Revenue at Esports Entertainment Group (EEG) was down 60.6% for full-year 2023 ended 30 June, although the business managed to reduce its expenses and net loss significantly.
EEG published a strategic update yesterday (16 October) detailing its activities throughout the financial year. This included a brief financial update.
The 12 months ended 30 June were rocky for EEG, following a financially difficult 2021. In October 2022, its future lay in the hands of a creditor after EEG defaulted on convertible notes issues in 2021. These notes had a principal value of $35.0m. In December, EEG then considered abandoning igaming altogether and also confirmed the exit of former CEO Grant Johnson. That same month, it narrowly escaped delisting from the Nasdaq stock exchange.
More exits came in January 2023, with Daniel Mathews resigning from the positions of CFO and COO. Later in the month former CEO Johnson launched a lawsuit against EEG, claiming his dismissal from the company had infringed upon his employment contract.
EEG announced the sale of its Bethard online casino and sportsbook business in February, with the sale totalling at €9.5m. April saw newly-appointed CEO Alex Igelman outline EEG’s B2C expansion and confirm divestment plans and also saw EEG enter an agreement to exchange much of its debt with company stock.
Financial update
Total revenue for FY23 totalled $23.0m (£18.9m/€21.8m), compared to $58.4m for 2022. But the cost of revenue declined overall, landing at $8.8m, a fall of 63.6%.
Sales and marketing expenses were minimised the furthest, tumbling 77.0% to $5.9m. General and administrative expenses came to $28.9m for the year, declining by 43.6%. Net loss totalled at $32.2m, a stark contrast from the $102.2m loss recorded in EEG’s 2022 financial year.
Igelman said EEG had undertaken a number of strategic decisions that he hopes will strengthen the company moving forward.
“Over recent months, the company has undertaken a comprehensive examination of our organisation, focusing on the anticipated trajectory of the esports and igaming sectors,” explained Igelman. “Through this process, we conducted a deep dive into our business from top to bottom and pinpointed operations and contracts that weren’t profitable, leading to decisive actions that have set us up for a promising future.
“Although the restructuring came with one-time expenses, we are confident that the long-term advantages will significantly outweigh these costs.”
Ongoing focus on initiatives
He added that EEG expects a $4m reduction in annual operating expenses moving forward and says the company reduced total liabilities by an estimated $51.8m since January this year.
Igelman continued by explaining EEG’s “recent focus” – developing initiatives related to its esports and igaming offerings.
“Overall, we believe the company-wide initiatives we have undertaken this year will place us in a stronger financial position and at the forefront of the rapidly growing esports wagering market which is poised to grow significantly by 2025,” Igelman continued.
“As a result, I could not be more excited by the outlook for our business.”
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