Bethard deal helps Esports Entertainment reduce net loss in Q1 - Quarterly results

Esports Entertainment Group (EEG) has reported a remarkable surge in revenue for the first quarter of its 2022 financial year, which concluded on September 30. Notably, the operator has successfully reduced its net loss by more than half, showcasing resilience and effective strategic execution in a competitive landscape.

For the three-month period ending September 30, EEG recorded revenue of $16.4 million (£12.2 million/€14.4 million), marking an astounding increase of over 70 times compared to just $222,392 in the same period of the previous financial year. This impressive growth in Q1 nearly equaled the company’s entire revenue for FY21, which totaled $16.8 million.

This year-on-year growth trajectory can be attributed to EEG’s strategic expansion efforts throughout the past year, including the significant acquisition of Bethard—the B2C segment of Gameday Group—which brought Swedish and Spanish licenses into its portfolio.

Key Highlights of Q1:

Submitted a transactional waiver to the New Jersey Division of Gaming Enforcement, pending final approval, to initiate betting operations in New Jersey.
Formed strategic partnerships with the National Football League (NFL) teams, including the Indianapolis Colts, Tampa Bay Buccaneers, and Los Angeles Chargers.
Collaborated with Hall of Fame Resort and Entertainment Company to become the official esports provider for Hall of Fame Village.
Established a content partnership with ESTV EsportsTV, a 24/7 live video channel devoted to esports, and partnered with NetEase to serve as the official North American tournament and broadcast provider for Naraka: Bladepoint.

Grant Johnson, CEO of Esports Entertainment Group, remarked, “Our first quarter revenue nearly matched our performance for the entirety of FY21, reflecting our recent platform-building transactions. The powerful combination of marquee partnerships, an expansive portfolio of products and services, and strategic acquisitions is expected to drive double-digit year-over-year and quarterly sequential financial growth throughout fiscal 2022.”

Despite the surge in revenue, total operating expenses also saw a significant increase, rising 541% year-on-year to $25 million. This contributed to an operating loss of $8.6 million, compared to $3.9 million the prior year. The operator also incurred an interest expense of $2.3 million and a non-operating loss of $1.4 million, although this was partially mitigated by $11.8 million in income resulting from changes in the fair value of warrant liability.

Consequently, the pre-tax loss amounted to $552,381, an improvement from the $1.8 million loss experienced in FY21. Notably, no taxes were incurred during the quarter, resulting in a net loss of $552,381, a substantial decrease from last year’s $1.8 million loss.

Outlook for FY22:

Looking forward, EEG anticipates a revenue increase of at least 490% for the full fiscal year, projecting revenues to reach $100 million. This forecast is primarily driven by the platform-building initiatives and strategic acquisitions made in 2021.

Johnson reiterated, “With the strong start to FY22 and continued momentum in our business, we expect Esports Entertainment will surpass $100 million in revenue this fiscal year. We remain strategically positioned in iGaming and esports—two of the fastest-growing segments in the entertainment industry. Our team is committed to executing our rapid expansion strategy, which we believe will further strengthen our market position and enable us to scale effectively while achieving operational leverage from our unique portfolio of assets.”