Esports Entertainment Group Reports Revenue Drop in FY23 but Reduces Expenses

The fiscal year 2023, which ended on June 30th, was a tumultuous period for EEG, following a financially challenging 2021. In October 2022, the company faced a precarious situation when it defaulted on convertible notes issued in 2021, worth $35.0 million. By December, the company contemplated abandoning its igaming operations and witnessed the departure of its former CEO, Grant Johnson. In the same month, EEG narrowly avoided delisting from the Nasdaq stock exchange.

Further leadership changes occurred in January 2023, with Daniel Mathews resigning from the positions of CFO and COO. Concurrently, former CEO Grant Johnson initiated a lawsuit against EEG, alleging that his dismissal breached his employment contract.

In February, EEG announced the sale of its Bethard online casino and sportsbook business, generating €9.5 million. In April, newly-appointed CEO Alex Igelman outlined EEG's B2C expansion plans and divestment strategies. The company also engaged in an agreement to exchange a significant portion of its debt for company stock.

Despite the revenue decrease, EEG's total revenue for FY23 amounted to $23.0 million, compared to $58.4 million in 2022. Nevertheless, the cost of revenue decreased significantly, landing at $8.8 million, marking a 63.6% reduction.

Sales and marketing expenses were notably minimized, plummeting by 77.0% to $5.9 million. General and administrative expenses amounted to $28.9 million for the year, showcasing a decrease of 43.6%. The net loss for the year totaled $32.2 million, a stark contrast to the $102.2 million loss recorded in EEG's 2022 financial year.

Alex Igelman, the CEO of EEG, revealed that the company had made a series of strategic decisions aimed at strengthening its position in the market. He stated, "Over recent months, the company has undertaken a comprehensive examination of our organization, focusing on the anticipated trajectory of the esports and igaming sectors. Through this process, we conducted a deep dive into our business from top to bottom and pinpointed operations and contracts that weren't profitable, leading to decisive actions that have set us up for a promising future."

Igelman emphasized that while the restructuring incurred one-time expenses, the long-term benefits are expected to outweigh these costs. The company anticipates a $4 million reduction in annual operating expenses going forward and has reduced total liabilities by an estimated $51.8 million since the beginning of the year.

Igelman further outlined EEG's "recent focus" on developing initiatives related to esports and igaming offerings. He expressed optimism about the company's future, stating, "As a result, I could not be more excited by the outlook for our business."