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Operator: Good afternoon. And welcome to theScore Fiscal Year 2021 Q3 Financial Results Conference Call and Webcast. At this time, all lines are in a listen-only mode. After the speakers’ presentation we will open up the call for questions. Please note that the audience on today’s webcast will have the ability to increase the size of their presentation screen by navigating to the maximize controls found in the top right of the slides window. This call is being recorded today, Tuesday, July 13, 2021, at 5:30 Eastern Daylight Time. I would now like to turn the call over to your host, Alvin Lobo, Chief Financial Officer. Mr. Lobo, you may begin.
Alvin Lobo: Thank you, Guyana. Hello and good afternoon. Thanks for joining us on today’s call and webcast for theScore’s fiscal 2021 Q3 results. This is Alvin Lobo, theScore’s Chief Financial Officer; and joining me on the call today are theScore’s Chairman and CEO, John Levy; and President and COO, Benjie Levy. At this time, we would like to caution our listeners that this presentation contains forward-looking statements. There are risks that actual results could differ materially from what is discussed and that certain material factors or assumptions are applied in making these forward-looking statements. Any forward-looking statements contained in this presentation represent the views of management and are presented for the purpose of assisting theScore shareholders and analysts in understanding theScore’s financial position, objectives and priorities, and anticipated financial performance. Forward-looking statements may not be appropriate for other purposes. Additional information on items of note, theScore’s reported results and factors and assumptions related to forward-looking information, are all available in our financials and MD&A for Q3 fiscal 2021, both of which were filed on SEDAR a few moments ago and are also available on our Investor Relations page at ir.scoremediaandgaming.com. Our CEO, John Levy, will now begin the presentation.
John Levy: Thanks, Alvin, and good afternoon to everyone. And thank you for joining us today as we review what was a record setting third quarter, continuing our strong fiscal year. The third quarter of fiscal 2021 was an incredibly productive period as we saw highlights in our media business, further traction for our sports betting operation, and of course, the recent monumental step forward here in Canada, with legalization of single events sports betting, which clears the path for the opening of the Ontario market later this year. We began our third quarter by completing our U.S. IPO, a significant company milestone that raised gross proceeds of US$186.3 million. We are deploying the capital towards the ongoing build out of our integrated sports, media and betting platform, further investments in technology, expanding our market access footprint and to rapidly scale our team. We continue to make progress with the licensing across several additional states, where we hope to launch theScore Bet in the coming months. In support of our ongoing expansion across North America, we continue to make big strides in our technology development. Next month, we will mark a major milestone with the plan deployment of our proprietary internally developed Player Account Management System and Promotion Engine, which have been approved by GLI and the applicable state gaming labs. This transition moves us closer to the full vertical integration of our sportsbook operation, which is foundational to our strategy to establish theScore as a leading integrated provider of digital sports media and sports betting throughout North America.
Benjie Levy: Thanks, John, and good afternoon, everyone. As John mentioned, our handle this quarter was highlighted by record wagering in March and the execution of another highly successful marketing push around a marquee sports event in March Madness. Our integrated marketing campaign led theScore Bet to generate its highest ever betting week during the first week of the tournament.
Alvin Lobo: Thanks, Benjie. Total revenue for our fiscal third quarter was $6.4 million with record third quarter media revenue partially offset by negative net gaming revenue of $2.5 million. Media revenue was $8.9 million, compared to $2.4 million for the same period last year, representing a 270% year-over-year increase and a 5% increase compared to the same in 2019. Gaming handle was $73 million and gross gaming revenue was a negative $40,000 in the third quarter. When taking into account promotional costs and fair value adjustments on unsettled bets, this resulted in negative net gaming revenue $2.5 million. EBITDA loss in Q3 fiscal 2021 was $21.1 million versus an EBITDA loss of $8.7 million for the same period last year. The wider EBITDA loss was driven primarily by additional expenses incurred in connection with the ongoing expansion of our gaming operations and costs and professional service fees related to the recently completed U.S. initial public offering which closed in the third quarter. In terms of our liquidity position, we closed the third quarter with $229.1 million of cash on hand.
Operator: Your first question is from Matthew Lee of Canaccord Genuity. Your line is now open.
Matthew Lee: Good evening, gents. So maybe I will just start with a housekeeping question here, in terms of the G&A, can you tell me how much of that was one-time in nature?
Alvin Lobo: Sure.
John Levy: I will…
Alvin Lobo: Sorry, John. Go ahead.
John Levy: So I will turn it over, Alvin can you provide on that?
Alvin Lobo: Yeah. So I would say about five of it was one-time in nature and the rest, look, there is a balance of some ongoing U.S.-related public company costs, as well as some of what you are seeing in G&A also reflects the overall growth of the business, including as we continue to scale a increase in headcount, which the vast majority of that is related to product and engineering just given what we are continuing to do from a tech perspective in terms of taking on more and more of the sports betting platform in-house. And so I would say, when you back out the non-recurring like that gives you a good sense of both the elevation in public company costs, as well as just spend overall sort of growth in the business.
Matthew Lee: So then we should be expecting kind of $8 million to $9 million per quarter G&A gaming point going forward?
Alvin Lobo: Yeah. Again, look as we continue to invest and scale like there will be other things to be mindful of too, but I -- as you know, Matt, we don’t necessarily guide, but I think it’s fair to kind of look at that as a baseline.
Matthew Lee: Great. And then maybe just a bigger picture, can you discuss at what level of handle you believe to reach more that can make that GGR consistently positive?
John Levy: Benjie why don’t you talk about what our thoughts are in terms of we talk about scale and we talk about early days in each of the states and I know it’s a little difficult to anticipate without sort of specifically guiding particularly since we are saying that we are in four states now. We hope to have that doubled within the next 12 months maybe even a little more than that in the U.S. And that’s without talking specifically about on peril. But maybe perhaps Benjie give some color around that.
Benjie Levy: Yeah. No listen, Matt, I think, we are not going to put a specific handle number on where we think that ultimately converts. I think our view on this is that at scale we do start to see that normalize and we are on our way there and we are starting to see that in some of the results on a day-to-day and week-to-week basis. But until we get to that scale we are still susceptible to some of these swings. And no, but at the end of the day it’s all consistent with our overall approach, which has been building slow and steady. This is not about us buying market share and buying scale in the market -- from a marketing perspective. And ultimately, as we are looking forward to the future and the opportunities that are ahead of us in jurisdictions like Ontario, we think there’s the opportunity to get there in the not too distant future and do it on our own tech stack with our own services.
Matthew Lee: All right. That’s perfect. And then just maybe could you provide some color on the next couple of quarters in terms of the expected hand on the market overall given the sports calendar? Are you starting to see and I know you don’t guide, but like similar handle overall for the industry in Q4 as you saw in Q3 which is…
Benjie Levy: Yeah. Listen, I mean, look for us it follows the sports calendar, right? I mean and Q -- our fiscal Q3, which we just came out of, when you line up the sports calendar against our fiscal Q2 is a softer quarter. Fiscal Q4 is after all of the -- after NBA and NHL wrap up, yes, we have Olympics over the summer, but it’s largely MLB and then you are getting into our fiscal Q1 in the fall where kind of our fiscal Q1 is seasonally our strongest quarter. So I think it’s natural to expect handle to ebb and flow along the lines of sports calendar.
Matthew Lee: Perfect. Thanks. I will pass the line.
John Levy: Yeah.
Operator: Your next question is from Chad Beynon of Macquarie. Your line is now open.
Chad Beynon: Hi. Thanks for taking my question. I wanted to ask about some of the initiatives about bringing more of the tech in-house. I know you guys have talked about this as a primary goal, but you are actually doing it and executing it and talked about the timeline. Does this change how you are thinking about long-term margins for the business over time as you -- as the revenues and the handle start to grow? And if you can’t talk about that or the reasons why it can’t be as high if not higher than what some of your peers are talking about? Thanks.
John Levy: So, I will start out by just saying that, first of all, thanks, Chad, for the question and we have said right from the GEICO that when we first launched. Building that tech stack and having control and management over that tech stack was critical to the type of offerings that we were going to deploy over time and it’s really put us in a position where we are starting to see the fruits of our labor. We announced today that PAM has been basically fully authorized and licensed and ready to go and we have already launched wallet and the promotional vehicles. And these are all attributes of allowing us to be able to provide theScore Bet as part of this integrated omni present uniform offering with theScore at the core, right? And I will let the Alvin and Benjie talk to how that improves our margins in the context of our go-forward strategy. But it also it touches every aspect of what we are doing from mark from being a thriving attractive offering for market access to increasing our penetrations as we were doing within the four states and as we are going to show once we launch in Ontario right to the margins that we are going to be able to, which is I think the core -- at the core of what you are asking in the context of from a financial offering and in terms of what the results are. But I don’t know, Alvin do you want to talk a little bit more maybe about what the financial impact of our own tech stack is in the context of our rollout?
Alvin Lobo: Sure. And I think Chad the short answer is, we are doing it for the margins, but this is a really nice side benefit of it. And to your point, we do think that this is one of the components along with just the overall philosophy of having an integrated media embedding approach. But the ownership of the tech stacks really important to what that whole experience looks like from the consumer’s perspective in terms of not just acquisition, but retention and engagement in sort of the frequency in which that the user participates in the ecosystem. But we do think it helps us attain margins at the high end of the industry just as a result of not having to pay rapt shares to tech partners. So the short answer is, yes, but like that’s not what -- why we are doing it. It’s just a really nice added effect of owning our own tech.
Chad Beynon: Okay. That makes sense. Thanks, John. Thanks, Alvin. And then regarding the iGaming initiatives can you help lay out the timeline in terms of launching iGaming products? And then once you achieve the doubling of the markets on OSB, if you are in markets where iGaming is currently legal or expected to legalize such as Ontario, should we expect that that you will be offering a product to your customers in those markets? Thanks.
Alvin Lobo: I can take that one, Chad. Yeah, so the short answer is, our plan is to have iGaming up and running in the fall and that would be in both New Jersey where we have existing iGaming market access, as well as Ontario where the plan is to have iGaming and online sports betting available at the market open in December based on the current timelines that iGaming Ontario has put out subject of course to all regulatory approvals.
Chad Beynon: Great. Thank you very much guys. Best of luck.
John Levy: Thanks Chad.
Operator: Your next question is from Ben Chaiken of Credit Suisse. Your line is now open.
Ben Chaiken: Hey. How’s it going? You have got…
John Levy: Hi.
Ben Chaiken: You have a material presence -- material existing presence in Ontario through your media arm already. In the first few months of the iGaming and OSB rollout. How do you think about customer acquisition, like, is there an education process that’s required for those existing customers, is it promo expense? Just can you help us think about the strategy at least high level and appreciating that some of this still may be in flux currently?
John Levy: Okay. So, Ben, I will…
Benjie Levy: I will…
John Levy: Go ahead. Benjie, do you want a lead off or go ahead.
Benjie Levy: Sure. Listen, Ben, I think, Ontario is a -- as John and we have been talking about is a very, very exciting market for us and it’s not just because we have a tremendous user base who loves our platform here. We have a brand history and a brand legacy with theScore having been in market as a -- first as a television business for the better part of 20 years. And so, what that brand presence allows us to do is to target the market and attack the market in a bit of a different way than we have been in the U.S. where it’s been -- our marketing approach has been predominantly conversion based and also selected digital marketing that we have done in the states. Up here because of that brand presence and because the audience knows us, we are able to do a lot more from a creative execution perspective. So you can expect us to be more active from a marketing perspective across the Board, because ultimately that brand allows us to generate an ROI on that spend much more effectively, because we are not educating people about who theScore is or what theScore Bet is. People know theScore here more so than any other sports media brand in the market.
Ben Chaiken: Got you. I appreciate it. That’s all from me. Thank you.
Operator: Your next question is from Sudhir Karve of Eight Capital. Your line is now open.
Unidentified Analyst: Good evening, everybody. Thanks for taking my question. Can you maybe just talk about like additional state rollouts, I know Illinois with the Caesars partnership was something that was slated for H2 is that kind of skill in line or expected to go live around in that timeframe?
John Levy: Yeah. So thanks, Sudhir, and glad to have you on the call. We are currently pursuing licensing in Illinois in partnership with Caesars in front of the IGB, wouldn’t want to put down an exact timeline on when that’s going to be. We are working through that process now though.
Unidentified Analyst: Okay. Great. Then just maybe kind of looking at the broader market on the regulatory side, I know there’s been some movement with several more states kind of legalizing over the last couple of months. Can you guys talk about some of the market access agreements or some of the initiatives when it comes on the additional market access legalization you guys are working?
John Levy: Listen I can’t get into details on confidential discussions that are ongoing on that front. I mean, it’s been reported publicly that we have applied for a license in Virginia and also Tennessee. Maryland is an open licensing jurisdiction that’s organizing for -- organizing to get their market open in short order. We have said publicly that we anticipate that over the course of the next 12 months we anticipate our footprint from a launch state perspective more than doubling. And so based on kind of what we have got line of sight into we believe we are well-positioned to execute on that.
Unidentified Analyst: Okay. That’s helpful. So that’s all for me guys. Thank you very much.
Operator: Your next question is from David McFadgen of Cormark Securities. Your line is now open.
David McFadgen: Oh! Hi. Yeah. A couple of questions. Thank you. So I am just looking at the handle, so $73 million in Q3 and Q2 was $81.6 million. Is this just a function of following the sports schedule or was there some other factors that caused it to dip sequentially?
John Levy: No. I think David is kind of consistent with my previous comment that it just kind of sequential sports calendar.
David McFadgen: Okay. And then, Alvin, just on the $5 million of one-time costs in nature for Q3 is that primarily all related to U.S. IPO or is there some other factors that play there?
Alvin Lobo: Yeah. Primarily all related to the U.S. IPO. You are correct.
David McFadgen: Okay. So if we back that we took that out and the EBITDA loss instead of $21.1 million would be $16 million, correct?
Alvin Lobo: Yeah.
David McFadgen: Yeah. Okay. And then just when I look at your monthly active users at 3.7 million in the quarter. It’s typically bounced around sort of between, say, high 3 million, 3.7 million up to 4.2 million. I am just wondering do you think you can take that back up to over $4 million and actually you are getting growth from here or do you think this is just where it’s going to sit and this is where it’s going to be with this level of user base we can still cover a lot of people to bet on sports?
Alvin Lobo: Right. I think the second part of the deal. I will take the second part first about do we think we can convert a lot of users to bet on sports and the answer is, yes. And I think you know with respect to the first part about it that you are correct that it kind of bounces around in that 3.7, 3.8, low-4s range and we do believe very strongly that we have the capability to grow that user base. A lot of the things we think about from a product perspective on our media app and what we can do to continue to grow users and engagement. We think we should translate into user growth steadily over time.
David McFadgen: Okay. Okay. All right. That’s it for me. Thank you.
John Levy: Thanks, David.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.