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Scout CEO demands profitability push after posting Q1 net loss

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Scout Gaming Group CEO Niklas Jönsson has called on the business to “do more” to reach profitability after posting a net loss in Q1 despite revenue increasing.

Revenue for the three months to 31 March was SEK8.0m (£587,944/€685,048). This is 23.1% higher than the SEK6.5m Scout reported in Q1 of last year.

Scout posted growth across both its B2B and B2C segments. This is despite what Jönsson describes as a “significant” reduction in employee costs and other external expenses. 

This came in the wake of a transformation programme, which completed in August last year. While the initiative led to some staff being let go, Scout said this would allow it to become a leaner business and more efficient in delivering services to B2B partners.

Looking back over Q1, Jönsson says Scout is now a more “efficient and effective” business. However, he also raised concerns over a lack of profit, saying Scout must work towards becoming profitable. 

“Q1 2024 has come to end, we have built a more efficient and effective company and are improving in almost all important metrics,” Jönsson said. “But we need to do more to reach profitability. 

“It is also satisfying to see the improved profitability as we have managed to grow both our B2B and B2C revenues despite a significant reduction in employee cost and other external expenses. We are well positioned to reach profitability and to start to generate positive cashflows.

“We aim to solidify our market position and enhance revenue growth by implementing and further develop pricing models that directly reflect the significant benefits we provide to our partners. Our long-term plan for growth also includes focus on tailored developments alongside our product portfolio of different verticals focused on delivering added value for our partners.”

B2B and B2C growth for Scout

Breaking down Q1, B2B revenue increased 20.4% to SEK6.5m. Scout puts this down to a stronger focus on this vertical. This comes in the wake of last summer’s transformation programme. By the end of Q1, Scout had 10 integrated and active B2B partners. 

As for B2C, revenue was up 36.4% year-on-year to SEK1.5m. Scout said this was helped by the optimisation of its sportsbook offering. B2C revenue is booked at the date the transaction takes place for daily fantasy sports or when a bet settles. 

While the transformation programme is more focused on B2B growth, Jönsson says Scout will also focus on its B2C brands.

“We are committed to achieving profitability by meticulously tracking key metrics and KPIs,” he said. “This ensures that our marketing expenditures drive controlled and effective growth. The current activity level on this brand is from an invested and active user base acquired years ago, with little to no marketing efforts covering the first quarter of the year.

“Through a combination of efforts internally and with our partners and based on the number of entries we expect the coming months to be the most engaging of our users in the history of the company.”

Scout slips to net loss

Looking at spending, the early impact of the transformation initiative is clear to see. Total operating expenses are down 34.6% to SEK10.8m. Much of this is down to staff costs halving from SEK9.6m to SEK4.7m.

This left an operating loss of SEK2.8m, an improvement on SEK9.9m in 2023. However, when also taking into account financial items, this is where the situation changed for Scout. This year, it reported a net negative impact of SEK153,000 whereas, last year, this was a gain of SEK17.0m.

As such, pre-tax loss for this year amounted to SEK2.9m, compared to last year’s SEK7.0m profit. Scout did not pay any tax, so bottom line net loss was also SEK2.9m versus the net profit of SEK7.0m in 2023.

“We look forward to continuing to create added value for our partners by utilising our internal account management, development, and operations teams to foster an environment that not only attracts new users but also captivates and retains existing ones through tailored marketing campaigns designed by our teams,” Jönsson said.

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