Esports Entertainment Group Inc said revenue in the second quarter of its fiscal year 2022 jumped nearly 18.85% year-over-year despite the ongoing challenges of the global pandemic.
The Hoboken, New Jersey-based full stack esports and online gambling company expects FY22 net revenue growth to range between $70-$75 million, up 317%-347%, driven primarily by the platform-building and strategic diversification acquisitions completed in calendar 2021.
For its fiscal 2Q ended December 31, 2021, rapidly growing Esports Entertainment reported net revenue of $14.5 million, compared to $12.2 million in the 2Q in fiscal year 2021.
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It also marked a gross profit of $8 million, up $7.2 million compared to 2Q21, and an 19.5% decrease compared to $10 million in the 1Q 2022. Its gross margin was 55.2%, compared to 60.7% in the previous quarter.
The company reported a GAAP, or generally accepted accounting principles net loss of $34.5 million, or $1.53 per share, while the non-GAAP adjusted EBITDA loss was $6.8 million.
As of December 31, 2021, the company had total cash and equivalents of $1 million.
"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," Esports Entertainment CEO Grant Johnson said in a statement. "First, a significant change in the Netherlands regulatory environment led us to make the strategic decision to exit the country's iGaming and online sports betting market at the start of the quarter. Second, our online sportsbook business in Europe experienced historically low hold which, while in-line with the broader European and US market, resulted in a material decline in sportsbook revenue.”
The ongoing global pandemic and rise of the Omicron variant during the end of the quarter also impacted business, delaying the firm’s LANDuel launch and the opening of its Helix esports center in California.
“This also drove the cancellation or postponement of many in-person, publisher-sponsored esports events,” said Johnson. “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.”
However, the Esports boss remains bullish.
"Despite these challenges and the collective impact they are having on our business, we remain extremely bullish about the year ahead and in our ability to reach annualized revenue of $100 million from our current portfolio of offerings,” said Johnson. “Our optimism reflects the recent receipt of our transactional waiver in New Jersey and the full-scale launch of VIE.gg, which makes us the first and only company to accept real money esports wagers in the U.S. We are also very bullish on the debut of LANDuel at the Hard Rock in Atlantic City on March 18-20 and believe this unique peer-to-peer wagering platform will expose Esports Entertainment Group to a significant and untapped market across many U.S. jurisdictions.”
In addition, the company said it has seen “considerable interest” for its OMEGA esports gaming platform since it debuted in the quarter.
“We are confident it will soon become a more important contributor to our top line results. Finally, we experienced record results and strong momentum in recent weeks, including a record month in January, as this business continues to grow and our market position expands,” noted Johnson.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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