Allied Gaming & Entertainment Announces Fourth Quarter and Full Year 2023 Financial Results
- Revenues increased by 21% in 2023, reaching $7.7 million.
- Costs and expenses decreased by 21% in 2023.
- Net loss was $3.6 million in 2023 compared to $10.8 million in 2022.
- AGAE had a cash position of $78.6 million as of December 31, 2023.
- Key corporate developments include strategic investments in Z-Tech and Elite Fun Entertainment Co. , as well as the formation of Skyline Music Entertainment.
- None.
Insights
The reported increase in revenues by 21% for Allied Gaming & Entertainment, Inc. in 2023 compared to the previous year indicates an upward trajectory in the company's financial performance. This growth is particularly notable given the renewal of a naming rights agreement and the strategic investment in Z-Tech, which contributed to two months of revenue. From a financial perspective, the company's ability to reduce costs and expenses by 21% while growing revenue is a positive sign, showcasing efficient cost management and potentially increased operational leverage.
However, the net loss of $3.6 million, despite being an improvement from the previous year's $10.8 million, still raises concerns about the company's path to profitability. Investors should consider the sustainability of the revenue streams and whether the cost reductions are a result of one-time benefits, like the Employee Retention Credit, or indicative of a longer-term trend. The Adjusted EBITDA loss reduction from $8.6 million to $4.6 million is encouraging, but it's essential to analyze the quality of EBITDA improvements and the underlying drivers.
The cash and short-term investments position decreased from $86.8 million to $78.6 million year-over-year, which could be a point of focus for investors. The working capital position also saw a decrease, which might impact the company's financial flexibility. The share repurchase under the 2022 Stock Repurchase Plan indicates confidence by management in the company's valuation and prospects.
The esports and entertainment sectors have been experiencing significant growth and Allied Gaming & Entertainment's strategic initiatives seem to align with this trend. The integration of Z-Tech and the expansion in Asia through Allied Experiential Entertainment signal a focus on diversifying and tapping into new markets. The strategic investment by Elite Fun Entertainment Co. Ltd. and the formation of Skyline Music Entertainment joint venture could provide the company with a stronger foothold in the Asian entertainment market, which is known for its rapid expansion and high consumer engagement.
It's important to assess the competitive landscape and consumer trends in the esports and mobile gaming industries to understand the potential for AGAE's growth. The increase in proprietary and third-party events produced in the fourth quarter suggests robust demand for the company's offerings, but it's important to evaluate the long-term sustainability of event-driven revenue, especially in a market that is becoming increasingly crowded with competitors.
Investors should also consider the implications of the company's strategic investments and partnerships for future revenue streams. Expansion into new markets comes with risks, such as cultural differences and regulatory challenges, which could affect the company's performance. The strategic investments and partnerships could be pivotal in driving growth, but they also require careful monitoring to ensure they deliver the expected synergies and returns.
The increase in legal and professional fees by $0.4 million due to normal business matters and strategic investments, including the investment in Z-Tech, suggests that AGAE is actively engaging in complex transactions that may involve cross-border legal considerations. Investors should be aware of the potential legal complexities associated with international expansion, such as compliance with foreign laws, intellectual property rights and potential litigation risks.
Additionally, the company's involvement in forming joint ventures and strategic investments could lead to complex contractual arrangements that might have implications for future earnings and liabilities. It's essential for investors to understand the legal framework under which these ventures operate, as well as the terms of these investments to gauge potential exposure to legal risks.
The stock repurchase plan indicates a potential strategy to increase shareholder value, but it also needs to be evaluated in the context of the company's overall capital allocation strategy. Share repurchases can signal management's confidence in the company but should be balanced against the need for capital to fund growth initiatives and maintain a healthy balance sheet.
“We made substantial progress during fiscal year 2023 and have entered fiscal year 2024 in a position of strength. Allied Esports International ('AEI'), Allied Mobile Entertainment ('AME'), and Allied Experiential Entertainment ('AEE') are all poised for growth as we execute on our strategic objectives this year,” said Yinghua Chen, the Company’s Chief Executive Officer. “With Beijing Lianzhong Zhihe Technology Co. ('Z-Tech') now integrated into our business, AEE finalizing events and expanding its presence in
Full Year 2023 Financial Results
Revenues: Total revenues of
Costs and expenses: Total costs and expenses were
Net loss (including the amount attributable to non-controlling interests) was
Adjusted EBITDA loss was
Fourth Quarter 2023 Financial Results
Revenues: Total revenues of
Costs and expenses: Total costs and expenses for the fourth quarter of 2023 were
Net loss (including the amount attributable to non-controlling interests) was
Adjusted EBITDA loss was
Balance Sheet
As of December 31, 2023, the Company had a cash and short-term investments position of
Operational Update
Allied Esports produced 64 events in the fourth quarter of 2023, with 30 proprietary events and 34 third-party events. Third-party events were highlighted by Omen Showcase Party; World Esports Day – TwitchCon Afterparty; EA Sports F1 23 Las Vegas Showrun; and All MLB Team Awards Show.
Corporate Developments
In November, AGAE closed on its strategic investment in Z-Tech, a prominent developer and operator of casual mobile games. As of October 31, 2023, AGAE has assumed a controlling interest in the Board for purpose of financial statement consolidation and became the largest shareholder of Z-Tech.
In December, Elite Fun Entertainment Co. Ltd., a premier player in the Greater Bay Area cultural and entertainment industry, agreed to a strategic investment in AGAE. The partnership marks the beginning of a dynamic collocation aimed at maximizing mutual benefits for expanding in the burgeoning market of live entertainment in
Also in December, AGAE announced the formation of Skyline Music Entertainment, a joint venture based in
Fourth Quarter and Full Year 2023 Conference Call
The Company will host a conference call today at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to discuss its fourth quarter and full year 2023 financial results. Participants may join the conference call by dialing 1-877-407-0792 (
A live webcast of the conference call will also be available on Allied Gaming & Entertainment’s Investor Relations site here. Additionally, financial information presented on the call will be available on Allied Gaming & Entertainment’s Investor Relations site. For those unable to participate in the conference call, a telephonic replay of the call will also be available shortly after the completion of the call, until 11:59 p.m. ET on Wednesday, April 10, 2024, by dialing 1-844-512-2921 (
About Allied Gaming & Entertainment
Allied Gaming & Entertainment Inc. (Nasdaq: AGAE) is a global experiential entertainment company focused on providing a growing world of gamers with unique experiences through renowned assets, products and services. For more information, visit alliedgaming.gg.
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 and non-recurring charges, such as stock-based compensation, business acquisition transaction costs and impairment expense.
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. The inclusion of such information should not be regarded as a representation by the Company, or any person, that the objectives of the Company will be achieved. Important factors, among others, that may affect actual results or outcomes include: risks associated with the future direction or governance of the Company; our ability to execute on our strategic and business plans; the substantial uncertainties inherent in the acceptance of existing and future products and services; the ability to retain key personnel; potential litigation; general economic and market conditions impacting demand for our services; our inability to enter into one or more future acquisition or strategic transactions; 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 AGAE 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 December 31, 2023, as filed with the SEC on March 27, 2024, as amended, as well as subsequent reports we file with the SEC. Readers are also urged to carefully review and consider the various disclosures we made in such Annual Report on Form 10-K and in subsequent reports with the SEC.
| ALLIED GAMING & ENTERTAINMENT INC. AND SUBSIDIARIES | ||||||||
| Consolidated Balance Sheets | ||||||||
December 31, |
||||||||
2023 |
|
2022 |
||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ |
16,320,583 |
|
$ |
11,167,442 |
|
||
| Short-term investments |
|
56,500,000 |
|
|
70,000,000 |
|
||
| Interest receivable |
|
792,223 |
|
|
677,397 |
|
||
| Accounts receivable |
|
529,369 |
|
|
72,739 |
|
||
| Deposits, current portion |
|
3,700,000 |
|
|
- |
|
||
| Prepaid expenses and other current assets |
|
498,886 |
|
|
459,274 |
|
||
| Total Current Assets |
|
78,341,061 |
|
|
82,376,852 |
|
||
| Restricted cash |
|
5,000,000 |
|
|
5,000,000 |
|
||
| Property and equipment, net |
|
3,834,193 |
|
|
4,005,622 |
|
||
| Digital assets |
|
49,300 |
|
|
49,761 |
|
||
| Intangible assets, net |
|
6,254,731 |
|
|
22,836 |
|
||
| Deposits, non-current portion |
|
392,668 |
|
|
379,105 |
|
||
| Operating lease right-of-use asset |
|
5,415,678 |
|
|
5,845,549 |
|
||
| Goodwill |
|
12,729,056 |
|
|
- |
|
||
| Other assets |
|
- |
|
|
49,950 |
|
||
| Total Assets | $ |
112,016,687 |
|
$ |
97,729,675 |
|
||
| Liabilities and Stockholders' Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ |
371,830 |
|
$ |
317,561 |
|
||
| Accrued expenses and other current liabilities |
|
763,512 |
|
|
1,645,379 |
|
||
| Deferred revenue |
|
103,748 |
|
|
108,428 |
|
||
| Operating lease liability, current portion |
|
1,482,977 |
|
|
1,227,164 |
|
||
| Loans payable |
|
9,230,168 |
|
|
- |
|
||
| Total Current Liabilities |
|
11,952,235 |
|
|
3,298,532 |
|
||
| Operating lease liability, non-current portion |
|
5,560,251 |
|
|
6,527,075 |
|
||
| Deferred tax liability |
|
1,096,160 |
|
|
- |
|
||
| Total Liabilities |
|
18,608,646 |
|
|
9,825,607 |
|
||
| Commitments and Contingencies (Note 12) | ||||||||
| Stockholders' Equity | ||||||||
| Preferred stock, |
|
- |
|
|
- |
|||
| Common stock, |
|
3,909 |
|
|
3,909 |
|
||
| Additional paid in capital |
|
198,677,132 |
|
|
198,526,614 |
|
||
| Accumulated deficit |
|
(113,671,029 |
) |
|
(110,235,568 |
) |
||
| Accumulated other comprehensive income |
|
305,991 |
|
|
219,675 |
|
||
| Treasury stock, at cost, 2,279,784 and 581,746 shares at December 31, 2023 and 2022, respectively |
|
(2,693,653 |
) |
|
(610,562 |
) |
||
| Total Allied Gaming & Entertainment Inc. Stockholders' Equity |
|
82,622,350 |
|
|
87,904,068 |
|
||
| Non-controlling interest |
|
10,785,691 |
|
|
- |
|
||
| Total Stockholders' Equity |
|
93,408,041 |
|
|
87,904,068 |
|
||
| Total Liabilities and Stockholders' Equity | $ |
112,016,687 |
|
$ |
97,729,675 |
|
||
| ALLIED GAMING & ENTERTAINMENT INC. AND SUBSIDIARIES | ||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||
Three Months Ended |
|
For the Years Ended |
||||||||||||||
December 31, |
|
December 31, |
||||||||||||||
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||||
| Revenues: | ||||||||||||||||
| In-person | $ |
1,374,963 |
|
$ |
1,216,512 |
|
$ |
4,955,931 |
|
$ |
4,950,912 |
|
||||
| Multiplatform content |
|
68 |
|
|
428 |
|
|
2,000,586 |
|
|
1,401,558 |
|
||||
| Casual mobile gaming |
|
698,522 |
|
|
- |
|
|
698,522 |
|
|
- |
|
||||
| Total Revenues |
|
2,073,553 |
|
|
1,216,940 |
|
|
7,655,039 |
|
|
6,352,470 |
|
||||
| Costs and Expenses: | ||||||||||||||||
| In-person (exclusive of depreciation and amortization) |
|
793,058 |
|
|
992,298 |
|
|
2,684,287 |
|
|
3,777,231 |
|||||
| Multiplatform content (exclusive of depreciation and amortization) |
|
- |
|
|
14,056 |
|
|
1,517,707 |
|
|
1,034,942 |
|
||||
| Casual mobile games (exclusive of depreciation and amortization) |
|
593,894 |
|
|
- |
|
|
593,894 |
|
|
- |
|||||
| Research and development expenses |
|
162,888 |
|
|
- |
|
|
162,888 |
|
|
- |
|
||||
| Selling and marketing expenses |
|
53,758 |
|
|
49,199 |
|
|
226,745 |
|
|
234,813 |
|
||||
| General and administrative expenses |
|
1,908,601 |
|
|
2,012,228 |
|
|
7,569,154 |
|
|
10,774,421 |
|
||||
| Depreciation and amortization |
|
469,789 |
|
|
777,242 |
|
|
1,499,980 |
|
|
2,065,348 |
|
||||
| Impairment of digital assets |
|
- |
|
|
- |
|
|
- |
|
|
164,411 |
|
||||
| Impairment of property and equipment |
|
- |
|
|
67,500 |
|
|
- |
|
|
67,500 |
|
||||
| Total Costs and Expenses |
|
3,981,988 |
|
|
3,912,523 |
|
|
14,254,655 |
|
|
18,118,666 |
|
||||
| Loss From Operations |
|
(1,908,435 |
) |
|
(2,695,583 |
) |
|
(6,599,616 |
) |
|
(11,766,196 |
) |
||||
| Other Income: | ||||||||||||||||
| Other (expense) income, net |
|
30,730 |
|
|
198,868 |
|
|
46,684 |
|
|
153,009 |
|
||||
| Interest income, net |
|
792,103 |
|
|
755,209 |
|
|
2,957,571 |
|
|
789,302 |
|
||||
| Total Other Income (Expense) |
|
822,833 |
|
|
954,077 |
|
|
3,004,255 |
|
|
942,311 |
|
||||
| Net loss |
|
(1,085,602 |
) |
|
(1,741,506 |
) |
|
(3,595,361 |
) |
|
(10,823,885 |
) |
||||
| Net Loss per Common Share | ||||||||||||||||
| Basic and Diluted | $ |
(0.03 |
) |
$ |
(0.04 |
) |
$ |
(0.10 |
) |
$ |
(0.28 |
) |
||||
| Weighted Average Number of Common Shares Outstanding: | ||||||||||||||||
| Basic and Diluted |
|
37,218,708 |
|
|
39,071,501 |
|
|
37,218,708 |
|
|
39,071,501 |
|
||||
| ALLIED GAMING & ENTERTAINMENT INC. AND SUBSIDIARIES | |||||||
| Consolidated Statements of Comprehensive Loss | |||||||
For the Years Ended |
|||||||
December 31, |
|||||||
2023 |
|
2022 |
|||||
| Net Loss | (3,595,361 |
) |
(10,823,885 |
) |
|||
| Other comprehensive income (loss): | |||||||
| Foreign currency translation adjustments |
|
212,973 |
|
|
(49,931 |
) |
|
| Total comprehensive loss |
|
(3,382,388 |
) |
|
(10,873,816 |
) |
|
| Less: Net loss attributable to non-controlling interest |
|
(159,900 |
) |
|
- |
|
|
| Less: Other comprehensive loss attributable to non-controlling interest |
|
126,656 |
|
|
- |
|
|
| Comprehensive Loss Attributable to Common Stockholders | $ |
(3,349,143 |
) |
$ |
(10,873,816 |
) |
|
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 from net loss, AGAE’s most directly comparable financial measure calculated and presented in accordance with GAAP.
Three Months Ended
|
|
Years Ended
|
|||||||||||||
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||||||
| Net Loss Attributable to Common Stockholders | $ |
(1,085,602 |
) |
$ |
(1,674,006 |
) |
$ |
(3,595,361 |
) |
$ |
(10,823,885 |
) |
|||
| Interest income, net |
|
(792,103 |
) |
|
(755,209 |
) |
|
(2,957,571 |
) |
|
(789,302 |
) |
|||
| Depreciation and amortization |
|
469,789 |
|
|
777,242 |
|
|
1,499,980 |
|
|
2,065,348 |
|
|||
| EBITDA |
|
(1,407,916 |
) |
|
(1,651,973 |
) |
|
(5,052,952 |
) |
|
(9,547,839 |
) |
|||
| Stock compensation |
|
13,913 |
|
|
(1,920 |
) |
|
150,518 |
|
|
791,309 |
|
|||
| Business acquisition transaction costs |
|
- |
|
|
- |
|
|
173,938 |
|
|
- |
|
|||
| Impairment expense |
|
- |
|
|
- |
|
|
- |
|
|
164,411 |
|
|||
| Adjusted EBITDA | $ |
(1,394,003 |
) |
$ |
(1,653,893 |
) |
$ |
(4,728,496 |
) |
$ |
(8,592,119 |
) |
|||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240326207693/en/
Investor Contact:
Tyler Drew
Addo Investor Relations
agae@addo.com
310-829-5400
Source: Allied Gaming & Entertainment, Inc.
FAQ
What were AGAE's total revenues in 2023?
What was the net loss for AGAE in 2023?
What was AGAE's cash position as of December 31, 2023?
What were the key corporate developments announced by AGAE?
How did AGAE's costs and expenses change in 2023?
