Esports Entertainment Group plans to sell assets to offset financial challenges
Following a challenging fiscal quarter, Esports Entertainment Group is planning to sell some of its assets to keep itself afloat long-term.
The challenges: Esports Entertainment Group may have bitten off more than it can chew.
- The company is planning to simplify its esports offering, focusing on the technology provided by software suite ggCircuit, in-person tournaments under the EGL banner, and its betting platform Vie.gg. This simplification includes "aggressively" cutting costs across all of the companies it owns.
- Esports Entertainment Group is working to divest the two Helix centers it currently owns and operates as it does not "see a path to attractive profitability" in the business due to its "significant overhead."
- Other companies such as ggCircuit and tournament operator EGL have been tough work for the company to monetize and, as such, it's looking to forecast the long-term opportunity for the businesses to "better establish their carrying value." In 2021, it acquired Helix eSports and ggCircuit for $43M and EGL for $5.5M.
The finances: These changes were announced alongside the company's latest financial results.
- For the three months ending March 21, 2022, EEG generated net revenue of $15.7M. This is almost three times as much as the revenue it brought in in the same period the year prior.
- Operating expenses, however, also increased dramatically. In the most recent fiscal quarter, the company has an operating loss of $50.6M — up from $5.6M the previous year.
- All-in-all, EEG reported a net loss of $63.6M for the quarter. It posted a net loss of $12.4M in 2021 for the same period.
- “As we look ahead, the building blocks for further growth remain firmly in place," said Esports Entertainment Group CEO Grant Johnson. "However, today’s market conditions are different and, as such, our team has adjusted to focus on achieving breakeven as quickly as possible.