Esports Entertainment Group suffers serious EBTIDA and cashflow downturns in Q2 2022
Operator posts quarter-on-quarter revenue slip as net losses continue to mount and cashflow restricts
Esports Entertainment Group (EEG) has posted $14.5m (£10.7m) in revenue for Q2 2022 but has experienced significant EBITDA and cashflow losses due to a series of mitigating circumstances. The esports-centric operator recorded more than a 500% year-on-year (YoY) increase in revenue owing to the fact the firm’s Q2 2021 reporting period coincided with one of its first quarters of operation. However, quarter-on-quarter, revenue slipped 11.4% compared to revenue of $16.4m in Q1 2022. EBITDA losses continued to mount as the group posted a $6.8m loss for Q2 2022, a further downturn on the $4.3m loss in Q1 2022 and the $3.8m loss for Q2 2021. Year-on-year net losses leapt from $7.3m to $34.3m in Q2 2022 while as of 31 December 2021, EEG had had total cash and cash equivalents of just $1m. As a result of the downturn in the reporting period, EEG said it had realigned its full-year revenue expectation to a range of $70m to $75m. Touching on the difficult quarter, EEG CEO Grant Johnson said regulatory changes, sportsbook difficulties and ongoing Covid-19 issues all played a part. Johnson said: “Our fiscal second quarter results reflect a variety of challenges largely outside of our control, which together drove our first quarter-over-quarter revenue decline in more than a year. “First, a significant change in the Netherlands regulatory environment led us to make the strategic decision to exit the country’s igaming and online sports betting market at the start of the quarter. “Second, our online sportsbook business in Europe experienced historically low hold which, while in-line with the broader European and US market, resulted in a material decline in sportsbook revenue. “Third, the ongoing issues with the global pandemic and rise of the Omicron variant during the latter part of the quarter impacted our esports business, including the delay of our LANDuel launch and the opening of our Helix esports centre in California,” he added. EEG’s share price was down 8.62% today to $2.97.