In its quarterly report, Esports Entertainment group expressed concerns about its ability to continue operating as a going concern for at least one year. The company also disclosed that it is in default on certain debt covenants. To address these challenges, the CEO outlined plans to modify repayment terms and significantly reduce costs.
To improve liquidity and support growth initiatives, Esports Entertainment group is working with its lender on key modifications to the loan. The company intends to simplify its offerings in the esports space, focusing on SAAS-based technology, in-person tournaments, and its peer-to-peer wagering platform. By adopting an asset-light model, the company aims to leverage its esports assets more efficiently.
Esports Entertainment group plans to aggressively cut costs across its seven brands by eliminating duplicate functions and de-emphasizing non-core assets. These actions, combined with an amended marketing strategy and the implementation of efficient operating strategies, are expected to generate significant savings and drive progress towards profitability.
As a result of these changes and the focus on achieving break-even, Esports Entertainment group has revised its full-year revenue forecast to a range of $55.0m to $60.0m. The company acknowledges that there is still much work ahead to become a leaner organization and create greater value for partners and shareholders.
In the most recent quarter, revenue for Esports Entertainment group increased to $15.7m, primarily due to the impact of recent mergers and acquisitions in the online betting and gaming sector. However, total operating expenses also rose significantly, leading to a widened operating loss.
For the nine months ending March 31, 2022, Esports Entertainment group reported a substantial increase in revenue compared to the previous year. However, operating costs also increased, resulting in a larger operating loss. The company is addressing near-term challenges to overcome constraints on growth and aims to drive bottom-line growth in the future.
