GMBL - Earnings call 2 2021 | Esports Entertainment Group, Inc.

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Operator

Good afternoon, and welcome to Esports Entertainment Group's Second Quarter Fiscal 2021 Conference Call.

As a reminder, this call is being recorded and all participants are in listen-only mode.

We will open the call for question-and-answer after the presentation.

On the call today is Esports Entertainment Group's CEO, Grant Johnson; and CFO, Dan Marks. The company would like to remind everyone that various remarks about future expectations, plans and prospects constitute forward-looking statements for purposes of safe harbor provisions under the Private Securities Litigation Reform Act of 1995. risks these may are to cause from indicated that and to differ cautions company's those that the uncertainties their including Cat forward-looking the subject statements risks materially filings Red with in SEC. described actual results made to statements call conference these reflect statements update date, any this of the company events speak XXXX, to that today. February of XX, on and as occur or does today's forward-looking Any only Tuesday, not after circumstances intend forward-looking

like turn Johnson. Please now over Esports I'd call that, Johnson. With Grant Entertainment to go to the Group's CEO, Mr. ahead,

Grant Johnson

Thank you XXXX we grow on our our earnings our for out afternoon, our our incredibly you. quarter unprecedented and fiscal execute uplisting in April. last Despite how Good to I'm circumstances, everyone. for joining laid SX continues that call. second commitments prior proud Thank quarter to -- of us team

Entertainment industry Group over XXXX been The time at trends for has for Gaming like setting X growing never with esports Esports transformative right Entertainment Esports and in esports whole. of have game mega now, than esports year year-over-year. been XX% currently crossroads Twitch, popular and a online of viewership are Group gambling. the the XXXX sits stream they up and platforms watched more records as currently with

distanced to physically people has Gaming during has be become a to this all new network pandemic. for together virtually brought had when form Zers and the of Gen social period COVID-XX we've due

the of there and And billion gamers, the million season. continue flatten of X.X almost throughout to X.X launches reports gamers them holiday from esports and Newzoo, billion Sony to according those the are New fans. set Microsoft of now globally. records sales console XXX are And shelves latest

in see addressable Jack growing player opportunity versus With the we around market we we on billion $X esports expect million Isler's is currently market. which Gray intend to Surveys in we fans unique $XXX addition indicate they're play, like years. according New And to [ over next to first-mover these year. position strategy and this matches watch, and opportunity, the bet the Orlando to a is esports wagering launch large ], watching. skill-based that and Memorial XX% X addressable the to is bet believe we're would which player, over growing address This of that Day Jersey product, our our with in which capture to market to in the wagering advantage,

very that of number gambling sports explore favorable online the ways unfortunately of to potential. over look budget the state are created. with at continue fill currently legislatures On some the side, form XX as regulatory esports remains betting and to states legal states environment, to continue challenges the COVID has There a

license. wagering esports-focused into plan spring, April. our the only rollout, to a expansion U.S. EEG -- After for is states. state Jersey this platform additional launch VIE currently We we early with U.S. market into platform access explore in the that New

offer single-event working also new the wagering there Canada to sports in provinces with We framework proposed as to begin in look future. near regulatory forward

the Arsenal with walk Soccer its resigned their Pro Football subsidiary Club the quarter. manage our through Evolution operational them sports of Gaming of esports. roster. and work League December, like to with I'd In This is of some agreement a help highlights opportunity to Esports value such the Europe and enter to brand second in world the the this traditional partnership, year we storied, from

all last The for Philadelphia joined which and be Philadelphia just the joined who biannual a Ravens, Eagles in esports December, Madden Eagles our turner platform. platform Also with multiyear Kings, as the tournaments the Baltimore we Galaxy NFL LA of agreement teams to ] exclusive [ LA host the reached provider. EEG signed have their Union, we Eagles. will sports week,

As to discussions Group, testament in what Entertainment announcements and belief coming a which part we number sporting large great we're think in agreement, are with the a further additional is Esports remain the EEG. Eagles We ongoing their franchises of months. of shareholders in building anticipate now of the here at

During the past Malta casino quarter, platform. the established proprietary with licensed Dino, Lucky we've an of online also announced operator software own its acquisition casino

the extremely jurisdictions tech further In addition gives across strengthening where multiple new foothold Europe to are is us asset and our in popular. what stack, Lucky substantial a Scandinavia, Dino esports

strategy casino iGaming strategic nation our The can VIE.bet opportunity players licenses, a tremendous for provide cross-sell great efficiently offerings and our acquiring is blueprint created our betting and a other players active that The profitable Dino pools into. operators that cross-selling transaction XX,XXX sports platforms. with of for we monthly Lucky us

this to February. end close expect month, the transaction to of We prior this

company Subsequent In to a that Market SportNation for detail into you. we also for company. for first onto the have the multi end, our to announced number that large exciting allows market jurisdictions we This to time. have -- a be license. brands developments put had VIE.bet, additional priority strategic both quarter's we to like the onto of January, I'd continues gaming the XXX access company's

focus South be representing in Eastern will together and initial a multibillion-dollar Central and opportunity. Our Northern America. Europe,

applications April. launch States, an Enforcement plan gaming As Gaming late Enforcement strong March, build brand Gaming to spring, have and to This us a will the early this earlier, Department advantage [ us our available us esports-dedicated first around there discussed first-mover the we waging of should in VIE give a Jersey, (sic) enable submitted State to United of New make Division the with and ] platform. platform our of company

additional intend for in opportunities explore possible. states we and the as many launch our New as expansions to Jersey, Following

our announced comes previously player acquisition platform, software January platform. And announced wagering vertically in best-in-class acquisition esports -- entertainment XX, This vertical esports we acquisition centers, terms our bolsters versus state-of-the-art and that enterprise around Helix ggCircuit. course, with strategy finalized and of esports we business our skill-based player Duel. significantly of esports-focused LAN this analytics

announced receipt of close already the We've ggCircuit senior of following following will Entertainment projects shortly. All the to Helix working expect will of and transaction. April, Group both on We with cross-company this approval. close shareholder exciting integrating the remaining Esports executives transaction be several begun be assets and the that this in

today, Finally, round a We finance $XX seen million closed in investors to we've shareholders news, the acquisition. new as and them use new thank $XX for support. proceeds financing the for Dino The of institutional for transaction welcome you've share. are their at the board, Lucky a this

on the by XX NASDAQ Finally, many and employees. in employees we to This together, come exciting XX pulled over all for year employees Bulletin OTC to of began finished the I have more really the with want testament is on to with know XXXX. that their we close We work. our XXXX milestones the Board a thanking I hard team and

quarter through going who'll financial the I'm turn to call upward of year performance our Dan CFO, revised the in walk some now guidance. full Marks, the new over to and our Dan?

Daniel Marks

and begin first joining I'm the company. Thank today. and the with, say revenue-generating that to a group was thanks To again for good you, its happy Grant, meaningfully everyone, past as us afternoon, quarter for

a revenue over quarter, entity. million principally which is prior Argyll SportNation.bet the of U.K., in the million This of $X.X Entertainment quarter, increase flagship delivered part the our the from a We in which that represents the brand $X.X the our affordability Commission. guidance platform, we decision ] new by impacted tool customer by U.K. summer post our materially to cross given over [ marketing was into integrated Gambling spend whilst

actually took QX, been on quarter. hold on we it unique unusually circa prior handle XX,XXX players Argyll in the in have for platform low have the casino Across up out would Revenues on million and over million $XX our were $X.X product December. higher the active materially not

to brand As current forward services we we customers By operate well this concentration abundant us will XXX the outside allowing of markets revenue in in widening the our of our jurisdictions. our license, the our on and MGA we And brands. look mentioned VIE.bet have fiscal brings access us breadth our substantial are to and between both the launched sports expand of the of growth previously, remainder giving the end are to and February, as it allow cross-sell opportunity as year, to Grant in both will esports the opportunities, opportunities with as bet U.K. SportNation.com us

Helix be revenue coming several pro VIE.gg of and initiated closing team-sponsored of our license the tournaments transaction coming in Jersey our the wagering New in both of several will EGL by ggCircuit, months, tournament the weeks the platform in transaction the months. the platform the with March streams esport QX. on during hosting the The and and impending Dino launch start of on Lucky Furthermore, new the spring, together

both including million. $XX above Dino in fiscal Dino XXXX, year guidance our acquisition, be revised for 'XX, guidance $XX revenue the mind, fiscal will our which ggCircuit, Lucky and the includes be revised for And million. will With Helix Lucky

loss to $X.X operating million Returning QX to an Total the the quarter. million in for prior was quarterly $X.X operating of numbers. loss compared

QX's impacted So equity-based compensation by million charge million. and charges $X.X figures depreciation of $X.X were of an

loss period. million for net $X.X prior was the compared Total the million to in period $X.X

loss the when quarter warrant an by in the of was net liabilities. quarter's compared this to compounded sales So million adverse $X.X fair prior of value

versus Operating QX. in $X.X $X.X totaled million the expenses quarter million in

depreciation and equity-based of costs. outlined those those a So charges drove previously compensation portion

prior in QX. as quarter-over-quarter an marketing period the QX ] FLIP books Argyll And completion of we $X.X X, the the increase of employees worth were X $X.X months. as summer had following reinitiated following the we SportNation.bet and increased the over during marketing [ Payroll million acquisitions brand on Sports expenses on months' over the million, fours in spend and their of sales

Moving on liquidity. sheet balance to the and

growth well our very to plan capitalized key are We and our execute address priorities.

XX, $X.X with since bank from subsequent on at of over now warrants shares As proceeds our cash approximately beginning for the XXXX, sale of $XX available exercised million. issued of million hand the we X.X in December But is cash. the net the million had

fund million via announced raise going round to financing $XX well as we our Lucky acquisition the With upcoming Dino the funded to complete growth strategy additional well of forward. as the are operational today,

is on Our will group's burn And circa on reduce Dino current activities to cost $X.X structure. million, enlarged be our finding efficiencies will within continue million of focused monthly rate we to $X.X post the closing Lucky but net cash acquisition. operational the

augmenting some can confident tech EGL and and we activity platforms. in customer next cost As support the as stated our build investment whilst function a in months, will XX last existing doubling in out quarter, operational to X we continue buy our are our base incremental resources

our growth acquisitions, industry. the opportunities closing impending optimistic closures diversified development with EGL, of our we next we Dino and In summary, having revenue-generating esports new activities accelerate the and months, Helix launch becoming company platforms across the into commenced extremely in Lucky in and therefore, to with most jurisdiction, the remain ggCircuit, together with as look of gambling in XX online new

the line Q&A, open now And with we for operator? that, please, can

Operator

comes [Operator Instructions] Markets. question NOBLE Capital Kupinski The first with from Michael

Michael Kupinski

of a here. questions quick Just couple

Regarding was stock-based And -- you want the I it Did to was then I correct, mentioned right. the million, $X.XX sure compensation. quarter? got depreciation make I this just $X.X million, that $XXX,XXX? in right, hear

Daniel Marks

$X.X million on on million was It base depreciation. and equity $X.X

Michael Kupinski

Okay. $X.X million.

of you. following And in you terms just Dino then Lucky cash, can the of acquisition. Okay. the the us Got net kind give

a mentioned later thoughts as right, to of had us $XX acquisition cash terms sense on you And there? to you and at have the hand what exercised. as $XX the kind equity -- you Helix then some have the are you acquisition at just Can that? point, in Lucky million, over if in debt ramp million You because up this after a the the on Dino you going that just have if of cash can were in fall of give us kind you warrants you give composition of the

Daniel Marks

for marketing expenses. will other operational cash round today earmarked financing that specifically the at be closed whether And be remaining that used -- Sure. hand activities, to Dino the bank the for was acquisition. Well, Lucky on fund or

I know the specifically to if with you regard don't speak ggCircuit want financing? to Grant,

Grant Johnson

that accelerated -- that. Yes, coming over also, should as as Dan over is in even past I out, can already an days past basis, address laid true today. money and been XX we also that add the I Michael, has the warrant at speak,

constantly as rising goes and numbers flux accounts. our in cash are into these So more

of determining ggCircuit, That in we or other it the $XX half, Half transaction. will million, said, we debt have be equity. are in million Helix, and committed transaction, still already the $X funds whether would equity roughly with be to the

early the will April. We closing, shareholders. just we're which closer looking the -- March, decision is of won't we to of around get finish best we what see have closer when offers end be on that and to they made to until ] interest both, in and But [ get be

Michael Kupinski

build-out And Where you then the found you sales kind to this indicated a that Helix you. it that they a way on of forth. breakeven the at so or was the -- there stand what of were Got this a in couple you be that is to can I of Or going I us had Because do them is -- just just is point? that facilities? on sense performing? for you how sense can performing? understand you hold Helix through us on a out building give and environment how give on know that

Grant Johnson

Well, sure.

since have In to ever course, behind loosening COVID brought XX% that weekend. of we say, nor until restrictions, place, of online us. have terms some able the will I say, the additional attendance fully over of with just during of can they took build-out, been news increase they this were booked received that been and up the over the to physical weekend locations no their is good

of the early those in to market What start Are we're up agreements well who there. prior been the a And software weeks talk facilities. well directly to which looks additional summer, of have those place, their entered to I in the pick going we we to other to talk into the teams as how we running some similar to with as more those have imagine even that food, sales or we're a would generating platforms to question, you're as what breaking the like, Patriots' started facilities? of looked your open referring type we'll facilities, message as have Yes. some where revenue about facility get we've XX% you combination at No. structure fall. the on we coming of breakeven late about to opening? bev plans up additional as have there with in to a But close that again will was to

again, we'll XXXX. more XXXX, facilities late be So to see progress. additional The a going how But not online likely XXXX conversation. that's those becoming likely

Michael Kupinski

what focused Got you. this at? active you And point? acquisitions there this that at very that looking additional this my And is areas you're point last question Are is, are have mostly obviously, on a at marketplace. you

Grant Johnson

Well, to the question, is the short yes. answer answer

constantly looking it. are We at

when -- think in fairly M&A I we're we've messaged our the market aggressive program.

U.K. go our iGaming Kerr to determine before constantly the we based brought space. letter are not consultants from And a are a, be of that accretive. targets multiple they have We whether us or how [ proceed in ], we have intent who's the in to further, in and going to engage

So obviously, to events. want dilutive have we any don't

the bring bring but markets, for we're up licenses, us it it, iGaming of it as expansion does if markets is access our what just -- to the not an company, we here, those cross-market it's for just report in? which about opens talked to currently in -- not Does -- other for -- the does other it us assets? iGaming just do Second, into additional just it it's esports. brings us If

we're And or we're business not unaddressed this looking will in can of what that new our product model. on look many technologies there's with M&A, that acquire unique ggCircuit, Genji, software accelerate we're things we for Helix, opportunities left always that have. the our on where currently mix, at are cetera, doing we acquisition et esports-centric terms the but With elements don't unique

than decisions, the we make that's additional to or us to all they we synergies to one. an time. an has guess we revenues, unique full probably give just also a I finish And just outside So for plus a when it. have to has us to opportunity pipe. have Yes, technology. more best looking the increase are give Yes, be way these It of

Operator

Our of comes Research. next question Singular from Lisa Springer

Lisa Springer

a should Given of second we it was much I I'm should think because And onetime in like how how the moving we of G&A parts, in the quarter to of expect the of number of year. the deal recurring? second large wondering half about much be mean how M&A? it

Grant Johnson

Dan? Yes.

Okay.

Sorry.

Daniel Marks

called Lisa, that couple I in the not or recurring direct getting Yes. a specifically too equity-based to least be year. that without comps will into of magnitude the half in the -- numbers numbers, I I of -- mean, not second out granularity, much just about at

to earlier. out coming perspective, alluded that a Dino Lucky numbers from with that Obviously, in So should down, on like. it's EBITDA-accretive model what coming possible be notes acquisition from perspective, the those to looks as an cash

Lisa Springer

focus to what you investors think forward, would of players? to do looking at? metrics should look measure And success? the metric Okay. your think you Or what Would growth be best would be it on number

Grant Johnson

-- be to Dan. ahead, sorry. going there's oh, Well, Go

Daniel Marks

Go talking ] end. the [ about No. Grant. on, I'm

Grant Johnson

going there's of -- difference. to be a I number

there's say, here. lot of a you As pieces moving

different is be is of and will connect huge that franchises the will teams indicator there of fan number with. these This a we increased the number is metrics. teams So a -- bases. pro One be have this key reason

Some these marketing fan range, be exclusive ours. partners will in and effectively teams the of of million they XX bases have

will down fans So that and that will an trickle the number up. indicator that of sign to

will going indicator continue sourcing more the than the to accelerated growth get our accretive on will organic quickly have closing to be through of transactions. and And growth Another up. signing course, ability we're these, much

completely Duel the to going a the again, Memorial update be closer that, the sense how one, to we initial type esports. be once And and new, proof-of-concept get wagering Day, LAN that will year-end. in groundbreaking the our are to fiscal once we'll launching And launch those, better is product in addition of numbers we around That a for we which uptake.

Operator

for Johnson any This back would closing to turn like remarks. I question-and-answer session. to conference Mr. concludes over the the

Grant Johnson

and of and call. our in the also of after IR, market. company, through to other you. may it's to Jeff you RedChip, can is address, questions for address to (sic) coming earnings thank your our reached any Just And Jeff@esportsentertainmentgroup have questions VP IR [ Cohen, my this happy Jeff's is Thank of He call to your you VP support ]. available e-mail our Strategy here to attention. continuing be or -- further his course, Jeff@esportsentertainmentgroup.com forward all

Operator

This concludes today's conference call.

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

Esports Entertainment (GMBL) 16 Feb 212021 Q2 Earnings call transcript