Allied Esports Entertainment Announces Third Quarter 2022 Financial Results
Allied Esports Entertainment (NASDAQ: AESE) announced its Q3 2022 financial results, reporting total revenues of $1.6 million, a 7% decrease year-over-year but a 35% increase sequentially. The net loss was $1.6 million, contrasting sharply with a $74.3 million net income in the previous year, which included a significant gain from the World Poker Tour sale. Notable operational highlights include producing 93 events, with proprietary events up 51% in revenue. The company maintains a solid cash position of $89.2 million and is exploring M&A opportunities to enhance growth.
- Sequential revenue growth of 35% from Q2 2022.
- Decrease in total costs and expenses by 42% compared to Q3 2021.
- Operational increase with 93 events produced, showing strong engagement.
- Total revenues decreased by 7% compared to Q3 2021.
- Net loss of $1.6 million, a significant drop from $74.3 million net income in the prior year.
Commenting on the third quarter 2022 results and strategic process, the Company’s Chief Executive Officer,
Third Quarter 2022 Financial Results
Revenues: Total revenues of
Costs and expenses: Total costs and expenses for the third quarter of 2022 were
Net loss for the third quarter of 2022 was
Adjusted EBITDA loss was
Balance Sheet
As of
Operational Update
Live event and production business continued to grow stronger with the Company’s HyperX Arena Las Vegas posting its best quarter year to date while growing revenues by
The Allied Esports Trucks were active with five eNASCAR Arcade events taking place in the third quarter of 2022 at the
Corporate Developments
During the third quarter of 2022, the Company’s Board of Directors (the “Board”) appointed
Subsequent to the end of the third quarter of 2022, the Company announced
As previously announced, late in 2021, the Company engaged
Additionally, as previously announced, the Company remains in the process of exploring strategic options for the Esports business and intends to provide further updates at the appropriate time.
About
Non-GAAP Financial Measures
As a supplement to our financial measures presented in accordance with
The Company provides net income (loss) and earnings (loss) per share in accordance with GAAP. In addition, the Company provides EBITDA (defined as GAAP net income (loss) from continuing operations before interest (income) expense, income taxes, depreciation, and amortization). The Company defines “Adjusted EBITDA” as EBITDA excluding certain non-cash charges, such as stock-based compensation, inducement expense, extinguishment losses and impairment losses.
In the future, the Company may also consider whether other items should also be excluded in calculating the non-GAAP financial measures used by the Company. Management believes that the presentation of these non-GAAP financial measures provides investors with additional useful information to measure the Company’s financial and operating performance. In particular, these measures facilitate comparison of our operating performance between periods and help investors to better understand the operating results of the Company by excluding certain items that may not be indicative of the Company’s core business, operating results, or future outlook. Additionally, we consider quantitative and qualitative factors in assessing whether to adjust for the impact of items that may be significant or that could affect an understanding of our ongoing financial and business performance or trends. Internally, management uses these non-GAAP financial measures, along with others, in assessing the Company’s operating results, measuring compliance with any applicable requirements of the Company’s debt financing agreements in place at such time, as well as in planning and forecasting.
The Company’s non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles, and our non-GAAP definitions of the “EBITDA” and “Adjusted EBITDA” do not have a standardized meaning. Therefore, other companies may use the same or similarly named measures, but include or exclude different items, which may not provide investors a comparable view of the Company’s performance in relation to other companies.
Management compensates for the limitations resulting from the exclusion of these items by considering the impact of the items separately and by considering the Company’s GAAP, as well as non-GAAP, financial results and outlook, and by presenting the most comparable GAAP measures directly ahead of non-GAAP measures, and by providing a reconciliation that indicates and describes the adjustments made.
Forward-Looking Statements
This communication contains certain forward-looking statements under federal securities laws. Forward-looking statements may include our statements regarding our goals, beliefs, strategies, objectives, plans, including product and service developments, future financial conditions, results or projections or current expectations. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “intend” or “continue,” the negative of such terms, or other comparable terminology. These statements are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause actual results to be materially different from those contemplated by the forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside our control, that could cause actual results or outcomes to differ materially from those discussed in these forward-looking statements. Important factors, among others, that may affect actual results or outcomes include: the ability to meet Nasdaq’s continued listing standards; our ability to execute on our business plan; the ability to retain key personnel; potential litigation; general economic and market conditions impacting demand for our services; a change in our plans to retain or invest the net cash proceeds from the WPT sale transaction; our inability to enter into one or more future acquisition or strategic transactions using the net proceeds from the WPT sale transaction; and our ability, or a decision not to pursue strategic options for the esports business. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. The business and operations of AESE are subject to substantial risks, which increase the uncertainty inherent in the forward-looking statements contained in this communication. Except as required by law, we undertake no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Further information on potential factors that could affect our business and results is described under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended
Condensed Consolidated Balance Sheets |
||||||||
2022 |
2021 |
|||||||
(unaudited) | ||||||||
Assets | ||||||||
Current Assets | ||||||||
Cash | $ |
84,225,000 |
|
$ |
92,887,030 |
|
||
Accounts receivable |
|
121,394 |
|
|
389,040 |
|
||
Prepaid expenses and other current assets |
|
1,214,231 |
|
|
984,777 |
|
||
Total Current Assets |
|
85,560,625 |
|
|
94,260,847 |
|
||
Restricted cash |
|
5,000,000 |
|
|
5,000,000 |
|
||
Property and equipment, net |
|
4,831,180 |
|
|
6,136,893 |
|
||
Digital assets |
|
56,970 |
|
|
- |
|
||
Intangible assets, net |
|
23,833 |
|
|
26,827 |
|
||
Deposits |
|
379,105 |
|
|
379,105 |
|
||
Total Assets | $ |
95,851,713 |
|
$ |
105,803,672 |
|
||
Liabilities and Stockholders' Equity | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ |
745,584 |
|
$ |
341,161 |
|
||
Accrued expenses and other current liabilities |
|
2,768,895 |
|
|
2,966,245 |
|
||
Accrued expenses - related party |
|
- |
|
|
1,800,000 |
|
||
Deferred revenue |
|
411,510 |
|
|
141,825 |
|
||
Total Current Liabilities |
|
3,925,989 |
|
|
5,249,231 |
|
||
Deferred rent |
|
1,708,115 |
|
|
1,907,634 |
|
||
Total Liabilities |
|
5,634,104 |
|
|
7,156,865 |
|
||
Commitments and Contingencies | ||||||||
Stockholders' Equity | ||||||||
Preferred stock, |
||||||||
none issued and outstanding |
|
- |
|
|
- |
|
||
Common stock, |
||||||||
39,085,470 shares issued and outstanding at |
||||||||
39,116,907 shares issued and outstanding at |
|
3,909 |
|
|
3,912 |
|
||
Additional paid in capital |
|
198,528,534 |
|
|
197,784,972 |
|
||
Accumulated deficit |
|
(108,494,062 |
) |
|
(99,411,683 |
) |
||
Accumulated other comprehensive income |
|
179,228 |
|
|
269,606 |
|
||
Total Stockholders' Equity |
|
90,217,609 |
|
|
98,646,807 |
|
||
Total Liabilities and Stockholders' Equity | $ |
95,851,713 |
|
$ |
105,803,672 |
|
Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) |
|||||||||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||
2022 |
2021 |
2022 |
2021 |
||||||||||||
Revenues: | |||||||||||||||
In-person | $ |
1,551,963 |
|
$ |
1,455,867 |
|
$ |
4,884,400 |
|
$ |
2,627,781 |
|
|||
Multiplatform content |
|
13,679 |
|
|
229,961 |
|
|
251,130 |
|
|
383,684 |
|
|||
Total Revenues |
|
1,565,642 |
|
|
1,685,828 |
|
|
5,135,530 |
|
|
3,011,465 |
|
|||
Costs and Expenses: | |||||||||||||||
In-person (exclusive of depreciation and amortization) |
|
1,112,645 |
|
|
1,249,640 |
|
|
4,002,312 |
|
|
2,442,750 |
|
|||
Multiplatform content (exclusive of depreciation and amortization) |
|
31,010 |
|
|
87,373 |
|
|
95,507 |
|
|
214,258 |
|
|||
Selling and marketing expenses |
|
54,445 |
|
|
87,755 |
|
|
185,614 |
|
|
216,428 |
|
|||
General and administrative expenses |
|
2,397,901 |
|
|
3,385,418 |
|
|
8,470,193 |
|
|
9,659,425 |
|
|||
Depreciation and amortization |
|
(328,739 |
) |
|
806,137 |
|
|
1,288,106 |
|
|
2,495,939 |
|
|||
Impairment of digital assets |
|
- |
|
|
- |
|
|
164,411 |
|
|
- |
|
|||
Total Costs and Expenses |
|
3,267,262 |
|
|
5,616,323 |
|
|
14,206,143 |
|
|
15,028,800 |
|
|||
Loss From Operations |
|
(1,701,620 |
) |
|
(3,930,495 |
) |
|
(9,070,613 |
) |
|
(12,017,335 |
) |
|||
Other Expense: | |||||||||||||||
Gain on forgiveness of PPP loans and interest |
|
- |
|
|
912,475 |
|
|
- |
|
|
912,475 |
|
|||
Other (expense) income, net |
|
34,073 |
|
|
54,434 |
|
|
(45,859 |
) |
|
69,413 |
|
|||
Interest income (expense), net |
|
25,316 |
|
|
(11,809 |
) |
|
34,093 |
|
|
(269,411 |
) |
|||
Total Other Expense |
|
59,389 |
|
|
955,100 |
|
|
(11,766 |
) |
|
712,477 |
|
|||
Loss from continuing operations |
|
(1,642,231 |
) |
|
(2,975,395 |
) |
|
(9,082,379 |
) |
|
(11,304,858 |
) |
|||
(Loss) income from discontinued operations, net of tax provision: | |||||||||||||||
Loss from discontinued operations before the sale of WPT |
|
- |
|
|
(3,151,740 |
) |
|
- |
|
|
(1,099,033 |
) |
|||
Gain on sale of WPT |
|
- |
|
|
80,429,729 |
|
|
- |
|
|
80,429,729 |
|
|||
Income from discontinued operations |
|
- |
|
|
77,277,989 |
|
|
- |
|
|
79,330,696 |
|
|||
Net income (loss) | $ |
(1,642,231 |
) |
$ |
74,302,594 |
|
$ |
(9,082,379 |
) |
$ |
68,025,838 |
|
|||
Basic and Diluted Net Loss (Income) per Common Share | |||||||||||||||
Continuing operations | $ |
(0.04 |
) |
$ |
(0.08 |
) |
$ |
(0.23 |
) |
$ |
(0.29 |
) |
|||
Discontinued operations, net of tax | $ |
- |
|
$ |
1.98 |
|
$ |
- |
|
$ |
2.03 |
|
|||
Weighted Average Number of Common Shares Outstanding: | |||||||||||||||
Basic and Diluted |
|
39,094,696 |
|
|
39,056,403 |
|
|
39,092,133 |
|
|
38,989,671 |
|
|||
Comprehensive Loss | |||||||||||||||
Net Loss | $ |
(1,642,231 |
) |
$ |
74,302,594 |
|
$ |
(9,082,379 |
) |
$ |
68,025,838 |
|
|||
Other comprehensive (loss) income: | |||||||||||||||
Foreign currency translation adjustments |
|
(31,747 |
) |
|
(22,031 |
) |
|
(90,378 |
) |
|
35,889 |
|
|||
Total Comprehensive Loss | $ |
(1,673,978 |
) |
$ |
74,280,563 |
|
$ |
(9,172,757 |
) |
$ |
68,061,727 |
|
Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA are non-GAAP financial measures and should not be considered as a substitute for net income (loss), operating income (loss) or any other performance measure derived in accordance with
The following table presents a reconciliation of EBITDA and Adjusted EBITDA to net loss from continuing operations, AESE’s most directly comparable financial measure calculated and presented in accordance with GAAP.
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
2022 |
2021 |
2022 |
2021 |
||||||||||||
Continuing operations | |||||||||||||||
Net loss from continuing operations | $ |
(1,642,231 |
) |
$ |
(2,975,395 |
) |
$ |
(9,082,379 |
) |
$ |
(11,304,858 |
) |
|||
Interest (income) expense, net |
|
(25,316 |
) |
|
11,809 |
|
|
(34,093 |
) |
|
269,411 |
|
|||
Federal, state, and foreign taxes |
|
- |
|
|
(48,400 |
) |
|
- |
|
|
(48,400 |
) |
|||
Depreciation and amortization |
|
(328,739 |
) |
|
806,137 |
|
|
1,288,106 |
|
|
2,495,939 |
|
|||
EBITDA |
|
(1,996,286 |
) |
|
(2,205,849 |
) |
|
(7,828,366 |
) |
|
(8,587,908 |
) |
|||
Stock compensation |
|
238,840 |
|
|
151,220 |
|
|
793,229 |
|
|
1,081,362 |
|
|||
PPP loan forgiveness |
|
- |
|
|
(912,475 |
) |
|
- |
|
|
(912,475 |
) |
|||
Impairment expense |
|
- |
|
|
- |
|
|
164,411 |
|
|
- |
|
|||
Adjusted EBITDA | $ |
(1,757,446 |
) |
$ |
(2,967,104 |
) |
$ |
(6,870,726 |
) |
$ |
(8,419,021 |
) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20221116005850/en/
Investor Contact:
Addo Investor Relations
lglassen@addo.com
424-238-6249
Media Contact:
brian@alliedesports.com
Source:
FAQ
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