Introduction
Lottery.com Inc (ticker: LTRY) has reported significant changes in its financial performance for the first quarter of 2023. The company’s revenue decreased by 83%, while personnel costs dropped by 95%. In this article, we will discuss the factors that contributed to these changes and analyze the company’s overall financial performance during the quarter.
Table of Contents
Q1 2023 Revenue Decrease
Lottery.com Inc’s revenue for the first quarter of 2023 was $620,000, representing a decrease of $3.0 million, or 83%, compared to $3.6 million in Q1 2022. The decrease in lottery-related revenue was attributed to the cessation of operations. Furthermore, $1.8 million of project-related revenue from business partners in Q1 2022 did not reoccur in Q1 2023.
Cost of Revenue and Gross Profit
Cost of revenue for the company in Q1 2023 amounted to $35,000, a significant decrease of $2.35 million, or 99%, compared to the $2.38 million in Q1 2022. The lower cost of revenue was primarily driven by the decrease in the number of lottery games sold domestically due to the cessation of operations. As a result, gross profit for Q1 2023 was $585,000, down 53% compared to the $1,246,000 recorded in Q1 2022.
Operating Expenses
Operating expenses for Lottery.com Inc during Q1 2023 were $3.7 million, an 88% decrease compared to the $31.9 million in Q1 2022. The decline in operating expenses resulted mainly from a $23.1 million reduction in personnel costs, a $2.4 million decrease in professional fees, and a $2.7 million drop in general and administrative expenses.
The lower personnel costs, from $24.4 million in Q1 2022 to $1.3 million in Q1 2023, were predominantly due to a $20.7 million reduction in stock compensation expenses related to Q1 2023’s equity grants and a decrease in headcount and compensation due to furloughs.
Professional fees saw a 76% drop from $3.1 million in Q1 2022 to $740,000 in Q1 2023, mainly attributable to lower accounting, legal, and investor relations expenses and compliance costs in Q1 2023 brought about by the cessation of operations.
General and administrative expenses also decreased by 89% from $3.0 million in Q1 2022 to $300,000 in Q1 2023 due to substantially lower spending on marketing and software development.
In contrast, depreciation and amortization expenses increased by 2%, from $1.37 million in Q1 2022 to $1.41 million in Q1 2023, mainly due to the amortization of intangibles placed in service during mid-2022.
Net Loss Before Income Tax
Lottery.com Inc’s net loss before income tax for Q1 2023 was $3,213,982, a 91% reduction compared to the $34,874,093 net loss in Q1 2022. The improvement in the net loss position resulted from the various cost reductions and other changes in the company’s operations as discussed above.
Conclusion
In conclusion, Lottery.com Inc’s financial performance for Q1 2023 exhibited significant declines in revenue, operating expenses, and net loss before income tax. The cessation of operations contributed to the drop in lottery-related revenue and other financial changes within the company. With the company focusing on strengthening and improving its internal controls over accounting and financial reporting and exploring potential sources of funding to restart its operations, it will be interesting to observe how its performance evolves in the coming quarters.
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