SharpLink Gaming Announces 2023 Year-End Results

Rhea-AI Summary

SharpLink Gaming, Inc. (SBET) reports a 42% increase in revenues from continuing operations on a year-over-year basis, with total revenues reaching $4,952,725. The company's Affiliate Marketing Services segments in the U.S. and internationally saw significant growth, with gross profit increasing by 17%. Despite a net loss decrease of 20%, SharpLink sold its Sports Gaming Client Services and SportsHub Gaming Network segments to RSports Interactive for $22.5 million, eliminating all interest-bearing debt.

Positive

• Total revenues from continuing operations rose by 42% to $4,952,725 from $3,489,948.
• Affiliate Marketing Services - International segment achieved revenues of $4,198,279, up 22%.
• Revenues from the Affiliate Marketing Services - United States segment climbed by 1112% to $754,446.
• Gross profit from continuing operations increased by 17% to $1,532,663.
• Net loss from continuing operations decreased by 20% to $11,248,598.
• SharpLink sold its Sports Gaming Client Services and SportsHub Gaming Network segments to RSports Interactive for $22.5 million.
• The company retired approximately $19.4 million in outstanding debt obligations.
• SharpLink is now debt-free and focused on growth opportunities.

Negative

• Gross profit margin declined to 31% from 38% due to higher marketing costs.
• -

Insights

Market Research Analyst

The 42% increase in revenues from continuing operations reported by SharpLink Gaming, Inc. is a strong indicator of the company's growth, particularly in the context of the online marketing industry which is known for its competitiveness and rapid evolution. The significant 1112% uptick in the Affiliate Marketing Services – United States segment suggests a successful expansion strategy in the U.S. market, likely reflecting the ongoing legalization and growth of sports betting and iGaming sectors in the region. This could be seen as a positive signal to investors about the company's ability to capitalize on new market opportunities.

However, the decline in gross profit margin from 38% to 31% should not be overlooked. This contraction could be attributed to the increased marketing expenses aimed at gaining market share and driving traffic, which while necessary for growth, can impact profitability. Investors might be concerned about the company's ability to manage costs effectively while scaling up operations.

The reported net loss decrease of 20% is a double-edged sword. On one hand, it shows an improvement in controlling losses; on the other, it still reflects a company that is not yet profitable. The sale of business segments and the retirement of debt are strategic moves that have left SharpLink free of interest-bearing debt, which is typically favorable for the company's financial health and could be reassuring for investors wary of high leverage ratios.

Financial Analyst

The all-cash transaction from the sale of SharpLink's Sports Gaming Client Services and SportsHub Gaming Network segments for $22.5 million is a transformative event for the company. This move not only provided liquidity but also allowed for the retirement of $19.4 million in debt. A balance sheet free from interest-bearing debt enhances financial flexibility and reduces risk, potentially leading to a re-rating of the company's stock by the market. It is important to examine how these proceeds are allocated towards growth initiatives, as this will be critical in evaluating the company's future earnings potential.

SharpLink's strategy to concentrate on growth opportunities after its domestication merger indicates a shift in focus towards core competencies and markets with higher growth prospects. This could be a positive development, as it suggests a streamlined business model aimed at creating shareholder value. However, investors should be vigilant about how the company plans to achieve profitability and whether it can maintain revenue growth without compromising margins.

Legal and Regulatory Expert

The financial results of SharpLink Gaming, Inc. must be considered in light of the regulatory environment surrounding the sports betting and iGaming industries. The remarkable growth in the U.S. segment is likely tied to the changing legal landscape, which is progressively allowing for online betting in more states. Companies operating in this space must navigate a complex web of regulations and SharpLink's ability to do so successfully is implied by its revenue growth.

Moreover, the completion of SharpLink's domestication merger may have implications for regulatory compliance, tax strategy and corporate governance. Such structural changes are often undertaken to optimize a company's operations within the regulatory framework. Investors should be aware that while the merger could streamline operations, it also requires careful monitoring to ensure continued compliance with laws and regulations, especially in a fast-changing industry like iGaming.

Revenues from Continuing Operations Increase 42% on Year-Over-Year Basis

MINNEAPOLIS, April 01, 2024 (GLOBE NEWSWIRE) -- SharpLink Gaming, Inc. (Nasdaq:SBET) ("SharpLink" or the "Company"), an online performance-based marketing company serving the U.S. sports betting and iGaming industries, today announced its financial results for the year ended December 31, 2023.

Comparative Year-Over-Year Financial Highlights for Continuing Operations

• Total revenues from continuing operations rose 42% to $4,952,725 from $3,489,948.  
  
  
  • Affiliate Marketing Services – International segment achieved revenues of $4,198,279 – up 22% from $3,427,698.
    
    
  • Revenues from the Company’s Affiliate Marketing Services – United States segment climbed 1112% to $754,446 from $62,250.
    
    
• Gross profit from continuing operations increased 17% to $1,532,663 from $1,316,113; however, due to higher marketing costs associated with engagement of Search Engine Optimization and programmatic advertising campaigns used to drive traffic to our direct-to-player sites in the U.S., gross profit margin declined to 31% from 38%.
  
  
• Net loss from continuing operations totaled $11,248,598, a 20% decrease when compared to $14,095,646.
  

As previously announced, on January 18, 2024, SharpLink sold all of the issued and outstanding shares of common stock and membership interests in an equity sale of our Sports Gaming Client Services and SportsHub Gaming Network business segments to RSports Interactive for $22.5 million in an all-cash transaction. Consequently, the historical results for these segments have been reflected as discontinued operations in the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the years ended December 31, 2023 and 2022. The Company, as previously disclosed, used a portion of the proceeds from the equity sale to retire approximately $19.4 million, in aggregate, in outstanding debt obligations. SharpLink is currently free of all interest-bearing debt. For more detailed information on SharpLink’s 2023 financial performance, please refer to Form 10-K filed with the U.S. Securities and Exchange Commission and accessible at www.sec.gov or on SharpLink’s website at www.sharplink.com.

Rob Phythian, Chairman and Chief Executive Officer of SharpLink, stated, “With the completion of the sale of our free-to-play sports games development and fantasy sports businesses in January 2024, followed shortly thereafter by the completion of our domestication merger in February 2024, SharpLink is now in a much better financial position and free to concentrate on growth opportunities that will allow us to make progress towards our long-term goal of creating enduring shareholder value.”

About SharpLink Gaming Ltd.

Headquartered in Minneapolis, Minnesota, SharpLink is a trusted marketing partner to leading sportsbooks and online casino gaming operators worldwide. Through its iGaming affiliate marketing network, known as PAS.net, SharpLink focuses on driving qualified traffic and player acquisitions, retention and conversions to U.S. regulated and global iGaming operator partners worldwide. In fact, PAS.net won industry recognition as the European online gambling industry’s Top Affiliate Website and Top Affiliate Program for four consecutive years by both igamingbusiness.com and igamingaffiliate.com. SharpLink also owns and operates a portfolio of direct-to-player, state-specific, affiliate marketing websites designed to attract, acquire and drive local sports betting and online casino gaming traffic to its valued partners which are licensed to operate in each respective state. For more information, please visit www.sharplink.com.

Forward-Looking Statements

This release contains forward-looking statements that are subject to various risks and uncertainties. Such statements include statements regarding the expected growth in the online betting and iGaming industries, the Company’s ability to grow its business, the potential benefits of the Company’s products, services and technologies and other statements that are not historical facts, including statements which may be accompanied by the words “intends,” “may,” “will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,” “believes,” “hopes,” “potential” or similar words. Actual results could differ materially from those described in these forward-looking statements due to certain factors, including without limitation, the Company's ability to achieve profitable operations, government regulation of online betting, customer acceptance of new products and services, the demand for its products and its customers' economic condition, the impact of competitive products and pricing, the lengthy sales cycle, proprietary rights of the Company and its competitors, general economic conditions and other risk factors detailed in the Company's annual report and other filings with the United States Securities and Exchange Commission. The Company does not undertake any responsibility to update the forward-looking statements in this release.

CONTACT INFORMATION:

INVESTOR AND MEDIA RELATIONS
ir@sharplink.com

FAQ

What was the percentage increase in total revenues from continuing operations for SharpLink Gaming, Inc. (SBET)?

Total revenues rose by 42% to $4,952,725 from $3,489,948.

How much did the Affiliate Marketing Services - International segment generate in revenues?

The International segment achieved revenues of $4,198,279, up 22%.

What was the percentage increase in revenues for the Affiliate Marketing Services - United States segment?

Revenues from the U.S. segment climbed by 1112% to $754,446.

What was the percentage increase in gross profit from continuing operations?

Gross profit increased by 17% to $1,532,663.

How much was the net loss from continuing operations for SharpLink Gaming, Inc. (SBET)?

Net loss decreased by 20% to $11,248,598.

What was the amount SharpLink received for selling its Sports Gaming Client Services and SportsHub Gaming Network segments?

SharpLink sold the segments to RSports Interactive for $22.5 million.

How much debt did SharpLink retire after the equity sale?

The company retired approximately $19.4 million in outstanding debt obligations.

Is SharpLink Gaming, Inc. (SBET) currently debt-free?

Yes, SharpLink is now debt-free and focused on growth opportunities.