quarter of 2020.

 

  Revenues from sales of interactive toys (animation series) were US$0.09 million for the quarter ended March 31, 2021 , a significant increase from zero in the first quarer of 2020.

 

  Revenues from mobile games were US$2.4 million for the quarter ended March 31, 2021 , an increase of US$1.9 million , or 315.2%, following the closing of the Csfctech acquisition during the period.

 

  Revenues from AR education, previously included under interactive toys (animation series), were US$0.2 million for the quarter ended March 31, 2021 . Growth in the AR education business has been primarily driven by the roll-out and implementation of Blue Hat's ARIC system to various schools through 2020 and into 2021.

 

  Revenues from communication services were US$5.37 million for the quarter ended March 31, 2021 . The gain was due to the acquisition of Xunpusen in the second half of 2020.

 

  Gross profit was US$4.1 million for the quarter ended March 31, 2021 , an increase of 143.8% from US$1.7 million in the first quarter of 2020. Gross margin for the five different business lines were as follows:

 
  • I nteractive toys (animation series): 65.6%, or US$0.06 million  
  •  
  •   Interactive toys (game series): 53.6%, or US$1.0 million  
  •  
  •   Mobile games: 84.5%, or US$2.1 million  
  •  
  •   AR education: 97.2%, or US$0.2 million  
  •  
  •   Communication services: 13.9%, or US$0.7 million  
  •  

  Total gross margin was 41.1% for the quarter ended March 31, 2021 , compared to 74.6% in the same period last year. The decrease was due to higher initial costs associated with establishing new business lines, such as licensing costs and copyright costs, among others.

 

  Total operating expenses were US$2.3 million for the quarter ended March 31, 2021 , which includes expenses from Csfctech and its two subsidiaries, compared to US$0.8 million in the first quarter of 2020.

 

  Income from operations was US$1.7 million for the quarter ended March 31, 2021 , compared to US$0.9 million in the first quarter of 2020.

 

  Net income was US$1.2 million , up US$0.57 million , or 62.0%, from US$0.85 million in the first quarter of 2020. The increase was primarily driven by strong revenue growth, which more than offset an increase in operating expenses.

 

  Diluted earnings per share were US$0.024 for the quarter ended March 31, 2021 , compared to US$0.022 for the first quarter of 2020. During the first quarter of 2021, the Company completed a registered direct offering with two institutional investors for the purchase and sale of 7.16 million ordinary shares at a price of $1.06 per share, resulting in total gross proceeds of approximately $7.59 million before deducting the placement agent's fees and other offering expenses. The net proceeds is approximately $6.8 million .

 

  Balance Sheet Highlights  

 

As of March 31 2021, Blue Hat had cash and cash equivalents of US$14.7 million , working capital of US$34.6 million and total shareholders' equity of US$75.5 million , compared to cash and cash equivalents of US$15.8 million , working capital of US$34.0 million , and total shareholders' equity of US$58.9 million , respectively, at December 31, 2020 .

 

  About Blue Hat  

 

Blue Hat Interactive Entertainment Technology is a producer, developer and operator of AR interactive entertainment games and toys in China , including interactive educational materials, mobile games, and toys with mobile game features. Distinguished by its own proprietary technology, Blue Hat aims to create an engaging, interactive and immersive community for its users. For more information, please visit the Company's investor relations website at https://ir.bluehatgroup.com. The Company routinely provides important information on its website.

 

  Forward-Looking Statements  

 

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. In evaluating such statements, prospective investors should review carefully various risks and uncertainties identified in this release and matters set in the Company's SEC filings. These risks and uncertainties could cause the Company's actual results to differ materially from those indicated in the forward-looking statements.

 

  Contacts :

 

Blue Hat Interactive Entertainment Technology
Phone: +86 (592) 228-0010
Email: ir@bluehatgroup.net  

 

  Investor Relations:  

 

The Equity Group Inc.
Carolyne Y. Sohn , Vice President
(415) 568-2255
csohn@equityny.com  

 

In China  
Lucy Ma, Associate
+86 10 5661 7012
lma@equityny.com  

 

 

 
 
                                                                                                                                                                                                                                                                                                                      
 

   BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 
 

 
 
 
 
 

   For   the Three Months Ended March 31,   

 
 
 
 

   2021   

 
 

   2020   

 
 

   Revenues   

 
 
 

   $   

 
 

   9,941,407   

 
 
 

   2,243,658   

 
 
 
 

  Cost of revenue  

 
 
 
 

  5,859,847  

 
 
 

  569,489  

 
 
 
 

   Gross profit   

 
 
 
 

   4,081,560   

 
 
 

   1,674,169   

 
 
 
 
 
 
 
 
 
 
 
 

   Operating expenses:   

 
 
 
 
 
 
 
 
 

  Selling  

 
 
 
 

  580,046  

 
 
 

  173,150  

 
 
 
 

  General and administrative  

 
 
 
 

  1,315,777  

 
 
 

  539,710  

 
 
 
 

  Research and development  

 
 
 
 

  444,211  

 
 
 

  76,051  

 
 
 
 

   Total operating expenses   

 
 
 
 

   2,340,034   

 
 
 

   788,911   

 
 
 
 
 
 
 
 
 
 
 
 

   Income from operations   

 
 
 
 

   1,741,526   

 
 
 

   885,258   

 
 
 
 
 
 
 
 
 
 
 
 

   Other income (expense)   

 
 
 
 
 
 
 
 
 

  Interest income  

 
 
 
 

  194  

 
 
 

  377  

 
 
 
 

  Interest expense  

 
 
 
 

  (137,615)  

 
 
 

  (72,607)  

 
 
 
 

  Other finance expenses  

 
 
 
 

  (40,970)  

 
 
 

  (57,749)  

 
 
 
 

  Other income, net  

 
 
 
 

  30,509  

 
 
 

  18,534  

 
 
 
 

  Total other (expense) income, net  

 
 
 
 

  (147,882)  

 
 
 

  (111,445)  

 
 
 
 
 
 
 
 
 
 
 
 

   Income before income taxes   

 
 
 
 

   1,593,644   

 
 
 

   773,813   

 
 
 
 

  Provision for income taxes  

 
 
 
 

  363,146  

 
 
 

  14,440  

 
 
 
 

   Net income   

 
 
 
 

   1,230,498   

 
 
 

   759,373   

 
 
 
 
 
 
 
 
 
 
 
 

   Other comprehensive income (loss)   

 
 
 
 
 
 
 
 
 

  Foreign currency translation adjustment  

 
 
 
 

  (366,176)  

 
 
 

  (605,360)  

 
 
 
 

   Comprehensive income   

 
 
 

   $   

 
 

   864,322   

 
 
 

   154,013   

 
 
 
 

  Less: Comprehensive income attributable to non-controlling
interests
 

 
 
 
 

  527,194  

 
 
 

  -  

 
 
 
 

  Comprehensive income attributable to Blue Hat Interactive Entertainment shareholders  

 
 
 
 

  337,128  

 
 
 

  154,013  

 
 
 
 
 
 
 
 
 
 
 
 

   Weighted average number of ordinary shares   

 
 
 
 
 
 
 
 
 

  Basic  

 
 
 
 

  47,127,200  

 
 
 

  35,141,114  

 
 
 
 

  Diluted  

 
 
 
 

  52,012,580  

 
 
 

  35,141,114  

 
 
 
 
 
 
 
 
 
 
 
 

   Earnings per share   

 
 
 
 
 
 
 
 
 

  Basic  

 
 
 
 

  $0.026  

 
 
 

  $0.022  

 
 
 
 

  Diluted  

 
 
 
 

  $0.024  

 
 
 

  $0.022  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 
 
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
 

   BLUE HAT INTERACTIVE ENTERTAINMENT TECHNOLOGY AND SUBSIDIARIES   

 
 

   UNAUDITED CONSOLIDATED BALANCE SHEETS   

 
 
 
 
 

   March 31,   

 
 
 

   December 31,   

 
 

  ASSETS  

 
 
 

   2021   

 
 
 

   2020   

 
 

   Current assets:   

 
 
 
 
 
 
 
 
 
 

  Cash and cash equivalents  

 
 
 

  $  

 
 

  14,674,783  

 
 
 
 

  $  

 
 

  15,800,563  

 
 
 

  Restricted cash  

 
 
 
 

  -  

 
 
 
 
 

  -  

 
 
 

  Short-term investments  

 
 
 
 

  -  

 
 
 
 
 

  -  

 
 
 

  Accounts receivable, net  

 
 
 
 

  28,535,745  

 
 
 
 
 

  16,594,533  

 
 
 

  Accounts receivable - related party  

 
 
 
 

  -  

 
 
 
 
 

  1,906,101  

 
 
 

  Other receivables, net  

 
 
 
 

  21,181,096  

 
 
 
 
 

  14,350,223  

 
 
 

  Other receivables - related party  

 
 
 
 

  -  

 
 
 
 
 

  -  

 
 
 

  Inventories  

 
 
 
 

  168,346  

 
 
 
 
 

  117,075  

 
 
 

  Prepayments, net  

 
 
 
 

  5,238,393  

 
 
 
 
 

  1,917,780  

 
 
 

   Total current assets   

 
 
 
 

   69,798,363   

 
 
 
 
 

   50,686,275   

 
 
 
 
 
 
 
 
 
 
 
 

   Property and equipment, net   

 
 
 
 

   4,342,565   

 
 
 
 
 

   4,258,121   

 
 
 
 
 
 
 
 
 
 
 
 

   Other assets:   

 
 
 
 
 
 
 
 
 
 

  Prepayments  

 
 
 
 

  7,205,230  

 
 
 
 
 

  4,164,274  

 
 
 

  Operating lease, right-of-use asset  

 
 
 
 

  355,805  

 
 
 
 
 

  290,410  

 
 
 

  Intangible assets, net  

 
 
 
 

  26,784,385  

 
 
 
 
 

  14,252,575  

 
 
 

  Long-term investments  

 
 
 
 

  1,826,123  

 
 
 
 
 

  1,914,668  

 
 
 

  Deferred tax assets  

 
 
 
 

  252,564  

 
 
 
 
 

  119,127  

 
 
 

  Goodwill accounting  

 
 
 
 

  213,688  

 
 
 
 
 

  -  

 
 
 

   Total other assets   

 
 
 
 

   36,637,795   

 
 
 
 
 

   20,741,054   

 
 
 

   Total assets   

 
 
 

   $   

 
 

   110,778,723   

 
 
 
 

   $   

 
 

   75,685,450   

 
 
 
 
 
 
 
 
 
 
 
 

  LIABILITIES AND SHAREHOLDERS' EQUITY  

 
 
 
 
 
 
 
 
 
 

   Current liabilities:   

 
 
 
 
 
 
 
 
 
 

  Short-term loans - banks  

 
 
 

  $  

 
 

  4,338,151  

 
 
 
 

  $  

 
 

  5,129,295  

 
 
 

  Current maturities of long-term loans - third party  

 
 
 
 

  -  

 
 
 
 
 

  14,117  

 
 
 

  Accounts payable  

 
 
 
 

  3,110,529  

 
 
 
 
 

  935,588  

 
 
 

  Convertible bonds payable  

 
 
 
 

  54,150  

 
 
 
 
 

  739,189  

 
 
 

  Other payables and accrued liabilities  

 
 
 
 

  16,470,149  

 
 
 
 
 

  1,846,917  

 
 
 

  Other payables - related party  

 
 
 
 

  25,677  

 
 
 
 
 

  25,837  

 
 
 

  Operating lease liabilities - current  

 
 
 
 

  283,352  

 
 
 
 
 

  300,468  

 
 
 

  Customer deposits  

 
 
 
 

  756,945  

 
 
 
 
 

  941,877  

 
 
 

  Accrual interest payable  

 
 
 
 

  751,641  

 
 
 
 
 

  -  

 
 
 

  Taxes payable  

 
 
 
 

  9,394,094  

 
 
 
 
 

  6,802,454  

 
 
 

   Total current liabilities   

 
 
 
 

   35,184,688   

 
 
 
 
 

   16,735,742   

 
 
 
 
 
 
 
 
 
 
 
 

   Other liabilities:   

 
 
 
 
 
 
 
 
 
 

  Operating lease liability  

 
 
 
 

  85,493  

 
 
 
 
 

  -  

 
 
 

  Long-term loans - third party  

 
 
 
 

  -  

 
 
 
 
 

  -  

 
 
 

   Total other liabilities   

 
 
 
 

   85,493   

 
 
 
 
 

   -   

 
 
 

   Total liabilities   

 
 
 
 

   35,270,181   

 
 
 
 
 

   16,735,742   

 
 
 
 
 
 
 
 
 
 
 
 

  COMMITMENTS AND CONTINGENCIES  

 
 
 
 
 
 
 
 
 
 

   Shareholders' equity   

 
 
 
 
 
 
 
 
 
 

  Ordinary shares, $0.001 par value, 100,000,000 shares
authorized, 47,127,200 shares issued and outstanding as of March
31, 2021, and 38,553,694 shares issued and outstanding as of
December 31, 2020
 

 
 
 
 

 

 

 

 

 

 

  47,127  

 
 
 
 
 

 

 

 

 

 

 

  38,554  

 
 
 
 
 
 
 
 
 
 
 
 

  Stock subscription receivable  

 
 
 
 
 
 
 
 
 
 

  Additional paid-in capital  

 
 
 
 

  31,453,071  

 
 
 
 
 

  23,466,482  

 
 
 

  Statutory reserves  

 
 
 
 

  2,204,174  

 
 
 
 
 

  2,204,174  

 
 
 

  Retained earnings  

 
 
 
 

  32,090,702  

 
 
 
 
 

  31,387,398  

 
 
 

  Accumulated other comprehensive income (loss)  

 
 
 
 

  1,375,520  

 
 
 
 
 

  1,741,696  

 
 
 

   Total Blue Hat Interactive Entertainment Technology shareholders' equity   

 
 
 
 

   67,170,594   

 
 
 
 
 

   58,838,304   

 
 
 

  Non-controlling interests  

 
 
 
 

  8,337,948  

 
 
 
 
 

  111,404  

 
 
 

   Total equity   

 
 
 
 

   75,508,542   

 
 
 
 
 

   58,949,708   

 
 
 

   Total liabilities and shareholders' equity   

 
 
 

   $   

 
 

   110,778,723   

 
 
 
 

   $   

 
 

   75,685,450   

 
 
 
 

 

 

 Cision View original content: https://www.prnewswire.com/news-releases/blue-hat-announces-first-quarter-2021-financial-results-highlighted-by-343-increase-in-revenues-to-9-9-million-and-62-increase-in-net-income-to-1-2-million-301284033.html  

 

SOURCE Blue Hat Interactive Entertainment Technology

 
 

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Annual Revenue Growth of 57%, Gross Margin up 91%

 

NorthStar Gaming Holdings Inc. (TSXV: BET) (OTCQB: NSBBF) ("NorthStar" or the "Company") today announced its financial results for the three months and year ended December 31, 2024. The Company also announced that it will discuss the results on an investor webinar to be held Thursday, May 15, 2025 at 11:00am (please see below for details). All dollar figures are quoted in Canadian dollars.

 

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Restatement of Results

 

The comparative results for the three months and twelve months ended December 31, 2023 have been restated in the financial statements and management's discussion & analysis ("FY2024 MD&A") for the year ended December 31, 2024 to include additional merchant fees and player bonus expenses which were not captured in the previously published financial statements (note 2 of the Financial Statements for the year ended December 31, 2024). The Company's payment processor deducted the additional merchant fee from the daily remittances to the Company, and the deductions were not accounted for by the Company. These additional fees were identified as part of the year-end reconciliation of the amount due from the payment processor, and the financial statements and FY2024 MD&A have been adjusted accordingly. These restatements did not impact the cash balances reported for the years ended December 31, 2022, 2023, or 2024. However, they did result in adjustments to the reported current asset balances for those periods.

 

Financial Highlights for the Fourth Quarter Ended December 31, 2024 ("Q4 2024"):

 
  •  Total Wagers1 at Northstarbets.ca were $303.0 million in Q4 2024, a 42% increase compared to $213.3 million in Q4 2023.
  •  
  •  Gross Gaming Revenue2 at Northstarbets.ca was $10.0 million in Q4 2024, a 31.6% increase from $7.6 million in Q4 2023.
  •  
  •  Revenue2 was $9.5 million in Q4 2024, a 51% increase from $6.3 million in Q4 2023. Revenue in Q4 2024 includes $1.5 million of managed services revenue, which compares to $0.2 million in Q4 2023.
  •  
  •  Gross Margin was $3.6 million, a 71% increase from $2.1 million in Q4 2023, while the Gross Margin percentage increased to 38.1%, up from 33.6% in Q4 2023.
  •  
  •  Profit/(loss) before marketing and other expenses1 was $0.6 million in Q4 2024 compared to a loss of $2.5 million in Q4 2023, indicating that gross margin is now sufficient to cover the Company's overhead expenses.
  •  

Financial Highlights for the Year Ended December 31, 2024 ("FY 2024"):

 
  •  Total Wagers2 at Northstarbets.ca were $980.0 million in FY 2024, a 51% increase compared to $648.8 million in the year ended December 31, 2023.
  •  
  •  Gross Gaming Revenue2 at Northstarbets.ca was $34.0 million in FY 2024, a 51% increase from $22.5 million in FY 2023.
  •  
  •  Revenue2 was $29.6 million in FY 2024, a 57% increase from $18.8 million in FY 2023. Revenue in FY 2024 includes $2.3 million of managed services revenue, which compares to $0.5 million in FY 2023.3
  •  
  •  Gross Margin was $10.5 million, marking a 91% increase from $5.5 million in FY 2023, with the Gross Margin increasing to 35.7%, up from 29.3% in FY 2023.
  •  
  •  Profit/(loss) before marketing and other expenses1 was $0.1 million in FY 2024 compared to a loss of $6.7 million in YTD 2023, an improvement of $6.8 million.
  •  

"Early in 2025, we completed our most significant fund-raising to date, with a $43.4 million debt financing. This capital gives us a long runway on which to continue our trajectory of growth in wagering, gross margins and improving operating leverage. This was a milestone event for our business," added Mr. Moskowitz.

 

2024 Operating Highlights:

 
  • Completed the inaugural Blackjack Championship tournament, an innovative online competition that helped drive the acquisition of new high-value players and engagement for existing customers while increasing Blackjack wagering activity.
  •  
  • Implemented a series of enhancements to the NorthStar Bets platform, highlighted by streamlined navigation in both the Casino and Sportsbook sections, a doubling of Casino game selection since the start of 2024, personalized prop bets and intelligent parlay suggestions.
  •  
  • Introduced the "NorthStar Elite" program and branded tables to help secure the loyalty and satisfaction of our most active players and reinforcing the Company's positioning as a premium offering.
  •  
  • Launched "Sports Insights 2.0," a robust suite of enhancements to our content vertical that includes a redesigned home page, comprehensive team and player statistics, injury and player news feeds, added coverage of popular sports and strengthened casino content.
  •  
  • Gained significant traction outside the Ontario market with managed services revenue from Northstarbets.com site, owned by the Abenaki Council of Wolinak, increasing from $0.5 million in FY 2023 to $2.3 million in FY 2024.
  •  
  • Outpaced the industry growth rates reported by iGaming Ontario in 2024 in both Total Wagers (51% for NorthStar vs. 33% for the industry) and Gross Gaming Revenue (51% for NorthStar vs. 31.5% for the industry).
  •  

Outlook

 

"We expect our consistent pattern of year-over-year revenue increases to continue throughout 2025, based on our ongoing success in attracting and engaging high-value players," said Mr. Moskowitz. "We will maintain disciplined control over costs so that incremental gross margin falls primarily to the bottom line. As we continue to focus on operational excellence, we remain confident that we have the capital necessary to reach profitability based on our current business platform."

 

FY 2024 Corporate Update Webinar

 

On May 15, 2025, Michael Moskowitz will present an in-depth Corporate Update, including a discussion of the Company's FY 2024 Earnings, current operations and strategic priorities. All investors and other interested parties are invited to register for the webinar at the link below.

 

Date: Thursday, May 15, 2025
Time: 11:00 am EDT
Register: Webinar Registration

 

Management will be available to answer your questions following the presentation on the webinar platform. You may also submit your question(s) beforehand in the registration form linked above.

 

Extension of Strategic Marketing Agreement

 

The Company also announced that its wholly owned subsidiary, NorthStar Gaming (Ontario) Inc. ("NorthStar Ontario"), has extended its strategic partnership with Playtech Software Limited ("Playtech Software") through the renewal of their previously announced strategic marketing agreement. Under the agreement, Playtech Software contributes services designed to accelerate NorthStar Ontario's player acquisition strategy in the province. The agreement was first implemented in June 2023 and has since been renewed several times. Pursuant to the latest renewal, Playtech Software will reimburse marketing expenses valued at a total of up to $1.5 million over a 3-month period through to March 31, 2025. Playtech Software will be compensated through a share of revenue from the income generated in connection with the marketing initiatives to which it contributes. The Transaction between Playtech and NorthStar Ontario is exempted from Multilateral Instrument 61-101 Protection of Minority Securityholders in Special Transactions.

 

"We are very pleased to renew the marketing services agreement with Playtech Software," said Michael Moskowitz, Chair and CEO of NorthStar. "The agreement serves to extend our marketing budget and has contributed to our tremendous growth in Ontario. Playtech plc continues to be a valuable strategic partner and we look forward to further collaboration."

 

Continuous Disclosure

 

Further to a review by the staff of the Ontario Securities Commission (the "OSC") of the Company's continuous disclosure, the FY2024 MD&A includes enhanced disclosures with respect to:

 
  • the Company's regulatory framework, licensing regimes applicable to its business operations and the legal authorizations necessary to conduct its business operations;
  •  
  • specific risk factors relating to the Company's business operations which include risks relating to operating in a heavily regulated industry, cyber security risks and risks relating to conflicts of interest with respect to directors and officers of the Company; and
  •  
  • the relationship between the Abenaki Council of Wolinak and the Company as well as its subsidiary, Slapshot Media Inc.
  •  

Such amended disclosure is being included in the FY2024 MD&A to address comments received from the OSC on its management's discussion & analysis, for the period ended September 30, 2024, and to improve the Company's disclosure.

 

As a result of having to include such enhanced disclosure after the OSC review, the Company will be placed on the public list of Refilings and Errors in accordance with OSC Staff Notice 51-711 (Revised) - Refilings and Corrections of Errors for a period of three (3) years.

 

Additional Information

 

For additional information, please refer to the Company's condensed consolidated financial statements for the year ended December 31, 2024, and the corresponding FY2024 MD&A. These documents are available on SEDAR+ at www.sedarplus.ca, and on the Company's corporate website at www.northstargaming.ca.

 

About NorthStar

 

NorthStar proudly owns and operates NorthStar Bets, a Canadian-born casino and sportsbook platform that delivers a premium, distinctly local gaming experience. Designed with high-stakes players in mind, NorthStar Bets Casino offers a curated selection of the most popular games, ensuring an elevated user experience. Our sportsbook stands out with its exclusive Sports Insights feature, seamlessly integrating betting guidance, stats, and scores, all tailored to meet the expectations of a premium audience.

 

As a Canadian company, NorthStar is uniquely positioned to cater to customers who seek a high-quality product and an exceptional level of personalized service, setting a new standard in the industry. NorthStar is committed to operating at the highest level of responsible gaming standards.

 

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. Neither the TSX Venture Exchange ("TSXV") nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this press release.

 

Non-IFRS Financial Measures [/ Reconciliation of Non-IFRS Measures to IFRS Measures]

 

Throughout this document, management uses certain non-IFRS financial measures and supplementary financial measures to evaluate the performance of the Company. The terms "Gross Gaming Revenue" "Total Wagers" and "Profit/(Loss) before marketing and other expenses" are non-IFRS financial measures. These measures are not recognized measures under International Financial Reporting Standards ("IFRS") and do not have a standardized meaning prescribed by IFRS and are, therefore, not necessarily comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective and to discuss NorthStar's financial outlook. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS. We believe that securities analysts, investors and other interested parties frequently use non-IFRS measures, including industry metrics, in the evaluation of companies in our industry. Management also uses non-IFRS measures and industry metrics in order to facilitate operating performance comparisons from period to period, the preparation of annual operating budgets and forecasts and to determine components of executive compensation.

 

Total Wagers

 

Total Wagers are calculated as the total amount of money bet by customers in respect of bets that have settled in the applicable period. Total Wagers does not include free bets or other promotional incentives, nor money bet by customers in respect of bets that are open at period end. Total Wagers is used to provide investors with supplemental measures of our operating performance and thus highlight trends in our business that may not otherwise be apparent when relying solely on IFRS measures.

 

Gross Gaming Revenue

 

Gross Gaming Revenue is calculated as dollar amounts bet by customers less the dollar amounts paid out to the customers in respect of such bets which have settled in the applicable period.

 

Reconciliation of Non-IFRS Measures to IFRS Measures

 
                                
 In Q4 2024, the Company reported $10.0 million of Gross Gaming Revenue ($34.0 million in FY 2024) and has provided a reconciliation to the most comparable IFRS financial measure (Revenue) as follows:
$ Millions (unaudited)
Unaudited Three
months ended
Year ended
 Dec 31,
2024 
 Dec 31,
2023 
 Dec 31,
2024 
 Dec 31,
2023 
Gross gaming revenue from wagered games$10.0$ 7.6$ 34.0$22.5
Bonuses, promotional costs and free bets(2.0)(1.5)(6.7)(4.2)
Sub-total Gaming revenue8.06.127.318.3
Other revenue from managed services1.50.22.30.5
Revenue$ 9.5$ 6.3$ 29.6$ 18.8
 

 

 

Operating Results

 

Marketing expenses are a key driver of the business but are completely discretionary. Management considers "Profit/(Loss) before marketing and other expenses" to be a good indication of the extent to which the business' Gross Margin is in excess of its overhead costs, and therefore offsetting some portion of marketing expenses, reflecting improving economies of scale.

 
                                                    
$ Millions (unaudited) Unaudited Three 
months ended 
Year ended
 Dec 31,
2024 
 Dec 31,
2023 
 Dec 31,
2024 
 Dec 31,
2023 
Revenue$ 9,478$ 6,275$ 29,556$ 18,845
Cost of Revenues5,8684,16719,01313,317
Gross Margin3,6102,10810,5435,528
General and administrative expenses3,0334,45210,45312,277
 Profit/(Loss) before marketing and other expenses (1) 577(2,344)90(6,749)
Marketing5,2495,47215,45614,094
Loss before other expenses (1) (4,672)(7,816)(15,366)(20,843)
Other expenses(1,070)1493,6456,547
Net loss$ (3,602)$ (7,965)$ (19,011)$ (27,390)
 

 

 

(1) These measures are not defined by IFRS, do not have standard meanings and may not be comparable with other industries or companies.

 

Cautionary Note Regarding Forward-Looking Information and Statements

 

This communication contains "forward-looking information" within the meaning of applicable securities laws in Canada ("forward-looking statements"), including without limitation, statements with respect to the following: expected performance of the Company's business, the Company's growth plans being fully funded, expansion into new markets and future growth opportunities, and expected benefits of transactions. The foregoing are provided for the purpose of presenting information about management's current expectations and plans relating to the future and allowing investors and others to get a better understanding of the Company's anticipated financial position, results of operations, and operating environment. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "continues", "forecasts", "projects", "predicts", "intends", "anticipates" or "believes", or variations of, or the negatives of, such words and phrases, or state that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. This information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. This forward-looking information is based on management's opinions, estimates and assumptions that, while considered by NorthStar to be appropriate and reasonable as of the date of this press release, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, levels of activity, performance, or achievements to be materially different from those expressed or implied by such forward-looking information. Such factors include, among others, the following: risks related to the Company's business and financial position; risks associated with general economic conditions; adverse industry risks; future legislative and regulatory developments; the ability of the Company to implement its business strategies; and those factors discussed in greater detail under the "Risk Factors" section of the Company's most recent annual information form, which is available under NorthStar's profile on SEDAR+ at www.sedarplus.ca. Many of these risks are beyond the Company's control.

 

If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking statements. Although the Company has attempted to identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements, there may be other risk factors not presently known to the Company or that the Company presently believes are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking statements. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. No forward-looking statement is a guarantee of future results. Accordingly, you should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this press release represents NorthStar's expectations as of the date specified herein, and are subject to change after such date. However, the Company disclaims any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws.

 

All of the forward-looking information contained in this press release is expressly qualified by the foregoing cautionary statements.

 
 

For further information:

 

Company Contact:

 

Corey Goodman
Chief Development Officer 647-530-2387
investorrelations@northstargaming.ca

 

Investor Relations:
RB Milestone Group LLC (RBMG)
Northstar@rbmilestone.com

 
 

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