- Legal States
Melanie Porter February 23, 2022 4 min read
Esports Entertainment Reports First Revenue Decline in Over a Year
The full-service online gaming and esports company that specializes in the full spectrum of betting and gambling at all levels Esports Entertainment Group (EEG) made its financial results for the fiscal 2022 second quarter available to the public. The period that ended December 31 reflects a plethora of different challenges that the group could not control and which ultimately led to EEG’s first quarter-over-quarter decline in revenue in over a year’s time.
The NASDAQ-listed company that has offices in North America and Europe and is poised to help sports fans and active players remain in touch with their preferred esports decided to reset its revenue expectation to a $70-$75 million range for fiscal 2022.
EEG’s Financial Results in Fiscal Second Quarter 2022
The group recorded some interesting results during the fiscal second quarter 2022 (2Q22), with a net revenue that reached $14.5 million from $2.3 million in the second quarter of 2021 (2Q21) and a gross profit that reached the $8 million mark, compared to only $0.8 million in 2Q21. Nonetheless, when compared to the data from 1Q22, we notice an 11.4% decrease in net revenue and a 19.5% drop in gross profit.
The gross margin was 55.2% in 2Q22 and 60.7% in the same period of the previous year. As of December 31, EEG had a total of $1 million in cash and cash equivalents, while also recording a net loss of $35 million. When compared to the company’s 2Q21 net loss of $7.3 million and only $0.6 million, in 1Q22, the numbers are not looking very good for EEG.
According to chief executive officer Grant Johnson, these results show the numerous hardships that were out of the group’s control and which triggered the first quarter-over-quarter decline in revenue in over a year. The group’s online sportsbook in Europe recorded a “historically low hold”.
This, aligned with the rest of the changes and challenges on the European and North American markets caused sports revenues to drop fast. The changes in the Dutch regulations regarding online sports betting and online gaming forced EEG to us leave the Netherlands at the beginning of the quarter. Additionally, the continuous pandemic-tied problems and the rise in Omicron case during the end of the quarter under discussion severely affected EEG’s esports.
This includes a delay in the launch of LANDuel, the leading peer-to-peer sports betting platform based on skills that esports fans can use. The same delay was imposed on the group’s plans to open a Californian Helix esports center, along with a number of other important events sponsored by publishers.
New and Renewed Partnerships for EEG
At the end of January, EEG received a New Jersey Division of Gaming Enforcement transactional waiver and launched the much-anticipated VIE.gg platform that would be the first dedicated platform to allow esports fans in the US to wager on their favorite events at the beginning of February 2022. Last August, the group launched a unique “pay-and-play” casino online in Finland.
EEG also finished transferring the Vie.bet and SpotNation.com sites to one of its proprietary platforms and announced the debut of its innovative turnkey solution OMEGA that will allow different businesses ranging from shopping malls to movie theaters to provide gaming and esports solutions via arcade models.
Last September, EEG announced a partnership with NFL’s Tampa Bay Buccaneers, becoming the official esports tournament platform provider of the franchise.
The group expanded its existing partnership with Take-Two Interactive NBA 2K League at the beginning of 2022 when Stuart Tilly was also appointed the new chief operating officer. EEG will also have its ALPHA software installed at four of Simplicity Esports & Gamings’ locations.
Overall, the company remains confident in its bright outlook and ability to harness its potential to grow while moving deeper into the post-Covid19 pandemic recovery and integrating its newly acquired assets and technology advancements.