Year-over-Year and Quarterly Sequential Growth Continues
Reaffirms Fiscal 2022 Revenue Guidance of Over $100 Million
Hoboken, New Jersey--(Newsfile Corp. - November 15, 2021) - Esports Entertainment Group, Inc. (NASDAQ: GMBL) (NASDAQ: GMBLW) (or the "Company") today announced financial results for its fiscal 2022 first quarter ended September 30, 2021.
Fiscal First Quarter 2022 Financial Results
- Net revenue of $16.4 million, up $16.2 million compared to 1Q21 and an 86% increase compared to net revenue of $8.8 million in 4Q21
- Gross profit of $10.0 million, up $10.2 million compared to 1Q21 and a 92% increase compared to $5.2 million in 4Q21
- Gross margin of 61%, compared to 59% in 4Q21
- GAAP Net loss of $0.5 million, or $0.03 per share, compared to net loss of $1.8 million, or $0.15 per share in 1Q21, and net loss of $4.8 million, or $0.28 per share, in 4Q21
- Non-GAAP adjusted EBITDA* of ($2.7 million), compared to adjusted EBITDA of ($2.6 million) in 1Q21 and adjusted EBITDA of ($5.5 million) in 4Q21
- As of September 30, 2021, the Company had total cash and cash equivalents of $0.9 million
- Subsequent to the end of the quarter, the Company raised $8.0 million in gross proceeds via a preferred stock offering
* Reconciliation on non-GAAP financial measures provided in the tables of this press release.
First Quarter 2022 and Recent Operational Highlights
- Completed acquisition of BetHard, the B2C business of Gameday Group, which brought the Company gaming licenses in Sweden and Spain
- Submitted transactional waiver to the New Jersey Division of Gaming enforcement, which, pending final approval, would allow the Company to begin in-state betting operations
- Completed $8.0 million private placement of convertible notes with $17.50 conversion price
- Expanded roster of professional sports team partnerships with new agreements with the Indianapolis Colts, Tampa Bay Buccaneers and Los Angeles Chargers
- Launched fan-centered EGL ClubClash program with professional sports teams
- Partnered with Hall of Fame Resort and Entertainment Company to become the official esports provider for the Hall of Fame Village powered by Johnson Controls
- Entered into agreement to launch state-of-the-art Helix eSports gaming facility at UCLA
- Established content partnership with ESTV EsportsTV, the world's first 24-7 live linear video channel dedicated to esports
- Partnered with NetEase to become official North American tournament and broadcast provider of Naraka: Bladepoint
Management Commentary
"Our first quarter revenue nearly matched our performance for the entirety of FY21 and reflects our recent platform building transactions. With the strong start to FY22 and continued momentum in our business, we are reiterating our expectation that Esports Entertainment will eclipse more than $100 million in revenue this fiscal year," said Grant Johnson, CEO of Esports Entertainment Group. "The powerful combination of marquee partnerships, 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. We remain ideally positioned in iGaming and e-sports, two of the fastest growing entertainment verticals, and our team is focused on executing our rapid expansion strategy, which we expect will further strengthen our market position and allow us to scale and achieve operating leverage from our portfolio of unique and powerful assets."
Fiscal 2022 Financial Outlook
The Company expects net revenue growth of at least 490% to $100 million in FY22, driven primarily by the platform-building and strategic diversification acquisitions completed in calendar 2021.
Conference Call
Esports Entertainment Group will host a conference call and webcast today, Monday, November 15, at 5:00 p.m. ET to answer questions about the Company's operational and financial highlights for its fiscal 2022 first quarter as well as other recent developments.
| Date: | Monday, November 15, 2021 |
| Time: | 5:00 p.m. Eastern Time |
| Live Call: | +1-866-269-4260 (U.S. Toll-Free) or +1-323-289-6576 (International) |
| Webcast: | https://viavid.webcasts.com/starthere.jsp?ei=1513062&tp_key=33147e4e48 |
For interested individuals unable to join the conference call, a dial-in replay of the call will be available until November 29 and can be accessed by dialing +1-844-512-2921 (U.S. Toll Free) or +1-412-317-6671 (International) and entering replay pin number: 8268937.
About Esports Entertainment Group
Esports Entertainment Group is a full stack esports and online gambling company fueled by the growth of video-gaming and the ascendance of esports with new generations. Our mission is to help connect the world at large with the future of sports entertainment in unique and enriching ways that bring fans and gamers together. Esports Entertainment Group and its affiliates are well-poised to help fans and players to stay connected and involved with their favorite esports. From traditional sports partnerships with professional NFL/NHL/NBA/FIFA teams, community-focused tournaments in a wide range of esports, and boots-on-the-ground LAN cafes, EEG has influence over the full-spectrum of esports and gaming at all levels. The Company maintains offices in New Jersey, the UK and Malta. For more information visit www.esportsentertainmentgroup.com.
FORWARD-LOOKING STATEMENTS
The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The safe harbor for forward-looking statements contained in the Securities Litigation Reform Act of 1995 protects companies from liability for their forward-looking statements if they comply with the requirements of the Act.
Contact:
US Investor Relations
JCIR
Joseph Jaffoni, James Leahy, Norberto Aja
212-835-8500
gmbl@jcir.com
RedChip Companies, Inc.
Dave Gentry
407-491-4498
dave@redchip.com
Media Inquiries
brandon.apter@esportsentertainmentgroup.com
Investor Relations Inquiries
Jeff@esportsentertainmentgroup.com
| Esports Entertainment Group, Inc. | ||||||
| Consolidated Balance Sheets | ||||||
| September 30, 2021 | June 30, 2021 | |||||
| ASSETS | ||||||
| Current assets | ||||||
| Cash | $ | 926,983 | $ | 19,917,196 | ||
| Restricted cash | 2,945,654 | 3,443,172 | ||||
| Accounts receivable, net | 377,673 | 136,681 | ||||
| Receivables reserved for users | 5,061,768 | 2,290,105 | ||||
| Other receivables | 803,704 | 658,745 | ||||
| Prepaid expenses and other current assets | 2,922,104 | 3,264,344 | ||||
| Total current assets | 13,037,886 | 29,710,243 | ||||
| Equipment, net | 789,637 | 726,942 | ||||
| Operating lease right-of-use asset | 1,168,635 | 1,272,920 | ||||
| Intangible assets, net | 59,030,190 | 45,772,555 | ||||
| Goodwill | 52,328,021 | 40,937,370 | ||||
| Other non-current assets | 2,441,080 | 1,315,009 | ||||
| TOTAL ASSETS | $ | 128,795,449 | $ | 119,735,039 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Current liabilities | ||||||
| Accounts payable and accrued expenses | $ | 11,599,709 | $ | 8,458,689 | ||
| Payable for Bethard acqusition | 4,629,388 | - | ||||
| Liabilities to customers | 6,116,869 | 3,057,942 | ||||
| Deferred revenue | 151,045 | 22,110 | ||||
| Current portion of notes payable and other long-term debt | 219,024 | 223,217 | ||||
| Operating lease liability - current | 375,628 | 414,215 | ||||
| Contingent consideration - current | 3,266,000 | - | ||||
| Total current liabilities | 26,357,662 | 12,176,173 | ||||
| Senior convertible note, net of unamortized discount | 7,941,998 | 6,302,504 | ||||
| Notes payable and other long-term debt | 165,599 | 221,300 | ||||
| Warrant liability | 11,691,400 | 23,500,000 | ||||
| Deferred income taxes | 5,503,861 | 1,870,861 | ||||
| Operating lease liability - non-current | 820,082 | 878,809 | ||||
| Contingent consideration - non-current | 2,583,480 | - | ||||
| Total liabilities | 55,064,083 | 44,949,647 | ||||
| Commitments and contingencies (Note 13) | ||||||
| Stockholders' equity | ||||||
| Preferred stock $0.001 par value; 10,000,000 shares authorized, none issued and outstanding | - | - | ||||
| Common stock $0.001 par value; 500,000,000 shares authorized, 21,983,172 and 21,896,145 shares issued and outstanding as of September 30, 2021 and June 30, 2021, respectively | 21,983 | 21,896 | ||||
| Additional paid-in capital | 123,264,256 | 122,341,002 | ||||
| Accumulated deficit | (47,460,717) | (46,908,336) | ||||
| Accumulated other comprehensive loss | (2,094,156) | (669,170) | ||||
| Total stockholders' equity | 73,731,366 | 74,785,392 | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 128,795,449 | $ | 119,735,039 | ||
| Esports Entertainment Group, Inc. | ||||
| Consolidated Statements of Operations | ||||
Three Months Ended September 30, | ||||
| 2021 | 2020 | |||
| Net revenue | $ 16,408,291 | $ 222,392 | ||
| Operating costs and expenses: | ||||
| Cost of revenue | 6,451,292 | 420,075 | ||
| Sales and marketing | 7,386,463 | 604,118 | ||
| General and administrative | 11,175,136 | 3,055,808 | ||
| Total operating expenses | 25,012,891 | 4,080,001 | ||
| Operating loss | 8,604,600 | 3,857,609 | ||
| Other income (expense): | ||||
| Interest expense | (2,345,196) | (1) | ||
| Change in fair value of warrant liability | 11,808,600 | 2,100,953 | ||
| Other non-operating loss | (1,411,185) | (51,836) | ||
| Total other income | 8,052,219 | 2,049,116 | ||
| Loss before income taxes | 552,381 | 1,808,493 | ||
| Income tax benefit (expense) | - | - | ||
| Net loss | $ 552,381 | $ 1,808,493 | ||
| Basic and diluted loss per common share | $ (0.03) | $ (0.15) | ||
| Weighted average number of common shares outstanding, basic and diluted | 21,954,892 | 12,173,038 | ||
Adjusted EBITDA
The table below presents our Adjusted EBITDA reconciled to our net loss, the closest U.S. GAAP measure, for the periods indicated:
| Esports Entertainment Group, Inc. | |||||
| Adjusted EBITDA | Three Months Ended September 30, | ||||
| 2021 | 2020 | ||||
| Net income (loss) | $ | (552,381) | $ | (1,808,493) | |
| Adjusted for: | |||||
| Interest | 2,345,196 | 1 | |||
| Income tax | - | - | |||
| Depreciation and amortization | 3,342,352 | 266,448 | |||
| Shared based compensation | 882,372 | 1,007,672 | |||
| Amortization of debt discount | 1,639,494 | - | |||
| Transaction related expenses | 63,000 | - | |||
| Other non-operating cost | 1,411,185 | 51,836 | |||
| Change in fair value of warrant liability | (11,808,600) | (2,100,953) | |||
| Total adjusted EBITDA (loss) | $ | (2,677,382) | $ | (2,583,489) | |
Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are prepared and presented in accordance with Generally Accepted Accounting Principles (GAAP), the Company uses adjusted EBITDA, a non-GAAP financial measure. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The Company uses this non-GAAP financial measure for financial and operational decision making and as a means to evaluate period-to-period comparisons. The Company believes that it provides useful information about operating results, enhances the overall understanding of past financial performance and future prospects, and allows for greater transparency with respect to key metrics used by management in its financial and operational decision making. The non-GAAP financial measure used by the Company in this press release may be different from the methods used by other companies.
We define and calculate Adjusted EBITDA as net loss before the impact of interest income or expense, income tax expense or benefit, depreciation and amortization, and further adjusted for the following items: stock-based compensation, transaction-related costs, non-core litigation, settlement and related costs, remeasurement of warrant liabilities, and certain other non-recurring, non-cash or non-core items, as described in the reconciliation below.
Adjusted EBITDA excludes certain expenses that are required in accordance with U.S. GAAP because they are non-recurring items (for example, in the case of transaction-related costs), non-cash expenditures (for example, in the case of depreciation, amortization, and stock-based compensation), or are not related to our underlying business performance (for example, in the case of interest income and expense and litigation settlement and related costs).
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