- Emerging global esports platform
- Diversified business model
- Significant insider ownership
What ESE Entertainment does:
Strategically headquartered in both North America and Europe, ESE Entertainment Inc is well-positioned to emerge as a global esports platform in a market that is primed for consolidation.
The company has a diversified and scalable business model with the following assets:
- Technology, which includes digital tournament software licensing revenue, ecommerce product sales and affiliate revenue, 3D track scanning revenue through simulation racing, and scalable infrastructure service revenue
- Gaming franchise, which includes the sale of media rights for esports events, sponsorships and winnings related to its professional esports team, and set up and entry fees from wholly-owned and managed leagues
ESE Entertainment is led by CEO Konrad Wasiela, a former professional football player in the Canadian Football League (CFL), who is the founder of a global real estate holdings and private equity company.
How it is doing:
ESE Entertainment clearly has momentum on its side as it continues to make acquisitions and grow its revenue.
In July, the company reported second-quarter 2021 revenue of $716,293, a 350% year-over-year increase, following its acquisitions of K1CK and World Performance Group Ltd (WPG) in 2021. ESE ended the quarter with total assets of $6,087,941 as of April 30, 2021.
The company noted that its 2Q numbers included WPG financial results from April 12 (when the acquisition closed) to April 30, 2021, only. It added that WPG’s assets generated revenue in excess of C$14 million in 2020 and the acquisition expands ESE’s esports infrastructure services globally, bridging esports companies with their fans and customers.
Earlier in the month, ESE Entertainment had announced the closing of a bought deal public offering for gross proceeds of $8,629,600, which included full exercise of the over-allotment option.
The company said the net proceeds will be used for business development, general working capital, and other general corporate purposes.
Under the offering, ESE sold 6,164,000 units at $1.40 each. Each unit consists of one common share and one common share purchase warrant, entitling the holder to acquire one share at an exercise price of $1.95 per share for a period of 24 months from the closing date.
Meanwhile, in May, ESE Entertainment revealed it had partnered with global research agency Kantar to develop market research and strategy in the esports and sim racing industries.
The company said the goal of the partnership will be to develop market research, analysis, tools and strategies that can be offered to, and leveraged by, entrants in the digital motorsports industry, including those from the automotive industry and beyond.
ESE noted that the initial focus of the research is expected to include identifying opportunities and barriers in the gaming and esports world as well as understanding digital motorsports, analysing different games and marketing projects, probing players’ profiles, and obtaining insights into brands in esports and gaming.
Also in May, the company reported that it had signed a letter of intent (LOI) to acquire Digital Motorsports, an Irish company that provides infrastructure, technology, and support for the esports industry. ESE said Digital Motorsports is one of the leading simulation racing companies worldwide, with demonstrated profitability and double-digit, year-over-year revenue growth.
The company noted that the purchase price for Digital Motorsports will be confirmed following completion of further due diligence, but will be paid with a portion in cash and the balance in common shares of ESE at a deemed price of $1.48 per share, with the shares being released over three years from issuance.
Previously, ESE Entertainment announced it had signed a major new content production deal with Electric Vault Sp zoo (Bitcoin Vault) to debut a new esports talent show in Asia and South America. The deal is reported to be worth “seven figures” according to the company.
The gaming show will roll out in China, Japan, South Korea, Vietnam and Brazil – some of the largest markets in the world by game revenue. The company told investors that the production deal will strengthen its presence in the global esports and gaming markets while expanding its media rights and production capabilities.
And in April, ESE said its esports team, K1CK, plans to launch a FIFA 21 tournament in collaboration with the Rio Ave Football Club of the Portuguese Premier League.
On the corporate front, the company appointed Rick Brace, former president of the Sports and Media subsidiary of Rogers Communications (NYSE:RCI) Inc, to its board of directors.
Inflection points:
- Revenue growth from its recent acquisition of World Performance Group (WPG)
- Expanding Sim racing business
- Merger & Acquisition (M&A) opportunities
What the boss says:
Commenting on the company’s 2Q 2021 financial results, ESE Entertainment CEO Konrad Wasiela said in a statement: “I am very pleased with the progress of our operations and financial position halfway through 2021. We managed to improve our margins significantly while growing our business quarter over quarter, which was achieved by focusing on key clients and our strong M&A strategy.”
Wasiela added: “We look forward to a similar growth profile over the next half of 2021 driven by further growth from the aforementioned M&A and other material contracts the company has been working on.”
Contact Sean at sean@proactiveinvestors.com
