Allied Esports Reported Second Quarter Net Loss of $10.9M

Premier esports entertainment company Allied Esports announced its second-quarter financial results, August 10, posting a net loss of $10.9 million for the three months ending June 30. The net loss figure includes a one-time non-cash conversion inducement expense of $5.2 million related to recent debt refinancing and is nearly three times higher than the $2.8 million net loss for the second quarter of 2019.

Material Impact from the Virus Outbreak

Allied Esports’ total revenues for the quarter fell by 38%, from $7.3 million in Q2 2019 to $4.6 million for the three months ending June 30, 2020, mainly due to the drop in revenues from the in-person and multiplatform content divisions.

“Throughout the second quarter, we continued to operate in an extremely challenging environment arising from the ongoing COVID-19 pandemic.”

Frank Ng, CEO, Allied Esports

In-person generated just below $700,000, down from $3.22 million year-on-year, while multiplatform content fell to just above $700,000, from $1.74 million for the same period the year before, as both verticals were materially impacted by the outbreak of the virus.

The drop in revenue from in-person was related to the temporary closure of the HyperX Esports Arena at the Luxor Hotel & Casino in Las Vegas throughout most of the second quarter, as well as in-person events from the World Poker Tour (WPT) that were either canceled or postponed due to the virus-related restrictions.

Allied Esports experienced a decrease in the multiplatform content revenue mostly due to a true-up on music royalties in the previous quarters, and the lower sponsorship revenue resulting from the postponement of the WPT final tables.

Interactive services, posted 33% growth, from $2.38 million for Q2 2019 to $3.18 million in Q2 2020, partly offsetting the loss in revenue from the other two verticals. The increase in revenue was spearheaded by ClubWPT subscriptions and virtual chip purchases, as well as the launch of the new premium ClubWPT Diamond level, which stirred interest that exceeded the company’s expectations.

Total costs for the company in the quarter fell 7%, to $9.35 million from $10.08 million for the second quarter last year, due to a decrease in both in-person and multiplatform expenditure, but was offset by the increase in interactive services. General and administrative expenses also fell slightly, to $3.67 million compared to $4.25 million in the second quarter of 2019.

Allied Esports reported it had on its accounts as of June 30, $14.2 million in cash, including $5 million of restricted cash, compared to $12.1 million in cash with $3.7 million restricted by the end of December 2019.

“An important highlight in the second quarter was the successful refinancing of $14.0 million of outstanding debt and $3.7 million of accrued interest previously scheduled to mature on August 23, 2020.”

Frank Ng, CEO, Allied Esports