Esports and online betting company Esports Entertainment Group has reported its financial results for the fourth quarter of the fiscal year. During Q4, the business delivered revenue of $11.7 million, an increase of $2.9 million compared to the same period last year. However, the figure was down 25.4% sequentially from net revenue of $15.7 million in fiscal Q3 2022.
For the three-month period ended June 30, gross profit increased by $1.6 million to a total of $6.8 million on a yearly basis, but was again down from the previous quarter with a 27.8% sequential decrease from $9.4 million in Q3. The business also delivered a gross margin of 58% compared to 59% in the same period last year.
During the quarter, EEG began a strategic review focused on its operations and overall efficiency to help improve its short-term performance “while setting it a path for long-term success.” A number of initiatives were implemented over the period, including a reduction of the company’s workforce; the removal of duplicative functions; de-emphasizing parts of the business “which do not support its long-term strategic plans;” and implementing a more ROI-focused approach to marketing spend.
“These changes have already resulted in a reduction of the monthly cash burn rate,” the business noted. The company was able to cut its net loss from $4.8 million in Q4 2021 to $4.1 million, or a loss of $0.10 per share, in the fourth quarter of fiscal year 2022. EEG concluded the period with total cash and cash equivalents of $2.5 million.
Grant Johnson, CEO of EEG, commented: “We are pleased with the initial positive impact of our restructuring efforts and the progress we are making in our strategic pivot towards further leveraging our esports assets, including BETGROUND, our proprietary esports player-versus-player skill betting platform. However, there is still much work to be done and many challenges ahead to right-size the business, lower our cash burn and further reduce our debt and our reliance on capital raises.”
During the last few months, the company sold 30 million shares of common stock and warrants for a combined offering price of $0.25, raising gross proceeds of approximately $7.5 million. The betting company also sold the assets related to its Helix esports game centers for a total purchase consideration of about $1.2 million; and signed a non-binding letter of intent to sell the company’s Spanish iGaming operations as it looks to focus on its core markets.
The fiscal year was also marked by changes in the company’s executive team. The resignations of Stuart Tilly from his position as Chief Operations Officer as well as from the Company’s Board of Directors, along with Mark Nielsen, an independent director, were announced over the last few months. At the same time, in 2022 EEG appointed John Brackens, as well as independent directors Jan Jones Blackhurst and Kaitesi Munroe, to the company’s Board of Directors.
Shortly before Q4 began, back in June, the company received a letter from Nasdaq notifying it that it was not in compliance with the minimum bid price required for continued listing. EEG said it intends to submit an appeal that stays the delisting and suspension of its securities pending a decision of the Nasdaq Hearings Panel.
“The company also continues to work through various options intended to monetize its non-strategic assets and improve its ability to adequately support all aspects of the business,” the firm commented in a press statement. “These efforts have resulted in the sale of the Helix esports centers, a transaction that has eliminated excess cost and has mitigated the risk of having to invest and incur costs associated with operating and owning real estate.”
