Name: Lottery.com Inc. Q3 2021 Earnings Call
Start: 2021-11-15T00:00:00.000Z

Executive Summary

Reported Q3 2021 revenue of $32.2M and net income of $11.2M, driven by a global affiliate marketing program and improved user profitability; gross margin expanded to 63.0% from 54.9% YoY .
Management expects to meet or exceed prior FY2021 revenue guidance of $71M; catalysts include post-SPAC capital to accelerate marketing, new markets, product expansion, and M&A initiatives .
Sequential context: preliminary Q2 2021 revenue was $9.1–$9.6M (reported) and $10.0–$10.5M (pro forma with acquisitions); Q3 step-up reflects affiliate program launch and dynamic pricing .
Post-merger update: closed business combination on Oct 29, 2021; received $42.8M net proceeds and converted ~$60M of debt and accrued interest to equity, strengthening the balance sheet and enabling growth investments .
No Q3 earnings call transcript was found; Wall Street consensus estimates via S&P Global were unavailable due to mapping constraints, limiting beat/miss analysis [SearchDocuments] [GetEstimates].

What Went Well and What Went Wrong

Revenue inflection: $32.2M in Q3 (+$30.6M YoY) on global affiliate program initiatives, indicating successful B2B2C scaling .
Profitability: Gross profit rose to $20.3M (+$19.4M YoY); gross margin expanded 810 bps YoY to 63.0%, aided by dynamic pricing and app improvements (e.g., push notifications) .
Strong unit economics: Gross profit per transaction increased to $1.69 from $0.93 YoY; higher tickets per transaction and revenue per transaction demonstrate improved monetization .
Management quote: “We acted decisively to advance our plans for our global affiliate program… The start of this program provided increased revenue in the third quarter… Additionally, the implementation of a dynamic pricing model and improvements to our app… contributed to strong growth in gross profit per transaction” — Tony DiMatteo, CEO .

Elevated financing costs: Q3 interest expense was $3.79M; total other expenses $3.97M partially offset operating gains, showing a high cost of capital pre-SPAC .
Operating cash flow pressure: YTD Q3 operating cash flow was -$7.36M due to working capital swings (notably accounts receivable) and deferred revenue reductions, a watch item for liquidity management .
Controls and risk disclosures: Press release highlights material weaknesses in internal controls (segregation of duties, access controls, accounting staffing) and broader operational risks, which may impact execution .

Metric	Q3 2020	Q2 2021	Q3 2021
Revenue ($USD Millions)	$1.60	$9.1–$9.6 (reported) / $10.0–$10.5 (pro forma)	$32.25
Gross Profit ($USD Millions)	$0.88	n/a	$20.33
Gross Margin (%)	54.9%	n/a	63.0%
Operating Income ($USD Millions)	$(0.80)	n/a	$15.12
Net Income ($USD Millions)	$(1.16)	n/a	$11.15
EPS Basic ($USD)	$(0.22)	n/a	$1.89
EPS Diluted ($USD)	$(0.22)	n/a	$0.24

KPIs (User Metrics)

KPI	Q3 2020	Q3 2021
Transactions per user	11.2	12.4
Tickets per transaction	3.5	3.8
Revenue per transaction ($)	$8.20	$9.52
Gross profit per transaction ($)	$0.93	$1.69
Gross margin per transaction (%)	11.3%	17.8%

Balance Sheet Highlights (end of Q3)

Accounts receivable: $33.07M (reflecting strong sales and collections timing) .
Total assets: $92.61M; total liabilities: $58.17M; stockholders’ equity: $34.44M .

Notes:

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2021	$71M	Meet or exceed $71M	Maintained/Improved tone

Note: No Q3 earnings call transcript found; themes derived from press releases and investor materials.

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2021)	Trend
Affiliate program/B2B2C	Preliminary Q2 update flagged strong sequential revenue growth and partner expansion; acquisitions (Aganar, Juega Lotto) expected to be tailwinds	Affiliate program start drove Q3 revenue uplift and improved transaction economics	Accelerating
Dynamic pricing/app improvements	Not detailed in Q2 update	Implemented dynamic pricing and push notifications; boosted tickets per transaction and monetization	Positive execution
Capital and balance sheet	Pre-SPAC; capital constrained with higher interest costs	Closed SPAC; $42.8M net proceeds and ~$60M debt converted to equity	Material improvement
New markets/products	Latin America expansion via acquisitions (pre-Q3) [16]	Enter new U.S/international markets in 2021; NY/NJ planned for 2022; add digital scratchers and state-specific games	Expanding footprint
Blockchain/Project Nexus	Strategic initiative under development [16]	Continue development; launch first proprietary lottery game in 2022	On roadmap
Controls/regulatory risk	SPAC filings noted controls remediation needs	Press release reiterates material weaknesses and broader risk disclosures	Ongoing remediation

“We are proud of the strong revenue and profitability growth we achieved in the third quarter… The start of [our global affiliate] program provided increased revenue… an essential building block of our B2B2C strategy… Additionally, the implementation of a dynamic pricing model and improvements to our app… contributed to strong growth in gross profit per transaction” — Tony DiMatteo, CEO .
“Now that we have successfully completed our business combination, we are focused on utilizing the proceeds… to accelerate targeted user marketing, enter new markets, expand product offerings, and execute strategic and synergistic acquisitions” — Tony DiMatteo .
Strategic priorities post-merger: Project Nexus blockchain platform; targeted marketing; entering new U.S. and international markets; developing new products; adding affiliates/API partners; executing M&A for Sports.com .

No Q3 2021 earnings call transcript was found in the document corpus; therefore, Q&A highlights and guidance clarifications from a live call are unavailable [SearchDocuments].

Wall Street consensus estimates via S&P Global were unavailable due to missing CIQ mapping for LTRY, so beat/miss analysis versus consensus could not be performed at this time [GetEstimates].
Management reiterated it expects to meet or exceed FY2021 revenue guidance of $71M, implying potential upward pressure on sell-side models where coverage exists .

Q3 demonstrated a step-function in scale from affiliate program activation and improved unit economics; sustained gross margin expansion is a constructive indicator for profitability trajectory .
Post-SPAC capitalization and debt-to-equity conversion materially improve financial flexibility to fund marketing, market entries, and product expansion; monitor deployment efficiency and ROI .
Watch operating cash dynamics and receivables growth following the Q3 revenue surge; YTD operating cash flow was negative amid working capital swings .
Execution on new markets (U.S. and international) and product roadmap (digital scratchers, proprietary blockchain games) is the next leg of growth; regulatory and licensing remain key dependencies .
Elevated interest costs pre-merger highlight the importance of capital structure optimization; expect lower financing burdens going forward, contingent on disciplined investment .
Internal controls remediation is an important near-term milestone; successful resolution should reduce operational risk and support investor confidence .
Near-term trading catalysts: reaffirmed FY2021 guidance “meet or exceed” $71M, Coinstar affiliate partnership, and continued affiliate/API partner additions that can accelerate user acquisition and transaction flow .