NorthStar Gaming Reports Second Quarter 2024 Results

Company delivers record wagers, revenue and gross margin

NorthStar Gaming Holdings Inc. (TSXV: BET) (OTCQB: NSBBF) ("NorthStar" or the "Company") today announced its financial results for the three- and six-month periods ended June 30, 2024. All dollar figures are quoted in Canadian dollars.

"We are building on our momentum with another record quarter highlighted by growth in excess of 60% for both revenue and gross margin," said Michael Moskowitz, Chair and CEO of NorthStar. "Importantly, top line growth continues to outpace expenses as we leverage our existing resources to scale the business efficiently, demonstrating the considerable upside in our business model."

Financial Highlights for the Second Quarter Ended June 30, 2024 ("Q2 2024"):

• Revenue (including managed services fees, net of bonuses, promotional costs and free bets) reached $7.5 million in Q2 2024, a 61% increase from $4.6 million in Q2 2023.

• Total Wagers¹ at Northstarbets.ca were $225.5 million in Q2 2024, a 41% increase compared to $160.1 million in Q2 2023.

• Gross Gaming Revenue¹ at NorthStarbets.ca was $8.7 million in Q2 2024, a 58% increase from $5.5 million in Q2 2023.

• Gross Margin was $3.2 million in Q2 2024, representing a 69% increase from $1.9 million in Q2 2023, which accounted for approximately 42% of revenue, up from 40% in Q2 2023.

Financial Highlights for the Six-Month Period Ended June 30, 2024:

• Revenue (including managed services fees, net of bonuses, promotional costs and free bets) totaled $13.4 million, a 62% increase from $8.3 million in the six months ended June 30, 2023 ("YTD 2023").

• Total Wagers¹ at Northstarbets.ca reached $443.5 million, a 48% increase compared to $300.3 million in YTD 2023.

• Gross Gaming Revenue¹ at NorthStarbets.ca was $16.3 million, a 65% increase from $9.9 million in YTD 2023.

• Gross Margin was $5.4 million, marking a 77% increase from $3.0 million in YTD 2023, and represented approximately 40% of revenue, up from 37% in the comparable period of 2023.

Recent Operating Highlights:

• A 48% year-over-year increase in active players in Q2 2024, a 12% decline in the cost per acquisition of a customer (CPA), and a 7% rise in estimated 12-month player values.

• The Company outpaced the industry-wide year-over-year growth rates reported by iGaming Ontario for Q2 2024 in both Total Wagers (41% for NorthStar vs. 32% for the industry) and Gross Gaming Revenue (58% for NorthStar vs. 34% for the industry).²

• Renewal of the strategic marketing agreement with Playtech Software Limited, which will provide support for marketing initiatives valued at up to $4 million to October 31, 2024, designed to accelerate player acquisition in Ontario.

• Secured $3 million in short-term financing to fund the Company's continued growth through an unsecured promissory note to Playtech plc dated April 25, 2024 repayable in one year, or earlier upon completion by the Company of additional financing transactions.

• Celebrated the second anniversary of the NorthStar Bets platform, which launched in Ontario on May 9, 2022. Northstarbets.ca has generated more than $1 billion in total wagers³ in its first two years of operations.

• Continued roll-out of enhancements to the Company's "Sports Insights 2.0" content vertical, an initiative announced in February 2024. Recent additions include premium MLB team and player stats. For NFL fans, a redesigned Insights homepage will debut prior to the start of the season along with a premium suite of team and player stats, plus Rotowire's industry-leading NFL player news and injury report feeds.

• Sports Insights users continued to be more engaged, with the most active readers of the content depositing 87% more than non-readers in Q2 and generating higher average turnovers for casino and sports of 41% and 98% respectively.

• The Company ran a successful EURO/Copa campaign in July that positively impacted Sportsbook KPIs, with daily unique players increasing by 15%, daily bet counts rising by 11% and daily wagers growing by 34% compared to pre-campaign levels in June.

• In August, NorthStar launched the Blackjack Open, an innovative, bespoke tournament with daily and weekly cash prizes.

Outlook

"Just over two years since the launch of NorthStar Bets, our online betting platform stands strong against major international competitors," said Mr. Moskowitz. "Our premium offering has enabled us to outperform the Ontario market on key metrics like total wagers and gross gaming revenue. As we continue to innovate and provide unique content and outstanding customer service, we are enthusiastic about our prospects for continued growth."

Q2 Corporate Update Webinar

On August 14, 2024, Michael Moskowitz will present an in-depth Corporate Update, including a discussion of the Company's Q2 Earnings, current operations and upcoming milestones. All investors and other interested parties are invited to register for the webinar at the link below.

Date: Wednesday, August 14^th, 2024
Time: 11am ET
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.

Additional Information

For additional information, please refer to Company's condensed consolidated interim financial statements for the three- and six-month periods ended June 30, 2024, and the corresponding management's discussion and analysis ("MD&A"). These documents are available on SEDAR+ at www.sedarplus.com, and on the Company's corporate website at www.northstargaming.ca.

About NorthStar

NorthStar proudly owns and operates NorthStar Bets, a made-in-Ontario casino and sportsbook gaming platform that provides players with a uniquely local, premium user experience. The NorthStar Bets sportsbook provides real-time news, stats, analysis and scores directly in the betting environment along with the most popular online casino games. NorthStar's subsidiary, Slapshot Media Inc., provides managed services to Northstarbets.com, an iGaming site owned and operated by the Abenaki Council of Wolinak.

A Canadian company, NorthStar is uniquely positioned to become a convergence leader in the intersection of sports media and sports wagering thanks to its partnerships and agreements with leading media companies. 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 nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

Non-IFRS Financial 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 is 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 Q2 2024, the Company reported $8.7 million of Gross Gaming Revenue ($16.3 million in YTD 2024) and has provided a reconciliation to the most comparable IFRS financial measure (Revenue) as follows:

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 it's overhead

costs, and therefore offsetting some portion of marketing expenses, reflecting improving economies of scale.

 
(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, 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.com. 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.

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¹ Represents a Non-IFRS financial measure. See "Non-IFRS Financial Measures" below for more information.
² iGaming Ontario's FY 2024-25 Q1 Market Performance Report, July 25, 2024.

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