Esports Entertainment Group’s (EEG) revenue fell 71.9% to $2.7m in Q1 (PS2.2m/EUR2.5m), following the earlier sale of Bethard. However, the company remains optimistic about the long-term plans for growth.
In February, the group decided to sell Bethard’s online sportsbook and casino for EUR9.5m. EEG completed the sale in February, selling the entire business.
Esports Entertainment has also announced the liquidation and winding-down of Argyll. In December revenue-producing activities were stopped, which had an effect on comparisons between years.
Alex Igelman, the CEO of EEG, remains optimistic about EEG’s long-term future despite its decline. He spoke of recent business restructuring and its impact on growth.
EEG and Drafted.gg also reached an agreement shortly after the close of Q1. Igelman stated that this would further its long-term goals.
Igelman stated that “in the past few months we thoroughly reviewed our business, with a focus on the anticipated trends in esports, and igaming.” This review included a thorough analysis of all aspects of our company, including identifying non-profitable contracts and operations.
We have set the foundation for an exciting future. Although this restructuring resulted in one-time costs, we expect to see a reduction of operating expenses by more than $4 million per year.
This is an exciting time for our company. This marks a new beginning and a forging of a path to maximising our potential success, which will we believe lead to significant revenue growth and an increased long-term value.
In Q1, revenue fell across all igaming segments and gaming sectors
EEG’s revenue for the quarter ending 30 September fell across its two core business segments. The revenue generated by igaming (online betting, casino and gaming) fell 76.7%, to EUR2.0m, and the gaming revenues from esports, other activities and sports dropped 27.3%, to EUR733,768.
EEG stated that its Lucky Dino division had been affected by the worsening market and investment conditions in Finland, as well as regulatory changes. This was effective from fiscal year 2023. EEG stated that this continues to decrease.
In terms of geographic performance, US operations generated $733,768 in revenue. Interactional activities brought in $2.0m.
The sale of some assets reduced the cost of revenue by 81.3% in Q1 to $602,026. The costs were lower in sales, marketing and administration as well. Total operating expenses fell by 51.0% and totaled $7.7m.
Net loss increases despite cost-savings
The pre-tax losses were $4.8m after accounting for the $214,989 other income. This loss, despite the cost-savings, was larger than $4.2m by 2022.
EEG didn’t pay taxes, so the net loss was $4.8m for the third quarter, up from $4.2m in last year.
The adjusted EBITDA losses improved this year from $1.0m to $354,870.
EEG CEO predicts bright future
In closing Q1, EEG CEO Igelman returned to the long-term EEG vision. In his words, a renewed emphasis on developing initiatives that expand esports solutions and igaming will create an end-to-end online betting offering for customers.
Igelman stated that “through our partnerships we have created a strong ecosystem which benefits both our customers and clients.” We are committed to maintaining high standards in gaming integrity, auditing processes and content.
Our intention is to commission an integrity audit by a third party to ensure that Drafted.gg meets state-by-state requirements and supports our rapid growth within the large US market.
We are optimistic about EEG’s future, fueled by our strategic investment and confident of a bright future.
