AESE, a prominent player in the esports industry, experienced a substantial growth of 182.4% in the third quarter of 2021 compared to the same period in 2020. This surge was attributed to the resumption of in-person operations as Covid-19 restrictions eased. During this quarter, AESE successfully launched a total of 110 events, including 39 proprietary events and 71 events organized for third parties. The bookings for third-party events witnessed a remarkable increase of 51.0% compared to the previous quarter, primarily driven by an 89.0% rise in events held at the renowned HyperX Esports Arena in Las Vegas.
Moreover, there was a noteworthy 24% rise in the number of players participating in both online and in-person tournaments in the third quarter, further highlighting the growing popularity of esports. This impressive performance contributed to AESE’s overall revenue for the year, which reached $3.0m, indicating a significant year-on-year increase of 32.3%.
Libing (Claire) Wu, AESE’s CEO, expressed satisfaction with the third quarter’s accomplishments, emphasizing the strong growth of their esports business. Wu attributed this success to the resumption of in-person events in the United States as the economy reopened and foot traffic in Las Vegas steadily increased, leading to the return of live entertainment events.
The revenue distribution for the quarter demonstrated that the majority of earnings, totaling $1.4m, came from in-person attendance, experiencing a remarkable surge of 144.4% compared to the third quarter of 2020. The remaining revenue of $229,961 was generated through multiplatform content, reflecting a significant increase of $229,010. AESE’s engagement strategy on Twitch, including a 24-hour content stream that garnered 3.2 million views, resulted in a 24% rise in followers during the third quarter.
On the financial front, AESE experienced a rise in costs and expenses, reaching $5.6m, indicating a 27.3% increase. The largest outgoing costs were related to general and administrative expenses, totaling $3.1m, which grew by 40.3% compared to the previous year. In-arena operation costs amounted to $1.2m, witnessing a considerable increase of 95.1%. However, depreciation and amortization expenses decreased by 10.9% to reach $806,137. Stock-based compensation also decreased from $508,268 in Q3 2020 to $151,220 in Q3 2021. Selling and marketing expenses grew by 66.2% to $87,755, while other operating expenses increased by 8.3% to $37,462. Additionally, multiplatform content incurred costs of $87,373, with no comparative figure available for Q3 2020.
Consequently, the total operating loss for the quarter amounted to $3.9m, representing a further decrease of $115,738 compared to the previous year. However, other financial items, including a gain of $912,475 from forgiveness of payment protection program loans, alleviated Allied’s overall losses. Together with other income of $54,434, as opposed to a loss of $2,973 in the prior year, these factors offset interest expenses of $11,809, leading to a decrease in the loss from continuing operations to $2.9m, down by 57.7% year-on-year. Continuing operations were also affected by a loss of $3.5m from discontinued operations.
Nonetheless, AESE benefited from the substantial gains resulting from the $105.0m sale of its poker business, World Poker Tour, to Element Partners. This transaction generated additional income of $80.4m, significantly boosting AESE’s income from discontinued operations to a total of $77.2m, marking a remarkable year-on-year increase of $76.7m. Consequently, the total net income for the third quarter amounted to an impressive $74.3m, in stark contrast to a loss of $6.5m recorded in Q3 2020.
In the aftermath of the successful World Poker Tour transaction, AESE has been actively exploring opportunities to invest its cash and seeking strategic alternatives for its esports business. The aim is to maximize value for AESE shareholders, and progress continues to be made in this regard.
