Esports Entertainment Group’s (EEG) revenue was down by 60.6% in the full year 2023 ending 30 June. However, it managed to significantly reduce expenses and its net loss.
EEG released a strategy update on its financial activities yesterday (16th October). The update included a short financial report.
EEG had a difficult 12 months ending 30th June, after a financial challenging 2021. After defaulting on its convertible notes issued in 2021, EEG’s future was in the hands a creditor in October 2022. The principal amount of these notes was $35.0m. EEG considered giving up igaming in December and confirmed Grant Johnson’s departure. In the same month it barely avoided delisting on Nasdaq.
In January 2023 Daniel Mathews left his positions as CFO and COO. In the following month, former CEO Johnson filed a suit against EEG claiming that his termination from the company violated his employment contract.
EEG sold its Bethard sportsbook and online casino business to Bethard in February for EUR9.5m. Alex Igelman, the newly appointed CEO of EEG, announced EEG’s plans for B2C growth and confirmed divestment in April. EEG also entered into an agreement with its company to trade a large part of their debt against stock.
Financial update
The total revenue in FY23 was $23,0m ($58.4m in 2022), down from $58.4m. The cost of revenue fell overall to $8.8m (a drop of 63.6%).
The biggest reduction was in sales and marketing costs, which fell 77.0% from $5.9m to just $5.9m. The general and administrative costs for the entire year were $28.9m, a drop of 43.6%. The net loss was $32.2m – a dramatic contrast to the $102.2m in loss that EEG recorded for its 2022 fiscal year.
Igelman stated that EEG has taken a series of strategic decisions which he believes will help the company to grow.
Igelman explained that the company had undertaken an extensive examination of its organisation in recent months. It focused on the predicted trajectory of esports, and the igaming sector. Through this process, the company conducted a thorough examination of its business, from top-to-bottom, and identified operations and contracts which were not profitable. This led to a series of decisive decisions that set up us for a bright future.
The long-term benefits of the restructuring will outweigh the one-time costs.
Focus on Initiatives Continued
EEG is expected to reduce its annual operating costs by $4m in the future. The company has also reduced their total liabilities from January of this year, an estimated $51.8m.
Igelman explained EEG’s recent focus – which is developing initiatives related to esports, igaming and its offerings.
Igelman added, “We believe that the initiatives taken by the entire company this year have placed us at the forefront in the esports betting market. This is a rapidly expanding industry and it’s expected to continue growing significantly through 2025.”
As a result of this, the future prospects for our company are very exciting.
