GMBL - Earnings call transcript Q1 2021 | Esports Entertainment Group, Inc.

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Esports Entertainment First Quarter 2021 Earnings Conference Call.

As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. now Vice turn Relations. President, would to conference I Cohen, Jeff Strategy Instructions] like the to over [Operator and Investor go ahead, Please, sir.

Jeff Cohen

first Thanks today a everyone. joining company. quarterly our NASDAQ-listed afternoon, as conference Good call for for us

actual uncertainties read could forward-looking Before Harbor to brief results subject statements results this that that language. going of cause statements risks, during Safe are make are responsibility some not forecast. from we and we for historical materially just that our begin, statements. from call forward-looking or I'm our We other to factors Statements no fact assume differ to updating constitute historical our

Entertainment we Chairman please information, Group; turn Esports factors financials. the our will Hosting of now more Marks, I'll Afterwards, Officer have over discussed Grant? of For Grant will Johnson. a and our line Chief then we Financial Dan in today, filings. Group, Grant Officer Executive open Esports up to and to EEG's Johnson, the the Entertainment review and questions. risks, of uncertainties SEC CEO, other call who Chief refer call to the provide

Grant Johnson

Thank us earnings first on fiscal you call. QX our joining for

CFO, first you to through is the our company and take conference will, uplist this of After I'd we've detail. course, our Dan achieved our the like of the milestones quarter significant results our in Given you through April, as current uplisting, take as well in minutes few go of a since walk some since over which, the strategy.

COVID-XX this or become have subsector with two Those viewers broadcast period accelerated over why Esports for I globally, ESPN us of think these time. opportunity absolutely to expected market. the million it's a With we pandemic, that of And to FOX growth. into there's Esports have in strategy, time national a tremendous you Sports. and rapid for important break of Before advance frame with media. some TV fastest-growing has jump sector on minute has always the the Esports take digital followed the to XXX such even a things this We've over seen mainstream, on happen this into

pandemic the young, native fans digitally affluent. and line. time are accelerated Esports However, this has

has fans to influenced by Esports are sponsored also sports found being research are. favorite brand, Third-party team that likely than be more their by fans traditional

believe hear of a is lot strategy our investors in very the Group three-pillar with can strategy, the under Esports these opportunities diversified there's a me, three-pillar investors investment we -- We online things few excuse -- our Esports large from One the to public growing and Esports gambling Entertainment markets. exposure able structured and our market. be provide rapidly with pillars. three under deliver broad We to company, business Esports to growth

and is first Infrastructure. Esports The Entertainment pillar

provider the for basis. of ggCircuit, acquisition side, side to our BXC operating pending the on system and which of -- global ggCircuit BXB and have closing the tournament the leading be Analytics on software able excuse Genji side, LAN or the On LAN BXB offer Helix And the EGL, a on centers. me, and centers is we'll the platform we'll

course, of wagering. The second is pillar, our Esports

focus wagering. the player versus traditional be skill-based and wagering player Here with VIE.gg-branded on platform will both

that in license and our Commission. same year, skilled Jersey the booking sports as strategic issued a proprietary have These buy by via New QX U.K. alongside live final Casino. side, Gaming the Entertainment cross-sell licenses the announced This on planning side, brands August in of in States calendar be we're the X with as operate player Rivers at around This our and and we're we've access our On that SportNation. into. to asset a and platform our traditional New partnership or the the that on United us Ireland in gambling to versus wagering time launch is is And player players The state. of Esports pilot offering igaming. Jersey online here pillar the next Commission Twin U.K., provides sports can third to know, pool casino, a Argyll Tier with you acquisition, The Gambling we X. book our closed offering working

online and In strategically in approval XXX globally is jurisdictions the with multi-gaming major do United with a EU. applicable for investors, we and across States. important. the have to gambling legislation agreements. systems believe license. is the regulatory addition, confidence the It levels powerful announced recognized The because trust an -- powerfully with the as is multi-tiered U.K. onshore we partners knowing as EU and and of dealing two trends, portfolio and igaming multi-license jurisdiction allows international received line We in The and globally are legalization provides in Malta legislation and This to also of broad in May, and for one Tier competitive us rise here this license. advertise players our gaming approach, of exposure and globally highest additional they're the provide

highlights like uplisting I'd since Now, to in April. turn our back some operational

terms team. team to with August their addition esports asset the the VIE.gg we Dignitas, by referenced, Harris and which Entertainment announced in just license, rights the secured Sports May, I the in we GO Under agreement, announced multigambling of expanded of partnership owned naming is Group. famed Counter-Strike: an In which Blitzer with an Dignitas

next is focus. to flexibility the and back to New we ruled CS:GO a Jeff the now Jersey for activations naming integrate In can we tasked New U.S. of the physical customers is our our have with Jersey, August, rights on call Lafayette, is believe -- strategic experience. of provide digital we Jersey stack. that the for and license, core can in marketplace tech in We've ultimately lines that We integration types partners our where Sports. our will CFO the on into of Jersey in so FLIP addition platform, VIE's this been including vertically judicial New executives Newark U.S. offer investment as better offices our terms end in this in which Prudential team based. VIE.gg be Dignitas' a Center New also other us greater to FLIP moved headquarters building, allows that a and In have developers with acquired the own

expect end wagering In with this Jersey Rivers partnership We online by Twin it into will project market. to a New testing. submitted and we quarter completed company This the VIE.gg and we end be license. for March. next became announcement state U.S. entered Gaming acquire live the to have launch in we in anticipate, of with weeks the Jersey we to Enforcement wager this platform New have a of the We to esports by in this our esports-dedicated intend announcement, be will several -- gambling the submitting the August, our first documentation in the proprietary

with LA EGL XX-year EGL, our Galaxy partnered Red into their intend skill-based acquisition and -- which to Gaming In Union. brands Also VIE platform additional and LA esports Bull, tournament we acquisition the August, of Kings, in expand Subsequent U.S. first-of-their-kind expect fiscal is has announced Activision history, Esports with we of Arsenal deals during the more. such we We Microsoft, FC, certainly Philadelphia 'XX. a platform. League, states announced the to as

we Since the their AEG, with have Legend series being struggling that, two-week XXXX. their In to X.X we one drew traditional VIE.gg pandemic We was organizations explore are watched Allied stands over the to have teams watched, event with and provider. between about out to of generated well with What nature online to of since host Esports solution we the them million Series additional sporting crossover able engage gamers, The us because be September, them. making because nature. competition CS:GO to reach to as the online of announcement sports sports, the our similar tournament fans for XX tournament. as we the to the over created partnerships. back in have Series viewers and Legend million hours And esports, most unique over tournament partnered a without fans believe traditional esports official are found during in is we

As success our Allied this we saw additional towards tournaments. both future intend sponsored significant in in -- again alongside and work new to the a users VIE.gg event, of the new and the partnership, deposits. the of official gambling platform increases Because

potential to their this with now interest by provide expressed player-versus-player turn platform centers bear you. discuss the solution turnkey the us VIE, teams quarterly within will and on-premise brick-and-mortar our opens into base. bringing and a Since fans. our in Finally, and nicely acquisition along EGL, of acquisitions Esports this Helix Dan we And for to adding three-pillar Thank a described to and to arenas traditional -- in been acquisition and in capabilities be analytics eSports to to who approached attract new solution Dan? who looking along are announced acquisition now a I the struggling announcement, casino for Helix up business diversified space. state-of-the-art of focused ggCircuit call ggCircuit, integrate new an will also platform, Esports who engage have fit the problem. our our framework at wager centers, Genji we've sports we earlier wagering can and Strategically, Many believe over our to to skill-based enterprise these out results several facilities. casinos By building esports their younger October, as a casinos Marks, we demographic CFO, best-in-class esports software entertainment attract million. for $XX guidance. esports vertically can and are this vertical Esports asset

Dan Marks

joining and thanks you, Thank again us everyone for Good afternoon, today. Grant.

Pro be EBITDA and expect ending of just the $XX fiscal fiscal $X both million fiscal million of additional our fiscal Argyll, $X minus Before will provide and are revenue wanted in we same core of in next our the detail given acquisition to and XXXX, market and ggCircuit we we platform for and EBITDA revenue XX, And to also $XX year expect EGL for up quarter million. fiscal Helix, $X.X guidance to dig XXXX. for for periods VIE minus coming have around June this into fiscal $XX we million guidance for expected to continue million From the I to fiscal improve the XXXX, some positive million. XXXX year. our forma revised gone, we've revenue XXXX.

quarter per the were the preceding In brands results million of just of now the of the realizing Turning impact Argyll $X months XX COVID, gone. the month. to revenues

last of the underwent in in June. Commission The its which calendar. practices. in Gambling assessments laundering closing a licensed the operators. as driver with of who have negative business deal relation a small, the Post had audits backdrop revoked, quarter. simultaneous in COVID conducted against encountered of U.K. routine compliance and two months audit challenging protection was operators main on safer both commission's failed revenue compliance the during fine global the oversight this part code The player Such licenses received this operating the examples and to particular U.K. of compliance environment impact many this anti-money verify successfully, as reduction did gambling regularly sporting the Argyll was the Argyll complete of very on large Argyll their audit and August news. to $XXX,XXX. the the and/or X, two However, positive over conduct, compliance GC's it review and subsequent large with was also are of years assessments the

spending And provides and us protection safer commission's integrated, impact within responsibly tools was exhibit This Commission's to sites. in measure undertaken on how players ensure standards COVID increased affordability implement more gaming player evaluates on and were raise Argyll guidance such bet would means. of given ability an safer our integrate automated we and ensuring focus registration, the much over guidance player time are to and with robust, all industry. it protection period. the the However, across to environment, players One secure tool. to customer with Argyll their the which on more they by our what the play able indicating deposit operators can Once a

market-leading to integration The which narratives. source, in months the by of affordability true integrate X.X evaluate However, our case September. end and it completed finally took tool the provided towards was of

deposit it But player enforce Active versus our in that stringent customers During the to disclosure KYC safeguard ultimately reduced business. effort and to requirements we time decision our more prior though proactively the top impacted quarter. base. took line XX% an limits

has by place. and FTDs both over and New result GGR spend the by quarter. returned reduction turnover marketing the activity XX% is back NGR fell ultimately however, reduced levels manual have implemented successfully Handover of turnover, temporary values of a to XX pre-COVID say up that and been but player key recommenced income during and has average protective I'm They tool the we the drivers measures as range. put Since levels. XX% broadly levels to October were and the glad million of in these in to

remains in base was million. services for $XX million or total above unchanged operating were the in of Total million. payroll, driven period previously, month of entailing customer stock totaled fees, the the and active revenue businesses as above These Our players marketing and year mentioned in at are by were which of one-off the expenses month the $X circa our compensation, guidance principally EGL costs. October on non-repeatable XX,XXX $XXX,XXX. professional revenues $X.X and Argyll fiscal for this VIE, And remainder

And a a in functioning Argyll onto our platforms. related taken together delivering with FLIP Audit, during of for employees to fully revenues $X.X the since investment One stack in net been Total to quarter XX by loss market bodes principally post reduced change of the that our was $X.X of strategic XXXX. warrant the of value for the of tech platform, wholly calendar Assets wagering in-house XX initiatives first June our liability uplisting to Commission period the of by have driven owned fair Gambling group's measures team, the key consolidate or tech the increased acquisition well quarter. of million, we partially offset this resources our end by million. employee online the tech in and the with the enhancement base The Sports have pursued that XXXX

issued total Turning to the million from This of $XX.X as September equity $X.X of had the shareholders' we million proceeds million. XXth sheet, balance exercise. cash, net and of shares $X warrant sale million included working in of approximately XXX,XXX $X.X capital in for in

efficiencies activity current group's is net enlarged $X.X on operational be the structure. cost burn $X.X to in within cash to million focused Our And monthly finding continue rate range. on million we our

confident from environment a across six operational the felt accelerate the the in our are and whilst industry's our and incremental customer base ensures and the support to In investment existing despite our continue, in activity unprecedented We therefore, technology we and significant will summary augmenting results can function. cost the esports looking in positively doubling online XX uptick the months, most some next next October, gambling Audit, company. from XX months remain pandemic Commission in coming us the optimistic performance sets recent into out we up diversified to Gambling in extremely development impacts

I Q&A. think we open line for can now Operator? the

Operator

Thank you.

We will the Please session. NOBLE with Markets. Capital Instructions] [Operator ahead is question-and-answer Our sir. first question Kupinski now go Michael being from

Michael Kupinski

you. taking questions. thanks Thank for And my

implementing And give about hurting might terms -- us development then like, of your mentioned Just shutting you. this here, couple down helping economies, in and of again. be is of, questions, how some this as or Can and COVID be you at helping spiking point? talked a you couple macro the seems to about sense plans you a a how that micro it pandemic talk sounds there's

Grant Johnson

Grant Johnson that a of the come -- part that. very I'll -- It's of positive there's the here. list course of first out Sure. It's things have is COVID of short-list. take

I can on all we that. think agree

what increase done in had However, our activity. it an elements has have online is definitely

we our to as havoc, as opportunities And I wreak revenue the with fiscal platform, you most So drivers reach into opportunities is And the next sports be us into -- is, teams this continue tournament will example the can best COVID move us. XXXX. to will definitely. continues for to give our out these expanding

an the that, platform is to platform. addition specifically online VIE.gg In

into as that has site will have in driving a pandemic online -- the well. So traffic positive effect it

negative it's a think will say, to on LAN-based -- negative it impact have continuing on safe impact I operations.

future, in that -- that a the to are will those But a lets on negative sports have foreseeable which have for weekend. Not bubble, point So time at at on will effect fans impact the they sports the played see. be potentially a be the without seem will negative operating not book. this games

I of the that this a would know, well So add as are like to be if or to activity. positioned awful pandemic benefactor not. don't as to we is Dan

Dan Marks

No.

within think you're saw Grant. sports from traditional when first particularly mean U.K. during least were either, onto casino a movement the the I products. right, we shut I lockdown, esports down at sports or

wasn't They're didn't slightly turnover our So wasn't sports actually -- impacted. impacted. turnover least -- slightly the a at product in book. lower-margin But itself hugely

product same I the mix, in the I expect with wouldn't remaining sports calendar currently, assuming sporting change be see open continues think open. to to

Michael Kupinski

And acquisition you of us and to was million that give just integrate Helix to acquisition terms a still give that have what Are Thank you the point? I can of you can you sense of finance for And ggCircuit us at environment you $XX on in mode? parameters color. the plan the acquisition? now. then the wondering, this currently how you M&A If are planning purchased you right in

Grant Johnson

last which multiple vote time been are time have acquisitions iGaming we have With go to conversations how and expect Sure. ggCircuit Those working finances to this will give banking the in at effectively and time regards will million with segment online partners can transaction. mix some is we and going XX-XX at very accretive acquisitions. cash on January, be closely shareholder I we we for of we -- is in of the These $XX other be transaction our that to finalize side the cash point That equity Helix debt. transaction much the broadcasting to point color in debt. the on is with -- are do That quite going a will you to operators. only

announce in of we've debt advisory the with revenue these conversations because acquisitions the engage And -- them. of all did -- of to bankers have far UK. -- multiple here our are call. putting these this calendar as the it of a We there out been high one by pipe we've those them be definitely end But in we keep are Argyll, that place -- premature coming to nature of the is as working as of underway will the future. to enough year who for this as transactions, discuss in down near We others are a along be anticipate vehicles but to little our we of group with pursuing occur, same

possibly We at are all not in entertaining any we can -- moment time. this new because manage have simply we discussions,

Michael Kupinski

guidance a ramping? fiscal year. just revenues disruptions the I'll the let far, know But with some and in you us at so could in terms And just mentioned are revenues revenues you're players? Was ask of initial expectations? question in of And there $XXX,XXX. were still Argyll. know want And final November -- others a revenue of a just growth? sense if giving October to I color know I some questions. that of in But get disruptions Is line of is? that general into you number for then, And the or I I in in sense, driving it that what's give just what you there seeing November, the kind

Grant Johnson

going the of it have take could we what SportNation. that Sure. was. forecast the upon to impact first acquisition Argyll and CEO nor pass, COVID and was over when was not negotiated us, to and Clearly, I'll the of of course, Michael, I'm hand

could have have audit place UK the we some during was to from anticipated not anticipated the of So, taking COVID say I'd nor GC. that it

bit on. it two did not of we one, a was that plan So, a

I'm more who's to to the Michael point. to the take SportNation can get However, you of the quite question on specifics Michael, a we going with into since. that little turn COO call phone numbers over Michael, on -- it please? Wilson, pleased are

Michael Wilson

Thanks problem. here. Yes. Michael, No Grant.

tell through up coming out we're more before figures So where up driven returning new players saw and largest that from as seen acquiring. FTDs the record. we've seeing well, To the our of also mentioned back, November also the social number saw on are on actives into the momentum branching I We're players with retention of we're week existing an and that of the the in. this network. new the of the highest October as week, we to into in well. as channels the October acquiring through up. fact, players along retention month record had retention and That players you increased month and and whole number And bounced two in creeping also, and continue as We're and retention seeing month affiliate site, last that a players well. is figure the highest new momentum as new we've also largely as also the individual through And batch we're FTDs a

that that to the is in also – We're the from also we're doing increasing So is at momentum loyalty decent retention customers seeing the that part I are and hitting think I'd numbers that through rewards retention And stage those seeing them December revenue on-site sorry, revenue figures again. seeing tied the through and the customers showing as retention well. and million the we program it getting looks as driving moving the that this the as we're that into have. make point though by well, final the acquisition customers of $X the all of of forward part

Michael Kupinski

let others Thank questions. I’ll ask you. you. Thank

Operator

Research. Lisa Instructions] ahead. from is [Operator next go with Springer Please question Our Singular

Lisa Springer

could wondering kind how Thank to is with you what for And that expand opportunities? of going Commission skill-based how Gaming you. us LANduel? New the explain timetable the adding wagering -- pilot if your you how the to Jersey I'm player-to-player the have for really

Grant Johnson

Certainly. tested commission's evolution with The its involvement. been through the product has

have approved been product come first expect We launch The it QX, our in betting. product their this will are How each comparing it in out have esports they time impact. has other better that's revenues? the mindful working will and New a our center with their Esports fans and talked we to impact always and be So Jersey a time of center Helix Genji, against is and in each line. Player-versus-player people actually the has ggCircuit are will Helix been believe from gaming very this skills that's been in substantial betting in and terms by skilled commission with about a other's. them. engaged

we get I this the allow would $XX. in kill any you the house room So any to facility place. unlike other. can rate game the against doesn't a play win take -- next a bet the take would video each providing And match a will me -- I the where benefits esports, poker position risk, commission where from house the they environment not a but house the of takes the action

golf. this will there's to And closest takes of It more terms than unique. very in will to Hole-by-hole on think not the make the masters. the take shot hole. sporting links that could around It's common bet the betting long world if it on esports. betting anywhere place in the Think place exist so does all comparison, in golf be a else foursomes currently I and of

person way. in it up the with So activity We product place think these to that taking the be tournaments. where environment point more will versus anticipate person this get that time place the end of major taking betting to on on there'll

it on both effect will a it have and on profound revenues. believe our will have growth -- positive So our we

Lisa Springer

kind I mean And like do schedule tournament. lot we do? sponsorship how of have Okay. terms I a you've out you you'd this the year. And what Excellent. to with title of of in shape look wonder of for can the many got more what tournament sponsorship that take? would a of visibility during

Grant Johnson

in Allied that are discussion topic frankly. we on Actually exact with

both are working calendar tournaments. I of year So the working and expect next we where titles future in different more regions a and possibly additional both -- to being benefit would together in is Allied results. four enjoyed world. the see gotten minimum we we've including the We with in geographic merits focused

we about in as are the as that's So far details.

come to early expect schedule a New in out We Year. with the

Lisa Springer

Excellent. Okay.

to Thank you. it. forward Looking

Grant Johnson

you. Thank

Operator

closing registered to conference Instructions] time. for are Grant remarks. I further this the Johnson [Operator to over There any turn would no questions at like

Grant Johnson

us offer to us like for I'd earnings Again, the joining for thank and call. we offering you. that our I the diversified then Thank value Thank everybody tremendous create today shareholders. our will your for more joining forward sector to in delivering most and do we believe exciting esports questions. we you for to results larger execute that you here continue for we business and Thank look as our model.

Operator

call. conference today's concludes This

You pleasant day. have may Thank you participating a for your disconnect lines. and

Esports Entertainment (GMBL) 16 Nov 202021 Q1 Earnings call transcript