Esports entertainment company Allied Esports Entertainment has announced record revenue in its latest earnings report. The business has seen its revenue jump a staggering 381% year-over-year to $2.4 million in Q1 2022, with momentum driven by increased foot traffic at the company’s HyperX Arena Las Vegas due to an increased number of events.
The business, which stages esports events and provides content to digital partners, has also seen “encouraging results” from other verticals within its multi-platform portfolio. These include sponsorship revenue from the launch of its first original branded content offering, as well as first-time Non-Fungible Token (NFT) sales. However, these achievements were not enough to revert losses in the period.
Despite the encouraging results, Allied Esports reported a net loss of $3.8 million during the quarter, widening a loss of $3.3 million in Q1 2021. Total costs and expenses for the period were $6.2 million, up 15% compared to last year, an increase primarily driven by more retail expenses due to the recovery of live in-person events.
Allied Esports is not the only esports entertainment business experiencing losses amid increases in spending on marketing and new deals. Esports Entertainment Group posted a net loss of $63.8 million in fiscal Q3 against $15.7 million in revenue; while Canadian operator Rivalry posted a net loss of $19.2 million in 2021 against $8.6 million in revenue.
The company also posted an adjusted EBITDA loss of $2.5 million for Q1 2022, which implied a reduction from a $3.3 million loss in the first quarter last year. However, Allied Esports managed to deliver its best quarterly performance of all time in terms of revenue during the period, and was able to culminate in positive adjusted EBITDA results in the month of March.
“I am very pleased with the operational performance of our Esports business, which generated record revenue and adjusted EBITDA during the quarter and has continued to gain momentum as we emerge from the pandemic and move to a more normalized environment,” commented on the first quarter 2022 results Lyle Berman, the Company’s Interim CEO.
According to the executive, the operational recovery the company is currently experiencing is helping drive “strong interest from outside parties” as Allied Esports moves ahead with a previously stated objective to pursue strategic alternatives for the esports operations, including a potential sale of the business.
The HyperX Arena saw an increased number of events during the period
“Concurrently, we continue to make progress in our ongoing efforts to invest the cash on our balance sheet to acquire or merge with an existing business,” Berman added. At the end of the first quarter, the company’s cash balance totaled nearly $96 million, including restricted cash.
During the period, Allied Esports’ content division, AE Studios, launched its first original branded content offering, ELEVATED Presented by Progressive Insurance. The offering is described as “a new live and interactive show on Twitch that gives streamers exposure and awareness to a larger audience.” The initial run of ELEVATED -currently in development on its second season- delivered over 10 million live views and 3 million VOD views.
Also during the quarter, the company’s first NFT collection, EPICBEAST, minted 1,958 NFTs on the Ethereum Blockchain. This move is “propelling Allied Esports into the next evolution of the Internet, Web3,” which leverages digital ownership powered by blockchain technology in the development, activation, rewarding and monetization of communities.
But also as important, during the period, Allied Esports produced 92 events with 68 proprietary events and 24 third-party productions across its North American and European business units. Notably, proprietary and third-party events at HyperX Arena Las Vegas were up 56%, with total in-arena tournament entries up 42% versus the fourth quarter of 2021.
The UNLEASH THE BEAST! party was everything we could’ve hoped for and more all thanks to all of you, the HORDE! 🙏 #ForTheHorde
Take a look at some of the memories that made that EPIC night!❤️#EPICBEAST #EPICBEASTnft #NFT #NFTCommunity pic.twitter.com/w2SDeN40da
— EPICBΞAST (@EPICBEASTnft) June 1, 2022
It was also during Q1 2022 that Allied Esports announced a partnership with NASCAR to execute the eNASCAR Arcade at 17 NASCAR Cup Series events in 2022, with five events having taken place during the first quarter. The activations provide attendees with “a unique racing experience” as they get the chance to race at NASCAR tracks via an iRacing simulator.
“We remain focused on finding the best opportunity available to maximize value for our shareholders,” further commented Berman. “While we are limited in what we can currently disclose about the process, I look forward to providing the market with an update on our progress at the appropriate time.”
As announced in late 2021, Allied Esports has engaged investment banking firm The Benchmark Company to serve as the business’ exclusive financial advisor in connection with a potential business combination transaction. The move would follow the sale of Allied Esports’ poker assets, including the World Poker Tour, which was acquired by Element Partners last July for $105 million following a lengthy bidding war.
“The company has reviewed a number of potential target investment opportunities over the past several months, and due diligence, as well as the continued sourcing of other opportunities, remains ongoing,” Allied Esports stated in an update. The company intends to provide further updates “in due course when appropriate,” while it also remains in the process of exploring “strategic options” for the esports business.
