Esports Entertainment reports liquidity concerns after $38.6m impairment charge

Esports Entertainment has published its Q3 2022 results, reporting revenue increases alongside liquidity concerns following a $38.6m impairment charge.
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Esports Entertainment Group (EEG) has published its Q3 2022 financial results, reporting revenue increases alongside liquidity concerns following a $38.6m impairment charge.

CEO Grant Johnson noted that revenue increases per quarter and year-over-year were accomplished due to a ‘more normalized operating environment’ during the measuring period. He added that the results ‘illustrate growing top-line momentum’ across its igaming and esports verticals.

Reporting its Q3 results, ending March 31, 2022, EEG declared a net revenue of $15.7m, a $10.3m growth YoY (Q3 2021: $5.4m), and an 8% increase on the previous quarter (Q2 2022 $14.5m) despite the ‘near-term challenges’ that have affected its bottom line.

Johnson commented: “On the igaming front, we generated record-breaking quarterly revenue at Lucky Dino, one of our proprietary igaming brands, experienced more balanced sportsbook hold, and improved the overall profitability of the business, reflecting initial benefits from our newly implemented efficient marketing strategy.

“With respect to esports, the market continues to recover from the impact of the pandemic as more live, in-person events return to calendars worldwide.”

During the quarter, EEG launched its wagering platform at the Hard Rock in Atlantic City, as well as its mobile real money esports betting product,, in New Jersey. The group is also seeing a ‘healthy interest’ in its ALPHA and OMEGA turnkey solutions.

However, as previously mentioned, EEG has reported liquidity concerns following a $38.6m impairment charge due to ‘near-term challenges’ impacting its bottom line and its ability to grow the business.

“Given our lack of liquidity, we have been unable to fully monetize certain of our esports assets – including Helix, ggCircuit, and EGL. As a result, we are taking a $38.6m impairment charge in the quarter across these three businesses,” noted Johnson.

“We do not see a path to attractive profitability in the Helix business given its significant overhead and ongoing capex and are currently working to divest our two existing centers. ggCircuit and EGL are two assets which we have not effectively been able to monetize due to liquidity constraints.”

The CEO continued: “To address our liquidity position and improve our ability to invest in the business and adequately support our growth initiatives, we are actively working with our lender on key modifications to the loan and hope to have more to share on this front in the near-term.”

EEG reported a total operating expenditure for Q3 of $66.3m (impairment and business costs), declaring a loss of $50.6m. The group’s corporate cash balance came in at $9.4m (June 2021: $19.9m) with its asset value standing at $85.7m (June 2021: $119.7m).

Looking ahead, EEG stated that its focus would be on achieving aggressive cost savings across its group structure, revising expenditure on both esports and igaming verticals.

As a result, Johnson stated it is ‘prudent’ to update the group’s 2022 full-year revenue expectations to a range of $55m to $60m from the prior $70m to $75m range.

He concluded: “As we look ahead, the building blocks for further growth remain firmly in place. However, today’s market conditions are different and, as such, our team has adjusted to focus on achieving breakeven as quickly as possible.”

“While we have come a long way in a short period of time, there is much work ahead of us as we become a leaner organization that can operate more efficiently and create greater value for our partners and shareholders.”