Scout Gaming Group has returned to net profit after significant cuts in operating costs in the first three months of this year. However, it warned that further expenditure reductions could be made.
Late last year, the fantasy sports provider revealed that it had completed the restructuring of its B2B operation. The closure of 11 partnership led to a reduction of 13 co-operations.
This followed the news in September that Scout had raised SEK101m (PS7.6m/EUR8.7m/$9.4m) in a share issue process to help save the business. Scout has also begun a major restructuring in the personnel department – , which included the layoff of 68 full-time employees.
Restructuring has begun to pay dividends, as the provider posted a net income in Q1 despite revenue declines. Chief executive Niklas Johansson has warned that the company’s long-term plans may include cost cuts.
Jonsson stated that “continued cost control is one of the key success factors for the group in order to achieve profitability.” “The first quarter doesn’t fully reflect our already implemented cost reductions,” Jonsson said. We continue to transform the group.
The management is evaluating further cost reductions, but they must take into account the organisation’s ability to deliver for the partners who are already live as well as those who will be live in the next few months.
Scout Q1
The revenue for the quarter ending 31 March was SEK6.5m. This is down 3.0% compared to SEK6.7m during the same period last year.
Scout attributes this to a greater focus on B2B. By the end of the third quarter, the provider had 12 B2B partners that were integrated and active.
In B2C, revenues fell by 62.1%, to SEK1.1m. This was mainly due to the reduction of what Scout called “non-profitable” marketing campaigns. Scout stated that its B2C division has the potential to achieve “profitable” growth through the measures it is implementing. It expects this to happen in 2023.
Operating costs are down 45.5% at SEK16.5m. Personnel costs dropped 31.4%, to SEK9.6m. Other external expenses fell 56.1%, to SEK6.8m. Operating loss is 58.1% less at SEK9.9m.
After accounting for the SEK17.0m profit on undisclosed items, the pre-tax profit was SEK7.0m. This is a significant improvement over last year’s SEK21.7m losses. In Q1, Scout paid no income tax, so the net profit was SEK7.0m.
The loss before interest, taxes, depreciation, and amortization (EBITDA), which was SEK23.6m, has been reduced to SEK9.4m.
Jonsson stated that “we believe the journey we are on has shown many positive signs. However, there is still a great deal of work to be done to transform the company into a profitable one and create shareholder value.”
“We need to focus on achieving more efficiencies and we must all be engaged.”
