Net loss widens at Lottery.com despite 813.3% YoY revenue growth

US-facing lottery broker and information portal Lottery.com posted an increased net loss of $9.3m (£7.1m/€8.5m) for its 2021 financial year despite experiencing an 813.3% increase in revenue.

Revenue for the 12 months to 31 December 2021 amounted to $68.5m, a significant increase from $7.5m in the previous financial year.

Lottery.com put this growth primarily down to the sale of $47.1m worth of LotteryLink credits for prepaid advertising, prepaid lottery games, marketing materials and product development, while increased B2C sales also contributed to revenue growth.

In October of 2021, Lottery.com completed its business combination with special purpose acquisition company Trident Acquisitions Corp, which allowed the business to go public on the Nasdaq exchange,

Lottery.com owner AutoLotto and New York-listed Trident had signed a binding letter of intent to acquire the broker in November 2020, with the combined group estimated to have a post-business combination enterprise value of approximately $526m.

Shortly after the year-end, Lottery.com also reshuffled its senior management team with a series of new appointments. These included Ryan Dickinson moving into the role of chief financial officer and president, Katie Lever as chief operating officer and chief legal officer, and Matt Clemenson as chief revenue officer.

Looking at costs for the year, total operating expenses jumped 378.1% to $39.2m, with the main outgoing being personnel costs, which hiked 380.0% to $21.6m. After excluding certain costs, revenue growth meant adjusted earnings before interest, tax, depreciation and amortisation (EBTIDA) turned from a loss of $3.1m to a positive of $31.1m.

However, Lottery.com also noted $18.1m in interest expenses and $2.9m in other costs, which left a pre-tax loss of $10.9m, compared to a $5.8m loss in the previous year.

The broker received $1.6m in income tax benefit, which, after also accounting for a net cumulative translation adjustment of $655,000, meant Lottery.com ended the year with a net loss of $9.3m, wider than the $5.8m loss in 2020.

Looking at the final quarter of the year and revenue for the three months to 31 December 2021 was up 551.5% year-on-year to $21.5m.

Operating costs rocketed 679.3%, while net finance costs also rocketed by 1,154.1% from $802,600 to $10.1m. This left a pre-tax loss of $14.4m, far higher than $1.7m in Q4 of 2020.

Lottery.com received $1.6m in income tax benefit and also noted a cumulative translation adjustment of $655,000, meaning it ended the quarter with a net loss of $12.9m, compared to $1.7m in the previous year.

“In the fourth quarter and throughout 2021, we demonstrated our ability to execute our strategic growth initiatives across the business to generate strong revenue growth and gross profit,” Lottery.com co-founder and chief executive Tony DiMatteo said.

“B2C sales increased compared to the prior year period, despite no digital marketing spending. LotteryLink, our affiliate program, expanded and generated multiple revenue streams.

“I am extremely proud of our team achieving these accomplishments while successfully closing the business combination and taking our company public.”

Author: Raymond Fleming