Finance

Esports Entertainment reports maiden revenue figures for Q1

3 minutes read
Esports Entertainment Group reported revenue for the first time, as its acquisition of Argyll Entertainment meant it made $222,392 in revenue for the first quarter of its 2021 financial year, ended 30 September.

The majority of the group’s revenue came from white label services from Rush Gaming to operate Fansbet’s UK site, after its previous white label provider, Finnplay-owned Viral Interactive, withdrew from offering white label services in regulated markets. This revenue – 25% of Rush’s net profits on the site – came to $139,619.

A further $67,400 in revenue came from Argyll’s own flagship brand SportNation.bet. The business had another white label agreement with RedZone Sports, this site made a $23,609 loss for the period.

The business made an additional $38,982 from other services.

All of the group’s revenues came through the legacy Argyll business, which was acquired in July.

This revenue was dwarfed, however, by costs of revenue, which came to $420,075. This resulted in a $197,683 gross loss.

The business then paid $3.7m in operating expenses, up 428.8%, of which $3.1m came in general and administrative costs, up 358.2%, and $604,118 in sales and marketing, up more than 20-fold.

This resulted in an operating loss of $3.9m, up 456.5% year-on-year.

However, the business made a $2.1m gain through fair market changes in its liabilities to be paid, which resulted in a final loss of $1.8m, down 36.5% from the previous year’s loss.

A spate of acquisitions for Esports Entertainment Group continued in the start of the 2020-21 fiscal year as the group agreed to acquire B2B software business ggCircuit and esports center operator Helix eSports in October for an estimated $43m (£32.9m/€36.4m). ggCircuit is currently in the process of building a semi-permanent esports arena in South Bend, Indiana and expects to complete the project by the middle of December this year.

Esports Entertainment Group also agreed to acquire assets owned by peer-to-peer competitive gaming solutions provider Flip Sports in September and is in the process of acquiring British tournament operator the Esports Gaming League (EGL).

Esports Entertainment Group chief executive Grant Johnson said the novel coronavirus (Covid-19) pandemic has meant esports have risen significantly in popularity in 2020, which has helped the business grow.

“We have achieved many significant milestones since uplisting to the Nasdaq in April,” Johnson said. “The Covid-19 pandemic has absolutely accelerated the rapid growth of esports leading to mainstream broadcasts to national TV audiences on ESPN and Fox. 

“These trends helped us set new record audience viewing stats with our partner Allied Esports for the globally recognized Legend Series, just one of many accomplishments during the quarter. We believe the successes achieved this year provide an extremely strong foundation for long-term growth while offering investors a true pure play opportunity in the burgeoning world of global esports.”

However, he added that the business would not only take advantage of the rise of esports, but also of the rise of online gambling.

“We have structured our business to deliver a diversified esports and online gambling company via three key business pillars and believe this multi-tiered approach provides investors broad exposure to two major trends, the rise of competitive gaming and the legalization of online gambling in the US.”

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