Street Calls of the Week
NorthStar Gaming Inc. (BET:TSXV, NSBBF:OTCQB), a $132.28 million market cap gaming company, reported a strong performance in its Q2 2025 earnings call, highlighting significant revenue growth and improved financial metrics. According to InvestingPro data, the stock exhibits high price volatility with a beta of 2.01, making it particularly sensitive to market movements. The company achieved a 15% year-over-year revenue increase, reaching $8.5 million for the quarter. Despite the absence of specific earnings per share data, NorthStar’s strategic focus on reducing marketing expenses and enhancing customer retention contributed to its positive financial results. The company’s stock price remained stable, with no significant change noted in the latest trading session.
Key Takeaways
- NorthStar Gaming’s Q2 2025 revenue grew by 15% year-over-year to $8.5 million.
- The company reduced its marketing expenses significantly, dropping from 48.8% to 35.8% of revenue.
- Gross margin improved by 25% year-over-year, reaching $3.5 million.
- Managed services revenue doubled, accounting for 10% of total Q2 revenue.
Company Performance
NorthStar Gaming demonstrated robust performance in Q2 2025, with a notable 15% increase in revenue compared to the same quarter last year. The company’s strategic initiatives, including a reduction in marketing expenses and an emphasis on customer retention, have positively impacted its financial health. The launch of the Spring Tournament Series and enhancements to its casino platform contributed to attracting and engaging customers.
Financial Highlights
- Revenue: $8.5 million, up 15% year-over-year
- First Half 2025 Revenue: $16.4 million, a 23% increase
- Gross Margin: $3.5 million, a 25% year-over-year increase
- Profit Before Marketing: $700,000, an 87% increase from Q2 2024
- Marketing Expense: Reduced from 48.8% to 35.8% of revenue
Outlook & Guidance
Looking forward, NorthStar Gaming aims to enter the Alberta market by 2026, leveraging its strong position in the Canadian iGaming landscape. The company is targeting breakeven through continued revenue growth, efficient expense management, and effective customer acquisition and retention strategies. Future revenue forecasts project $62.13 million for FY2026 and $68.11 million for FY2027.
Executive Commentary
CEO Michael Moskowitz emphasized the company’s strategic focus, stating, "We believe that we are at the intersection point of iGaming and Media." He also highlighted the company’s commitment to customer engagement, saying, "Our goal is to attract, engage, and entertain customers." Moskowitz further underscored NorthStar’s dedication to its plans, noting, "We are maniacally focused on executing on our plans."
Risks and Challenges
- Market Saturation: As the Canadian iGaming market grows, increased competition could impact NorthStar’s market share.
- Regulatory Changes: Potential changes in gaming regulations could affect operations and profitability.
- Economic Conditions: Broader economic pressures may influence consumer spending on gaming activities.
- Technological Advancements: Keeping pace with technological innovations is crucial for maintaining competitive advantage.
Q&A
During the earnings call, analysts inquired about NorthStar’s cash resources and its ability to sustain growth. The company confirmed confidence in its financial position and addressed previous financial restatement issues, emphasizing a scalable business model and low-cost player reactivation strategies.
Full transcript - NorthStar Gaming Inc (BET) Q2 2025:
Trevor Brucado, Investor Relations Representative, RBMG: Hi, everyone. Welcome to NorthStar Gaming’s Earnings Call. This is Trevor Brucado with RBMG, NorthStar’s U. S.-based Investor Relations firm. NorthStar Gaming Holdings is listed in Canada on the TSXV under the symbol BET and in The U.
S. On the OTCQB under the symbol NSBBF. Joining us today is NorthStar’s Chair and CEO, Michael Moskowitz, who will be presenting the company’s Q2 twenty twenty five results, current operations and strategic priorities. After Michael’s prepared remarks, we will open up to questions. If you do have a question, you can submit them in the Q and A module.
Please note this webinar is being recorded today, 08/14/2025, and will be posted on the company’s Investors section at northstargaming.cainvestors, and this is where you will also find NorthStar’s August presentation and fact sheet. Now for a quick disclaimer. Today’s presentation may contain forward looking statements that are subject to risks and uncertainties that may be out of NorthStar’s control and should not be construed as a recommendation or solicitation to buy or sell any security. NorthStar’s full disclaimer can be found in the presentation, as you can see here, and on their website at northstargaming.ca. Lastly, RBMG is not a registered investment advisor or broker dealer.
For more information, please visit rbmilestone.com. And now it is my pleasure to turn it over to NorthStar’s Chair and CEO, Michael Waskowitz. Michael, stage is yours.
Michael Moskowitz, Chair and CEO, NorthStar Gaming Holdings: Thanks, Trevor, and good morning, everyone. Yesterday, we announced our financial results for the 2025. I’ll start today’s presentation with a review of those results, followed by an update on our recent progress at NorthStar and finally, our outlook and strategic priorities. As a reminder, NorthStar operates an online betting platform. We’re based in Ontario, Canada with a growing presence across the country.
We believe that we are at the intersection point of iGaming and Media, as I’ve said many times. Let’s begin with our investment highlights. For those that are new to the call, the addressable market in Canada has estimated at 9,500,000,000 Ontario was the first province to regulate online betting three years ago. We also participate in the rest of Canada through managed services provided by the Abenaki Council of Olneyak to support the website, northstarbets.com. Northstar has industry leading gaming content and technology.
We partner with the best in class providers to power our platform. Our internal team creates proprietary content and customized user experiences that position us as a premier offering in the marketplace. Earlier this year, we completed an important long term debt financing that we believe provides the funding we require to reach profitability. We have an experienced management team that is completely focused on meeting the needs of growing the Canadian market. We’ve got a differentiated positioning as a premium offering, leading to a superior customer experience and user economics.
For example, we have very high player values and attractive payback rates on acquired players. Our business is generating rapidly increasing gross margins as we benefit from operating leverage. As the business scales, we are seeing margins expansion and holding operating expenses relatively flat. This trend is taking us closer to profitability. And I’ll touch on each of these investment highlights throughout today’s presentation.
So before diving into our results, I’d like to touch on the addressable market in Canada. As I mentioned, the overall Canadian market is estimated to reach $9,500,000,000 by 2026. We generate most of our revenues in Ontario, which is currently the only province to license online betting. The Ontario market exceeded $3,000,000,000 in 2024 and is expected to reach $3,700,000,000 by 2026. That’s tracking ahead of some previous estimates, were predicted at about $3,500,000,000 in market size.
Although we see the regulated Ontario market beginning to mature over the midterm, the market continues to be very large. The potential market outside of Ontario, where 61% of the population lives, is $5,800,000,000 and we see tremendous midterm upside from the expansion outside of Ontario. Alberta is expected to be the next province to license online betting, which we are estimating by the 2026. Alberta is a very attractive market. It’s the youngest average adult market.
It’s got a very high per capita GDP in Canada. We’re estimating the market value to be in excess of $1,000,000,000 It’s about onethree of the Ontario size and would make it the eighth largest jurisdiction in North America. As it relates to the rest of Canada, we address this market for providing managed services to northstarbest.com, an iGaming site, which is owned and operated by the First Nations Group. They have Innacula Wolnac, as I mentioned. We launched this back in 2023, late twenty twenty three, and then we didn’t really start to see traction until 2024.
If you look at the most recent quarter, it’s about 10% of our revenues in 2025, so building. And building our brand outside of Ontario gives us a really good head start should additional provinces become regulated in the future. We believe NorthStar is very well positioned for the different stages of growth in the Canadian market. In Ontario, since launch, we’ve been growing faster than the overall market, meaning we are gaining some share. And in the rest of Canada, we believe that there’s additional upside in our managed services business.
And we will be ready to apply to the license when the provinces open up to commercial operators shortly. So now let’s take a look at our second quarter results. Once again, we delivered double digit year over year growth on the key measures. We track revenue increased by 15% over 2024. Gross margins was up 25%, and profit before marketing and other expenses grew by 87%.
We also reduced marketing expense with both in absolute dollars and as a percentage of revenue. And I’ll provide more color on each of these items. Revenue of 8,500,000 in Q2 was the second highest in our history. For the first half of the year, revenue was $16,400,000 which represents a growth rate of 23%. It outpaced the growth rate of Q2.
And so those for those who have following NorthStar for a while, you may notice that the percentage of growth rates are lower than we’ve reported in the past. We expected this and budgeted for it accordingly. Like any other early stage company, as revenue increases in absolute dollars, it’s natural that the rate of growth slows. It is more important that we continue to build our customer base and grow revenue year over year basis while focusing on our path to profit. And one of the key drivers of recent growth has been the managed services NorthStar provides outside of Ontario.
Managed services generated $900,000 of revenue in the second quarter, represents about 10% of our total revenue for the quarter and up more than 100% over Q2 of last year. The Managed Services business has considerably higher margins and operating synergies while leveraging our existing infrastructure in Canada. We believe there continues to be upside in our managed services business in the coming years, and we’ll continue to invest accordingly based on that growth projector. This slide shows our revenue for every quarter since we launched NorthStar Bets in May 2022. As you can see, we have delivered steady growth over time.
There is variability from quarter to quarter due to the seasonality of our business. For example, the fourth quarter is generally our strongest with several professional sports leagues beginning their season. And as the weather turns colder, activity levels within our base increase. The third quarter is typically a little slower due to Canadians taking vacations or spending time outdoors during the summer months. And then Q2 is somewhere in between that.
As always, we focus on year over year growth as a measurement of success, and the annual patterns do provide some measurability of predictability and enable us to plan promotions around various period periods. For example, we’re currently finalizing our plans to take advantage of the exciting and expected busy season and period that is coming up in the fall, this coming fall. So stay tuned for that. And so next slide. This slide shows our gross margin for both the quarter and the six month period.
Gross margins grew by 25% in the second quarter to $3,500,000 for the first half. The year over year increase was 39% to $6,500,000 It’s important to note that in both cases, gross margin outpaced revenue growth. This is one indicator of operating leverage, meaning our economics improve as business scales and we apply our costs against a larger total. As a percentage of revenue, gross margin increased by 40.8% for Q2 and 39.7% for the six month period. The Q2 margin percentage was the highest we’ve ever reported for a single quarter.
We’re pleased with the expansion of our gross margin percentage, and we believe there is some room for further growth, possibly to low mid-forty range, and gross margin dollars will increase along with revenue growth, of course. Another indicator of operating leverage is a metric we’ve been reporting since last year called profit before marketing and other expenses. As a positive number means that gross margin is covering our overhead expenses. In q two, profit before marketing and other was 700,000, And that is the highest that we’ve ever reported and represents an increase of 87% over Q2 of last year. As you can see, the figures was negative for the 2024, so we weren’t covering our overhead.
But in the first half of the year, it was positive $1,300,000 This increases for both periods are driven by the growth in gross margin. Marketing is the most significant cash cost that falls below the line item, and it’s considered a discretionary expense. Let’s take a closer look at our marketing spend and demand creation. Here, we see marketing expense presented as a percentage of revenue. Marketing spend in the second quarter decreased by 16% compared to Q2 of last year from $3,600,000 to $3,100,000 With revenue increasing over the same period, marketing expense fell from 48.8% of revenue to 35.8%, which is the lowest it’s ever been.
You can see a similar pattern for the first six months of the year, with marketing declining significantly from 55.1% of revenue to 43.7%. It’s important to remember that we will still grow the business despite spending less on marketing. We are becoming more efficient in our marketing effort as we target our spending in the most productive areas, which include both acquisition and, as I’ve mentioned before, a keen focus on retention, which is a lower cost. Similarly, we’ve been emphasizing financial discipline across the entire business. If you look at G and A expense as a percentage of revenue, it also would have declined except for some onetime expenses we incurred this quarter.
We will continue to align our resources and optimize our cost structure to support our midterm profit target. We expect to demonstrate further progress in the second half of this year and even to greater extent in 2026. The combination of the expense management and revenue growth should enable us to move further to the right of this chart. I spoke earlier about operating leverage, and this slide illustrates the idea conceptually. As we scale the business, we do not need to keep adding resources or costs at the same rate.
As I described, we started covering our overhead costs partway through 2024 and are continuing to do so, so far this year. The next milestone is breakeven when our gross margin also fully covers marketing and other expenses. We’re not giving guidance on this time as we reach breakeven, but we will continue to report on the progress as we manage closely our costs. As we prioritize reaching profitability, I should emphasize that we are very well capitalized. I mentioned at the start that we recently completed an important long term debt financing.
We secured $43,400,000 loan from Beach Point Capital Management in January 2025, which was the largest financing in NorthStar’s history. The funding will support our continued investment in growth, providing us flexibility as we make steady progress towards breakeven. We continue to believe we are fully funded to reach profitability based on our current business model. This slide lists some of our key achievements for the 2025. We strengthened our balance sheet with long term debt financing.
We continue to increase our gross margin, which is now more than covering our overhead expenses. Our customer retention has reached record levels in the past two quarters as we see more repeat engagement from our first time depositors. I’ll speak more about the importance of retention a bit later. And we continue to emphasize product innovation, including the introduction of the spring tournament series that span the first and second quarters of this year. And we strengthened our casino platform with the addition of more best in class games from leading providers around the world as well as the beginning of a comprehensive update and upgrade to our casino UI and UX design.
In the next part of the presentation, I will summarize the strategies we’re employing to drive growth and position us for continued success. We did go through a lot more detail during the last call, so I’ll keep this a little bit briefer at this point in time. But we believe that NorthStar is well positioned to accelerate, consideration. In other words, increasing the capabilities in our platform that consumers consider when they are looking for online betting options. After all, you can only acquire a new customer if they know who you are and think of you as a viable viable choice.
This is not a simple achievement in a very competitive market like Ontario, where consumers are bombarded with online advertising, specifically around betting. A brand like Northstar bets needs to differentiate our offering to become a top line choice. The pyramid of this slide summarizes our key pillars of differentiation, where we have the best opportunity to influence people’s decisions. At the top of the pyramid is ensuring that our VIP customers receive a premium experience where we continue to engage our most loyal players. We continue to invest in this important area to support our premium brand.
Moving to the bottom left, we’ve always made it clear that Northstar is a Canadian brand, starting from the name itself. We add fresh content daily, focus on sports that are most relevant to Canadians. We have events and promotions geared to local events or national ones that are included over the course of the year, like the Canada Day on July 1 long holiday that we focused on. With the head office in Toronto, we believe that we have greater knowledge of local markets compared to many international competitors and very agile and flexible. Being a made in Canada option also and fits nicely with the recent surge in many people’s desire to buy goods and services from domestic suppliers.
On the bottom right is an innovative promotions and content. Our goal is to attract, engage, and entertain customers. One of the most recent was called the spring tournament series, which we ran in March and April 2025. It included three separate online tournaments for blackjack, slots, and parlay with a total prize pool of up to a $100,000. The tournaments helped us to attract new players, improve engagement among existing players, and even reactivated some lapsed players.
As for the differentiated content, the best example is what we call insights. This section on our platform that features daily sports articles produced by our team of in house writers, we are we we are unique in integrating this type of content directly into our betting environment. It’s really seamless and intuitive. It’s great it’s got a great look and feel and tied right back into the bet slip. We recently expanded the insight sections with more casino content, including game reviews, premium team and player stats, injury and player news feeds, and a live scoreboard.
This kind of content enhances the player experience and leads to improved economics among the most active readers. I look forward to sharing additional news in the fall related to our content strategy that will help to scale, acquire and monetize our sports and casino content moving forward. In the middle of the pyramid in first is first class customer service. This is about providing a simplified customer journey and being available to delight our players with a white glove customer support. If we are doing all the things right, we can accelerate the number of customers who consider Northstar and the proportion that we retain, which is so valuable to our model.
I’ll take a moment to share some of the details of our current summer promotion called Summer of Spoils. The campaign taps into a sense of nostalgia. It sets against an iconic Canadian summer backdrop. Each letter in the logo represents a different landmark or destination. There are different events and offers throughout the nine week campaign designed to drive engagement during what we call maybe a little bit of a slower season.
At the same time, we’ve been running tactical advertising to boost our profile as a Canadian brand. This strategy ties back to our pyramid from the previous slide. So now I will conclude with a review of our priorities for maintaining and building on our growth. This has not changed, and we are maniacally focused on executing on our plans. As we plan for the rest of 2025 and into next year, we are focused on four key areas.
One is operational excellence. This starts with customer first, It’s personalized content, simplifying processes, getting the routine things right, giving players a reason to keep coming back. This year, we introduced features and services tied to our North Star Elite program aimed at our most active and valuable customers. Operating operational excellence also includes being disciplined around our spending, making sure that all investments directly support our growth strategy. Strategic partnerships.
We spoke about Playtech being a key technology partner, and there are other best in class partners that have helped power our gaming engine and the experience to our customers, which is amazing. We also have a partnership with Torstar, one of Canada’s largest media companies to distribute our content on their various digital platforms. We have and we have strategies to accelerate our expansion by leveraging the capabilities and connections of these partners moving forward. On the product innovations front, we remain highly focused on this because it is the experience the consumer sees first. Look forward to further enhancement throughout 2025.
And as I mentioned earlier, we are well on our way to a a new look and feel around our casino on the UI and UX design. Enhanced profitability. Incremental gross margin dollars will largely drop to the bottom line. We expect to see continued narrowing of our net losses as we approach breakeven. And today’s final slide summarizes our cap table.
We have a fairly diversified customer base or shareholder base. Directors and senior officers are large holders, two large seed investors plus our technology partner, Playtech, who has supported our growth from the beginning and have been a very strong partner, are included. And as we continue to execute on our business plan, we will build further confidence among current and prospective investors. At this point in time, I’d be happy to take any questions. Trevor, could you remind the listeners of the process of submitting questions, and we can get started.
Trevor Brucado, Investor Relations Representative, RBMG: Absolutely. Thank you, Michael. As mentioned, we will move on to the Q and A portion of the webinar. If you do have any questions, you can submit them in the Q and A module. And if we do not have time to get to all of your questions, management will do its best to address them via e mail in a timely manner.
Some questions have come through, so let’s kick off. First question here, Michael, is with a limited amount of cash available to the company, do you have any concerns about NorthStar’s ability to continue to grow revenues and acquire players?
Michael Moskowitz, Chair and CEO, NorthStar Gaming Holdings: Thanks. Good question. Listen, at this time, we have no concerns about the cash resources and limited potential for the growth business. Kind of two parts to this. One is that as discussed in the Q1 webinar, the acquisition costs are somewhere around just now a little bit lower, but let’s call it 7 to $800.
However, the cost of activating a dormant player from the database is 10 to $20. So, you know, just the pure math of that as our as our player base increases and expands, we will dedicate more effort towards reactivation, and that will obviously help the the financial situation of the company as it costs us less to reactivate. So combination of both where early on in in in the business, we were exclusively focused on acquisition as a new brand. We now have a much larger base of players and customers that we’re engaging. So the model changes.
I want to also remind everybody that working capital is not linear. Balance sheet is clean. Some of the cash outlay in Q2 was a function of paying for Q1 marketing. And we’ve got about $10,000,000 or so plus $5,500,000 in interest reserve. But I think the important thing is the 2025 losses will be significantly less, and the cash burn revenue will continue to be lower.
In fact, we’ve seen very positive signs in July, and that is continuing in August. So absolutely, things are going to get better in the back half, and we’re maniacally focused on costs, as I’ve mentioned before, which is all part of it. Thanks for the question.
Trevor Brucado, Investor Relations Representative, RBMG: Thank you, Michael. Next up. Following the $300,000 expense for restatement in past financials, is NorthStar confident that it has addressed all legacy issues in its financials going forward?
Michael Moskowitz, Chair and CEO, NorthStar Gaming Holdings: Yes. I mean, yes, it’s well, for us, it was quite a frustrating time. We’re we’re we’re confident that the legacy issues, which caused restatement and some incremental onetime costs in the quarter have been identified and resolved. And we do have a a robust process now in place to prevent any repeat issues. You know, despite some of the kind of the the pain that we went through, you know, it it it was actually a a positive thing from a structural perspective because it made us much stronger.
But to answer your question specifically, yes, it’s behind us and a lot of lessons learned, and we’re we’re we’re prevent to the and we’ve got process in place to prevent those from happening in the future. Thanks for the question.
Trevor Brucado, Investor Relations Representative, RBMG: Thank you. Let’s see what else we have here. Beyond the eventual regulation of Alberta, what are other near term catalysts which investors should be on the lookout for?
Michael Moskowitz, Chair and CEO, NorthStar Gaming Holdings: Well, Alberta is a very exciting opportunity. As I mentioned, not exactly sure on the launch date, but we’re targeting the 2026. And listen, beyond that expansion of the regulated market in Canada, I think we continue to drive towards profitability for the balance of the year. And we see that with gross margins continuing to expand and covering more of
Trevor Brucado, Investor Relations Representative, RBMG: our
Michael Moskowitz, Chair and CEO, NorthStar Gaming Holdings: marketing costs as we continue to invest in this business. So I’ll answer it like that. But I think, you know, just as as we look at the next opportunity outside of the rest of Canada piece, the regulated Alberta market for us is a is a is a key attribute. And the healthier our business becomes in Ontario and rest of Canada, the more fuel we have for launching and creating demand in the exciting market of Alberta, as I mentioned.
Trevor Brucado, Investor Relations Representative, RBMG: Thank you, Michael. It’s clear that you guys are focused on reaching breakeven. So what would need to happen in order to do so?
Michael Moskowitz, Chair and CEO, NorthStar Gaming Holdings: Yes. This is I mean, obviously, this is a day to day discussion as we are so focused on our operation and our discipline around our financial metrics. But I think that we’ve demonstrated consistent success in increasing revenues year over year, and that is a critical component. So one, continuing that. We believe that we will achieve the breakeven by continuing along the growth trajectory that we have been on.
Of course, as the business gets larger, the growth percentage year over year starts to reduce, but our growth is there. And the other very positive thing is the market is growing significantly as well. So we are growing and the market is growing. Those are two key components of an opportunity in a strong business. Similarly, we’ve done a really good job at managing expenses, which we discussed.
They’re declining as a percentage of revenue, and we expect to see that continue. That’s the model. As I mentioned, resources are not required additional significant number of resources not required to expand the business longer term. Of course, marketing is a key component of that, and we continue to invest, but actually, the the g and a is not. So I think it’s a very scalable model.
And as the costs are reduced as a percentage of revenue, we are you can see that we’re well on our way to kind of getting to that next the next threshold, which is the breakeven part. And as long as we continue to grow, that we should be able to achieve our objectives, which are critical. And I think now that we’re three plus years in this, you can see the trend is going in the right way. Thanks for the question, though.
Trevor Brucado, Investor Relations Representative, RBMG: Thanks, Michael. It looks like that’s it on the questions front. So for sake of everybody’s time, we’ll conclude there. Again, thank you, Michael, and thanks to those stakeholders for joining today. Northstar trades in Canada under the symbol BET and in The U.
S. Under the symbol NSBBF. Today’s webinar recording will be sent to all registrants and will also be made on the company’s website at northstargaming.ca. If you have any additional questions that have not been addressed, please e mail us at northstarrvmilestone dot com. Again, that’s northstarrvmilestone dot com.
Thanks again. That concludes today’s event. Hope you all have a great rest of your
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