Esports and online gambling company Esports Entertainment Group (EEG) released its financial results for the second fiscal quarter ended December 31, 2021, posting double-digit growth in revenue.
Platform Building and Strategic Acquisitions
The fiscal second-quarter report revealed revenue at the New Jersey-based EEG jumped 18.85% year-over-year to $14.5 million, up from $12.2 million in the fiscal Q2 in 2021, driven mainly by the platform building and strategic acquisitions in the calendar 2021.
Based on the current rate of growth, the Hoboken full-stack esports operator is projecting net revenue of between $70 million to $75 million for the full fiscal year 2022, up to 317%-347% compared to the prior year.
“Our fiscal 2Q results reflect a variety of challenges largely outside of our control, which together drove our first quarter-over-quarter revenue decline in more than a year.”
Grant Johnson, CEO, EEG
EEG reported a gross profit of $8 million in the reported quarter, an increase of $7.2 million from the respective fiscal quarter in 2021, and down 19.5% on a cumulative basis on $10 million in the first fiscal quarter.
Gross margin was also down compared to the previous quarter – 55.2% in the fiscal Q2 and 60.7% in fiscal Q1 2021 as the business ended the quarter with a GAAP net loss of $34.5 million and non-GAAP adjusted EBITDA of negative $6.8 million. EEG’s cash and cash equivalent reserves at the end of the reported quarter stood at $1 million.
Strong Regulatory Headwinds
Johnson also commented on the significant regulatory headwinds in the Netherlands which forced the company to “make the strategic decision to exit” the country’s online casino and sports betting markets, as well as the historically low hold of the company’s online sportsbook business in Europe which brought a “material decline in sportsbook revenue.”
In addition, the restrictive approach to tackling the spread of the latest variant of the coronavirus delayed EEG’s LANDuel launch and the opening of the company’s Helix esports center in California.
“This also drove the cancellation or postponement of many in-person, publisher-sponsored esports events. Collectively, these events significantly impacted our fiscal 2Q performance, resulting in our decision to reset our full-year revenue expectation to a range of $70 to $75 million.”
Grant Johnson, CEO, EEG
Upbeat for the Near Future
Speaking about the future business prospects, Johnson outlined the “extremely bullish” mood about the year ahead stemming from the company’s “ability to reach annualized revenue of $100 million” from its current portfolio of product offerings.
EEG optimism is also due to the recent transactional waiver the business received in New Jersey and the full-scale launch of Vie.gg which made the company “the first and only…to accept real money esports wagers in the US,” Johnson continued.
According to Johnson, another event of significance will be the launch of LANDuel at the Hard Rock in Atlantic City scheduled in mid-March as the company firmly believes “this unique peer-to-peer wagering platform will expose Esports Entertainment Group to a significant and untapped market across many US jurisdictions.”
On top of that, the “considerable interest” for EEG’s OMEGA esports gaming platform is giving the business further confidence its contribution share to the business total will be increasing and will add further momentum to the results registered in recent weeks, Johnson concluded.