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Allied Esports Entertainment Announces Preliminary Unaudited Fourth Quarter and Full Year 2020 Financial Results

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Allied Esports Entertainment, Inc., a global esports entertainment company, announced preliminary unaudited financial results for the fourth quarter and full year ended December 31, 2020, as well as an update on several key business initiatives. This release refers to “continuing” and “discontinued” operations due to the pending sale of the Company’s subsidiaries operating our poker-related business and assets comprising the World Poker Tour® (“World Poker Tour,” or “WPT®”), which is currently in active negotiations to be sold in a transaction that is expected to close in the second quarter of 2021. Therefore, unless otherwise noted, results presented in this release relate to the continuing operations of the Company and Allied Esports, and excludes the World Poker Tour.

The Company filed a Form 12b-25 to extend the due date for filing its Annual Report on Form 10-K for the year ended December 31, 2020 until April 15, 2021. Reflected herein are selected preliminary unaudited financial results. These financial results are subject to adjustments based upon, among other things, the completion of the audit of the Company’s consolidated financial statements as of December 31, 2020 and for the year then ended.

Commenting on the preliminary fourth quarter and full year 2020 results, the Company’s CEO, Frank Ng, said, “Despite the unprecedented operating challenges and macro-economic uncertainty encountered throughout most of 2020 resulting from the COVID-19 pandemic, Allied Esports finished the year with a solid performance in the fourth quarter. The In-person pillar of our business model remains the primary near-term growth driver of our Esports business, and this activity was significantly curtailed globally during the pandemic due to operational restrictions, including limitations on social gatherings and other health and safety protocols. However, we made good progress throughout the year conceptualizing and building-out the Multiplatform Content pillar of our business. I believe the work and progress we made will serve us well in the quarters and years ahead.”

Mr. Ng continued, “Total revenues for the fourth quarter of $0.9 million declined from $2.0 million in the fourth quarter last year. During the fourth quarter, Esports generated its first meaningful revenue from Multiplatform Content, which totaled $0.2 million and comprised nearly one-quarter of our fourth quarter Esports revenue. At the bottom line, our adjusted EBITDA loss of $3.5 million for the fourth quarter improved over 3% from an adjusted EBITDA loss of $3.7 million a year ago. I am also pleased with our ability to reduce operating expenses to better align our cost structure with the lower revenues generated during the year. Additionally, we made tremendous progress in 2020 improving our capital structure, as evidenced by a 71% reduction in total bridge and convertible debt during the year and significantly enhanced financial flexibility.”

Mr. Ng concluded, “As we look ahead in 2021, our expectation is that global distribution of COVID-19 vaccines will bring the return of a normalized world—and with it—the recovery of in-person events. We are optimistic that we will soon be operating in an environment where the Company’s foundational strides made on the Multiplatform Content pillar of our business in 2020 will come together alongside the resurgence of live events and the return of maximum capacity at our various Esports venues.”

Fourth Quarter 2020 Financial Results
Revenues: Total revenues of $0.9 million decreased 52% in the fourth quarter of 2020 versus the fourth quarter one year prior. This was due to decreased In-person revenue, partially offset by revenue growth in Multiplatform Content.

Costs and expenses: Total costs and expenses for the fourth quarter of 2020 were $16.6 million, an increase of 135% compared to the fourth quarter of 2019. Costs and expenses increased due to increases in impairment of investments and property and equipment expenses that were not incurred in the prior year period. The increase was partially offset by lower expenses in In-person, selling and marketing, and online operating areas of the business.

Loss from continuing operations for the quarter was $19.7 million, compared to a loss of $5.8 million in the prior year period. Loss from continuing operations for the fourth quarter of 2020 included a non-cash extinguishment loss on acceleration of debt redemption of $1.7 million that was not incurred in the prior year period as well as a $1.8 million increase in interest expense compared to the fourth quarter of 2019.

Adjusted EBITDA loss was $3.5 million for the 2020 fourth quarter, as compared to $3.7 million in the fourth quarter of 2019. A reconciliation of the GAAP-basis net loss to adjusted EBITDA is provided in the table at the end of this press release.

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Full Year 2020 Financial Results
Revenues: Total revenues of $3.2 million decreased 57% in the full year of 2020 versus 2019. This was primarily due to decreased In-person revenue, partially offset by revenue growth in Multiplatform Content.

Costs and expenses: Total costs and expenses for the full year of 2020 were $35.7 million, an increase of 63% compared to 2019. Costs and expenses rose primarily due to increases in impairment of investments and property and equipment, stock-based compensation expense and G&A expenses. The increase was partially offset by a decrease in In-person, Multiplatform content, and selling and marketing expenses.

Loss from continuing operations for the 2020 year was $46.5 million, compared to a loss of $15.5 million in 2019. Loss from continuing operations for the full year of 2020 included a non-cash conversion inducement expense of $5.2 million and a non-cash extinguishment loss on acceleration of debt redemption of $3.4 million that were not incurred in the prior year along with a $4.5 million increase in interest expense compared to 2019.

Adjusted EBITDA loss was $11.6 million for the 2020 year, as compared to $9.6 million in 2019. A reconciliation of the GAAP-basis net loss to adjusted EBITDA is provided in the table at the end of this press release.

Balance Sheet
As of December 31, 2020, the Company had a cash position of $9.1 million, including $5.0 million of restricted cash and an additional $3.6 million of cash held by the WPT business that is included in current assets of discontinued operations, but which continues to fund the Allied Esports business until the close of a WPT sale transaction. The Company had a cash position of $12.1 million at December 31, 2019, which included $3.7 million of restricted cash and $5.2 million held at WPT. The total gross principal amount of bridge and convertible debt as of December 31, 2020 was $4.0 million, as compared to $14.0 million in the prior year period. As of December 31, 2020, the Company’s common shares outstanding totaled approximately 38.5 million shares.

Operational Update
Allied Esports
In the fourth quarter of 2020, Allied Esports produced 48 events, with 41 proprietary events and 7 third-party productions, across its North American and European business units.

During the quarter, Allied Esports continued to see strong demand in both its in-arena and online proprietary offerings. Over 1,000 players from North America and Latin America competed across Fortnite, PLAYERUNKNOWN’S BATTLEGROUNDS (PUBG) Mobile and Call of Duty Mobile in Trovo Holiday Royale, a tournament which was co-organized by Trovo and Allied Esports. The event was live streamed exclusively on Trovo.Live.

Allied Esports continued to leverage its infrastructure for production services for several clients, including FaceIT, HyperX and Digi 1, among others. Services included both online productions as well as an in-person COVID-19-safe bubble environment at HyperX Esports Arena for participating teams.

Allied Esports also hosted one event on its HyperX Exports Truck in North America with partner Findlay Volkswagen in the fourth quarter.

In November, Allied Esports launched a 24-hour content strategy on Twitch, which has generated strong interest since launch. Hundreds of hours of Allied Esports’ tournament productions and exclusive original content are programmed around the clock across Allied Esports’ Twitch channels. The new 24-hour programming schedule generated nearly 3 million live views in the fourth quarter which was up 6,202% Y-on-Y. Growth in viewership also led to increased follower growth on Twitch by 7% in the fourth quarter.

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Subsequent to quarter end, Allied Esports announced the renewal of their exclusive naming rights agreement for Allied Esports’ global flagship property, HyperX Esports Arena Las Vegas, located at Luxor Hotel and Casino on the Las Vegas Strip. Per the multiyear deal, HyperX will continue to receive prominent branding and signage inside and outside of the venue, as well as across all arena promotions, content and social media platforms. Additionally, both companies will continue to partner on a variety of co-branded experiences and events at the arena focused on growing their gaming and esports communities.

Corporate Developments
On March 19, 2021, the Company announced an amended definitive agreement to sell its subsidiaries operating our poker-related business and assets comprising the World Poker Tour, to Element Partners, LLC subject to closing conditions, with a total transaction value of approximately $90.5 million.

In response to an unsolicited proposal of Bally’s Corporation to acquire the World Poker Tour for $105 million, on March 29, 2021, Element and the Company further amended their definitive agreement to increase the purchase price to $105 million. The Company’s Board of Directors will evaluate any additional proposals in due course in compliance with the terms of the Element definitive agreement.

Fourth Quarter and Full Year 2020 Conference Call
The Company will host a conference call today at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to discuss its preliminary fourth quarter and full year 2020 financial results. Participants may join the conference call by dialing 1-877-407-0792 (United States) or 1-201-689-8263 (International).

A live webcast of the conference call will also be available on the Company’s Investor Relations site at http://ir.alliedesportsent.com. Additionally, financial information presented on the call will be available on Allied Esports’ Investor Relations site. For those unable to participate in the conference call, a telephonic replay of the call will also be available shortly after the completion of the call, until 11:59 p.m. ET on Wednesday, April 14, 2021, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (International) and entering the replay pin number: 13717880.

eSports

Wamba Technologies signs Borderlands Developer Aaron Thibault to Esports Project

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Wamba Technologies, a think tank consisting of leaders in the online gaming industry, is excited to announce the appointment of Aaron Thibault as oversight for its upcoming esports venture, Gamers Oasis. This key addition comes as they move to launch their Gamers Oasis platform which allows gamers to compete for real money directly from their mobile devices.

Thibault began his gaming industry career in 1998, initially working as a sound designer and cinematic director at EA/Origin Systems. Today, he brings over 30 years of experience in game development and education. Thibault spent 16 years at Gearbox Entertainment as Vice President. There, he led major projects, including developing the billion dollar Borderlands franchise. Borderlands 3 was nominated for Best Game Design and Best Art Direction. Currently, Thibault serves as the director of games and esports at Texas A&M University. His industry knowledge will play a significant role in driving the development of Gamers Oasis, which aims to revolutionize online esports competitions.

Meanwhile, a platform like “Gamers Oasis” is only possible due to a patent that gives Wamba Technologies and Gamers Oasis the exclusive capability to offer “real money” capabilities into skill-based video games in the United States where players can actually compete for real money online (Patent 10,424,160). Their patent allows them (and ONLY them) to offer a software feature which will allow gamers to pay an entry fee into tournaments online, compete against each other, and actually win money back (where such capability is integrated into the game in some fashion). This will ultimately give developers previously untapped revenue streams and players the ability to win large amounts of real money while utilizing their skills from the comfort of their very own homes.

“At Wamba Technologies, we are committed to making esports accessible to everyone,” said Denham. “With Aaron’s oversight and experience, we will be able to move into the next phase of development and make Gamers Oasis a reality for dedicated esports players everywhere” 

“What Gary and I are going to do with Wamba Technologies and Gamers Oasis has never been done before in esports,” said Thibault. “There is so much incredible potential in this patent, and we can’t wait to start putting it to use and creating a product that is going to completely revolutionize the esports industry.”

Online, real money competition (online esports) is still in its infancy, but Wamba Technologies is currently engaging with gamers, game designers, coders, programmers, esports influencers and financial consultants to aid in the development of Gamers Oasis.

In the United States alone, 215 million people play mobile video games and globally, more than 700 million people are involved with esports. Among those 700 million people worldwide, only a very small percentage are competing online when real money is involved, while the rest of the players are competing in real life (IRL) at physical locations. Wamba anticipates that when offered and monetized properly, a mere 10% of the global market share could generate $13B-$15B in annual revenue from tournament buy-ins and ad revenues alone.

Aaron is not the first major player recently signed on board by Wamba Technologies. Wamba has also previously signed Andy Ashcraft (God of War 2, God of War 3, Disney’s Cars 2, and more), Brian Upton (Lead game designer for Tom Clancy: Rainbow 6, Tom Clancy: Ghost Recon), Marty Denham (genius mind behind the Pentium wafers for Intel), Joe Bagdon (CSO, formerly Military Intelligence Cyber Security in Afghanistan), Jared Goetz (former Lionsgate VP), and a number of other “rock star” individuals behind, or working with, multi-billion dollar products/companies.

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Cutting-edge esports betting solutions empower BET99’s expansion into the booming vertical

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PandaScore, the premier provider of esports betting odds, data, and innovative products, has announced an exciting new collaboration with BET99, one of Ontario’s top-ranking sportsbook and casino operators. This marks another major milestone for PandaScore as it continues to build its network of high-profile operators.

The deal gives BET99 access to PandaScore’s industry-leading Odds feed, which delivers comprehensive coverage of the world’s most popular esports titles, including Counter-Strike 2 (CS2)Dota 2, and League of Legends (LoL). Powered by advanced algorithms and supported by a team of specialized traders, PandaScore’s feed enables operators like BET99 to offer competitive odds while hitting a standard-setting margin of 6%.

In addition to PandaScore’s Odds feed, BET99 will integrate cutting-edge features such as BetBuilder and MicroBetting markets. These tools empower players to customize their wagers and enjoy dynamic, fast-paced betting experiences, aligning perfectly with the demands of today’s esports audiences.

The move into esports betting comes at a pivotal moment for the sector, which continues to see exponential growth. PandaScore recently surpassed €1 billion in esports bets processed through its platform, underscoring its expertise and leadership in this space.

Oliver Niner, Head of B2B, PandaScore, said: “Esports betting is rapidly becoming a cornerstone of the betting industry, and we’re thrilled to support BET99 as they take this exciting step. With our powerful Odds feed and innovative products like BetBuilder, BET99 is uniquely positioned to deliver a premium esports betting experience to players across Ontario.

“Our collaboration with BET99 is representative of the incredible momentum PandaScore has built in expanding our operator network. We’re excited to collaborate with BET99 and support their ambitious plans to become a leader in esports betting.”

Andre Bewerungen, Head of Sportsbook, BET99, added: “At BET99, our mission has always been to deliver a world-class player experience through personalization and innovation. With esports rapidly emerging as a key vertical, we see an incredible opportunity to engage the next generation of bettors who are passionate about this dynamic space.

By collaborating with PandaScore, we can provide tailored, engaging, and cutting-edge betting options that resonate with esports fans. Their comprehensive odds feed and advanced betting tools allow us to create a seamless, interactive experience that enhances player engagement and builds lasting connections with this growing audience. We’re excited to collaborate with PandaScore and take esports betting to the next level in Ontario.”

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Influencers, Content and eSports: Unleashing the Power of Dynamic Strategies in the eSports Ecosystem

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Influencers, Content and eSports: Unleashing the Power of Dynamic Strategies in the eSports Ecosystem

 

The sports betting industry is undergoing significant growth worldwide with restrictions loosening and new markets emerging. New opportunities create fierce competition among sportsbooks, and this has led to them devising increasingly expensive and aggressive advertising campaigns.

Public figures and influencers have become a popular go-to for sportsbooks promotions, such as Michael Jordan partnering with DraftKings or Jamie Foxx with BetMGM. Big names are costly, and sportsbooks haven’t realised the ad spend used on these campaigns is going to waste. Without the right precautions in place, up to 22% of ad spend is lost to fraud according to Juniper Research.

The big budgets behind high-profile brand campaigns need to translate into real user engagement. To achieve this, sportsbooks must ensure their digital channels are optimised to capture the surge in interest these campaigns generate. Without proper management, this potential can be lost to inefficiencies like invalid traffic, diluting the impact of their investments.

 

Ad Budgets Going to Waste

In today’s competitive landscape, sportsbooks need to make every click count. In 2023 alone, The American Gaming Association estimated that over $1.9 billion was spent on advertising campaigns in the US. With such a large amount of spend in play, it’s crucial that sportsbooks see as big a Return on Advertising Spend (ROAS) as possible.

Pay-Per-Click (PPC) campaigns are vital for sportsbook growth but can be disrupted by invalid traffic (IVT). IVT includes both malicious activity, like fraudulent bots, and unintentional actions, such as users repeatedly clicking on ads without intent to convert. These interactions inflate impressions and skew campaign performance data, leading to higher customer acquisition costs (CACs) and inefficient allocation of ad spend. Effectively managing IVT ensures that ad budgets drive genuine engagement and measurable growth.

Investing into influencers and celebrities also forces sportsbooks to bid on brand keywords to prevent their competitors stealing potential users searching for them. Up to 29% of PPC budgets are spent on this bidding according to Wordstream. As competition for brand keywords increases, PPC budgets are depleted without generating any new net revenue.

As campaigns become more expensive than ever, sportsbooks can’t afford to let profits fall to ad fraud. Instead of cutting budgets, sportsbooks should focus on analysing their campaign strategy.

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Problematic Navigational Traffic

Navigational traffic is also presenting a significant challenge to sportsbooks alongside ad fraud. Navigational traffic refers to existing customers clicking on branded keywords to log into their accounts. While this seems convenient and harmless enough, this behaviour drastically inflates CACs. Like ad fraud, this can skew the effectiveness of PPC campaigns. By utilising paid search results instead of organic links to navigate to the site, costs are driven up without contributing to new user acquisition.

In addition to the challenges posed by navigational traffic and ad fraud, the competitive landscape for first-time depositors intensifies the need for strategic bidding on Google search. Brands investing heavily in influencers or sponsorships of major sporting events to generate awareness and drive potential users to search for them. However, without securing top placements in paid search results, these prospective customers may be intercepted by competitors before reaching the organic search listings. This creates a critical juncture where the effectiveness of a brand campaign hinges on converting that intent-driven traffic into first-time depositors, ensuring marketing spend achieves its goal of meaningful user acquisition.

First-time depositors are a critical metric for sportsbooks, and this issue directly impacts the cost efficiency of acquiring them. High CACs make marketing budgets less effective, reducing overall ROI.

 

Shoring Up Your Defences

Before launching costly ad campaigns, sportsbooks should adopt a multi-faceted approach to address ad fraud. IVT typically goes unnoticed, so to prevent this sportsbooks should monitor and analyse their campaign traffic for any suspicious activity. It is possible to identify IVT by looking out for signs such as irregular spikes in traffic from unknown locations or high pageviews. Fraudulent traffic can then by highlighted and removed.

The advancement of technology has made ad fraud more difficult to identify, and legacy fraud tools fail to detect IVT. They don’t analyse traffic at the impression level or consider the context of the business advertising. Sportsbooks can leverage ad-verification platforms to compensate for this. This allows sportsbooks to analyse and report suspicious traffic in real-time. Fraud can then be blocked before it has a chance to harm budgets.

Sportsbooks can also deploy tactics to reduce the impact of navigational traffic on CACs. Methods include encouraging existing customers to use mobile apps or direct bookmarks to log into their accounts instead of paid search campaigns. This decreases their reliance on PPC campaigns for navigation and protects budgets.

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Keeping Profits in Sportsbooks’ Hands

Influencer and celebrity campaigns have proven to be a popular and useful tool in reeling new users and profits. However, if sportsbooks don’t have the essential precautions in place, they risk losing these profits to advertising fraud.

To make the most of their advertising efforts, sportsbooks need to prioritise their traffic. Implementing sophisticated tools to analyse traffic and filter out fraud will allow sportsbooks to protect their interests and focus on driving future growth. This way, they can secure their position in an increasingly competitive landscape.

 

Written by: Chad Kinlay, Chief Marketing Officer, TrafficGuard

A driven, open-minded, creative senior marketer with a strong sense of dedication and commitment. With over 15 years of progressive international experience in marketing and communications management, Kinlay has a credible history of commercial success.

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