Allied Esports Entertainment Announces Preliminary Unaudited Fourth Quarter and Full Year 2020 Financial Results

Rhea-AI Summary

Allied Esports Entertainment, Inc. (NASDAQ: AESE) reported preliminary unaudited financial results for Q4 and full year 2020. Q4 revenues were $0.9 million, a 52% decrease year-over-year, attributed to reduced in-person events but offset by $0.2 million from Multiplatform Content. Total costs surged 135% to $16.6 million. The company experienced a loss from continuing operations of $19.7 million. For the full year, revenues fell 57% to $3.2 million, leading to a $46.5 million loss. Despite these challenges, management is optimistic about recovery due to vaccine distribution.

Positive

• Generated first meaningful revenue from Multiplatform Content, totaling $0.2 million in Q4.
• Adjusted EBITDA loss improved to $3.5 million from $3.7 million in Q4 2019.
• 71% reduction in total bridge and convertible debt, enhancing financial flexibility.

Negative

• Q4 total revenues decreased 52% from $2.0 million to $0.9 million.
• Q4 total costs increased 135% to $16.6 million.
• Loss from continuing operations was $19.7 million compared to $5.8 million in Q4 2019.
• Full year revenues declined 57% to $3.2 million.

Allied Esports Entertainment, Inc. (NASDAQ: AESE) (the “Company” or “AESE”), a global esports entertainment company, today announced preliminary unaudited financial results for the fourth quarter and full year ended December 31, 2020, as well as an update on several key business initiatives. This release refers to “continuing” and “discontinued” operations due to the pending sale of the Company’s subsidiaries operating our poker-related business and assets comprising the World Poker Tour® (“World Poker Tour,” or “WPT®”), which is currently in active negotiations to be sold in a transaction that is expected to close in the second quarter of 2021. Therefore, unless otherwise noted, results presented in this release relate to the continuing operations of the Company and Allied Esports, and excludes the World Poker Tour.

The Company filed a Form 12b-25 to extend the due date for filing its Annual Report on Form 10-K for the year ended December 31, 2020 until April 15, 2021. Reflected herein are selected preliminary unaudited financial results. These financial results are subject to adjustments based upon, among other things, the completion of the audit of the Company’s consolidated financial statements as of December 31, 2020 and for the year then ended.

Commenting on the preliminary fourth quarter and full year 2020 results, the Company’s CEO, Frank Ng, said, “Despite the unprecedented operating challenges and macro-economic uncertainty encountered throughout most of 2020 resulting from the COVID-19 pandemic, Allied Esports finished the year with a solid performance in the fourth quarter. The In-person pillar of our business model remains the primary near-term growth driver of our Esports business, and this activity was significantly curtailed globally during the pandemic due to operational restrictions, including limitations on social gatherings and other health and safety protocols. However, we made good progress throughout the year conceptualizing and building-out the Multiplatform Content pillar of our business. I believe the work and progress we made will serve us well in the quarters and years ahead.”

Mr. Ng continued, “Total revenues for the fourth quarter of $0.9 million declined from $2.0 million in the fourth quarter last year. During the fourth quarter, Esports generated its first meaningful revenue from Multiplatform Content, which totaled $0.2 million and comprised nearly one-quarter of our fourth quarter Esports revenue. At the bottom line, our adjusted EBITDA loss of $3.5 million for the fourth quarter improved over 3% from an adjusted EBITDA loss of $3.7 million a year ago. I am also pleased with our ability to reduce operating expenses to better align our cost structure with the lower revenues generated during the year. Additionally, we made tremendous progress in 2020 improving our capital structure, as evidenced by a 71% reduction in total bridge and convertible debt during the year and significantly enhanced financial flexibility.”

Mr. Ng concluded, “As we look ahead in 2021, our expectation is that global distribution of COVID-19 vaccines will bring the return of a normalized world—and with it—the recovery of in-person events. We are optimistic that we will soon be operating in an environment where the Company's foundational strides made on the Multiplatform Content pillar of our business in 2020 will come together alongside the resurgence of live events and the return of maximum capacity at our various Esports venues.”

Fourth Quarter 2020 Financial Results
Revenues: Total revenues of $0.9 million decreased 52% in the fourth quarter of 2020 versus the fourth quarter one year prior. This was due to decreased In-person revenue, partially offset by revenue growth in Multiplatform Content.

Costs and expenses: Total costs and expenses for the fourth quarter of 2020 were $16.6 million, an increase of 135% compared to the fourth quarter of 2019. Costs and expenses increased due to increases in impairment of investments and property and equipment expenses that were not incurred in the prior year period. The increase was partially offset by lower expenses in In-person, selling and marketing, and online operating areas of the business.

Loss from continuing operations for the quarter was $19.7 million, compared to a loss of $5.8 million in the prior year period. Loss from continuing operations for the fourth quarter of 2020 included a non-cash extinguishment loss on acceleration of debt redemption of $1.7 million that was not incurred in the prior year period as well as a $1.8 million increase in interest expense compared to the fourth quarter of 2019.

Adjusted EBITDA loss was $3.5 million for the 2020 fourth quarter, as compared to $3.7 million in the fourth quarter of 2019. A reconciliation of the GAAP-basis net loss to adjusted EBITDA is provided in the table at the end of this press release.

Full Year 2020 Financial Results
Revenues: Total revenues of $3.2 million decreased 57% in the full year of 2020 versus 2019. This was primarily due to decreased In-person revenue, partially offset by revenue growth in Multiplatform Content.

Costs and expenses: Total costs and expenses for the full year of 2020 were $35.7 million, an increase of 63% compared to 2019. Costs and expenses rose primarily due to increases in impairment of investments and property and equipment, stock-based compensation expense and G&A expenses. The increase was partially offset by a decrease in In-person, Multiplatform content, and selling and marketing expenses.

Loss from continuing operations for the 2020 year was $46.5 million,

FAQ

What were AESE's preliminary Q4 2020 revenues?

Allied Esports reported Q4 2020 revenues of $0.9 million, a 52% decline from the previous year.

What is the adjusted EBITDA loss for AESE in Q4 2020?

The adjusted EBITDA loss for Q4 2020 was $3.5 million, an improvement from $3.7 million in Q4 2019.

What is AESE's outlook for 2021?

AESE's CEO is optimistic that the global distribution of COVID-19 vaccines will lead to the recovery of in-person events.

How much did AESE lose from continuing operations in Q4 2020?

AESE reported a loss from continuing operations of $19.7 million in Q4 2020.

What were AESE's full year 2020 revenue figures?

For the full year 2020, Allied Esports reported total revenues of $3.2 million, down 57% from 2019.