GMBL Stock: Why It Increased

By Amit Chowdhry ● Oct 14, 2021
  • The stock price of Esports Entertainment Group Inc (NASDAQ: GMBL) increased by over 11% pre-market today. This is why it happened.

The stock price of Esports Entertainment Group Inc (NASDAQ: GMBL) increased by over 11% pre-market today. Investors are responding positively to Esports Entertainment Group announcing the financial results for its fourth quarter and fiscal year ended June 30, 2021.

Fiscal Fourth Quarter 2021 and Recent Operational Highlights

— Completed acquisitions of Helix eSports and ggCircuit

— Completed acquisition of BetHard, the B2C business of Gameday Group, adding Swedish and Spanish gaming licenses and substantially increasing revenue base

— New Jersey gaming license formally accepted by NJ Division of Gaming Enforcement in May 2021

— Opened New Jersey office and expanded hiring ahead of VIE US launch

— Completed $35 million private placement of convertible notes with $17.50 conversion price

— Partnered with Square, the world-leading point of sale and payment processing provider, to integrate its payment solution into ggLeap, a premium esports center management software

— Partnered with Game Fund Partners to become a part of their venture capital arm and a new planned $300 million game fund

— Continued to expand partnerships with professional sports teams, becoming official tournament sponsor for the Cleveland Cavaliers, New York Rangers, Indianapolis Colts, Tampa Bay Buccaneers, LA Chargers, and LAFC

— Partnered with Pro Football Retired Players Association, a national membership organization that develops benefits and programs for retired NFL players, to be its official esports partner and tournament provider

— Partnered with Hall of Fame Resort and Entertainment Company to become the official esports provider for the Hall of Fame Village powered by Johnson Controls, joining Topgolf Swing Suites and Don Shula’s among others

— Signed agreement with Associated Students of UCLA to launch state-of-the-art Helix eSports gaming facility inside Ackerman Union, located in the heart of UCLA’s campus

— Launched crypto mining application at ggCircuit enabled LAN centers

— Launched “pay-and-play” casino brand targeting the Finnish gaming market

— Partnered with Indian Gaming Esports Association and Spectrum Gaming to bring esports to tribal nations and casinos

— Partnered with Liquipedia.net to create the most community-centric and responsible betting integration in esports

— Launched InVIE esports tournament series with Dota 2 Season 1 in South America

— Became official gambling sponsor of Beyond the Summit’s May 2021 CS:GO tournament; Beyond the Summit is one of the world’s largest esports networks

— Partnered with Riot Games to host the Summer 2021 North American LCS Proving Grounds tournament

— The company’s Helix eSports subsidiary partnered with GUNNAR Optiks, the leader in blue-light gaming and computer glasses

— Signed agreement to co-produce the 24th Annual East Coast Gaming Congress in Atlantic City

— Signed exclusive content partnership with ESTV EsportsTV, the world’s first 24-7 live linear video channel dedicated to esports

— Partnered with SG Esports, a Brazilian professional gaming organization, as their primary jersey sponsor

— Partnered with Real Cricket 20, the world’s top mobile cricket game, to provide software integration services for the dafaNEWS Ecricket World Series

— The company’s SportNation brand nominated for eGaming’s Marketing Campaign of the Year Award

— Partnered with Alpha Esports Tech to design computer vision technology for automated scoring

Fiscal Fourth Quarter 2021 Financial Results

— Net revenue of $8.8 million, up $8.8 million over 4Q20 and up 63% compared to 3Q21’s $5.4 million

— Gross profit of $5.2 million, up $5.2 million over 4Q20 and up 69% compared to 3Q21’s $3.1 million

— Gross margin as a percentage of net sales was 59%, compared to 57% in 3Q21

— Sales and marketing expenses of $5.1 million, up from $0.3 million in 4Q20 and compared to $2.4 million in 3Q21

— General and administrative expenses of $10.5 million, up from $1.8 million in 4Q20 and compared to $6.3 million in 3Q21

— Operating loss of $10.5 million, up from a loss of $2.1 million in 4Q20 and compared to $5.6 million in 3Q21

— GAAP Net loss of $4.8 million or ($2.80) per basic common share, up from a net gain of $1.9 million or $2.09 per basic common share in 4Q20 and compared to a net loss of $12.4 million or ($0.73) per share in 3Q21

— Non-GAAP adjusted EBITDA* of ($5.5 million), compared to adjusted EBITDA of ($0.9 million) in 4Q20 and compared to adjusted EBITDA of $2.1 million in 3Q21

Full Year Fiscal 2021 Financial Results

— Net revenue of $16.8 million, up $16.8 million over FY20

— Gross profit of $8.9 million, up $8.9 million over FY20

— Gross margin as a percentage of net sales was 53%

— Sales and marketing expenses of $10.0 million, up $9.7 million over FY20

— General and administrative expenses of $24.6 million, up $3.7 million over FY20

— Operating loss of $25.7 million, up $21.7 million over FY20

— GAAP net loss of $26.4 million or $1.68 per basic common share, compared to a net loss of $10.4 million or $1.50 per share in FY20

— Non-GAAP adjusted EBITDA of ($14.0 million), compared to adjusted EBITDA of ($2.3 million) in FY20

— Stockholders’ equity increased $63.4 million to $74.8 million at the end of FY21, up from $11.4 million at the end of FY20

Fiscal 2022 Financial Outlook

The company expects net revenue to increase by at least 490% to $100 million to $105 million in FY22, driven primarily by the multiple acquisitions completed in calendar 2021.

KEY QUOTE:

“The formidable foundation we built since our 2020 IPO drove strong performance in the fourth quarter and sets the stage for achieving significant growth in FY22. Based on a new record single-day performance of our iGaming division in late September, I am extremely confident in our ability to hit our guidance target. The partnerships we have formed, from top professional sports teams to industry-leading esports and gaming companies, clearly demonstrate the strength of our expansive product and service portfolio, and I believe our future is very bright as we continue to execute on our rapid expansion strategy driven by the solidification of our market position and the ongoing growth of our unique assets.”

— Grant Johnson, CEO of Esports Entertainment Group

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.