Allied Gaming & Entertainment, Inc. (NASDAQ: AGAE) (the
“Company” or “AGAE”), a global experiential entertainment company,
today announced financial results for the second quarter ended June
30, 2023.
“We are thrilled to announce our second quarter revenues of $3.3
million, which are up 182% year-over-year, and driven by the
continued success of our original content sponsorship and our new
arena and mobile truck sponsorship. Importantly, we continue to see
growing demand for our products and services as we further
streamline our expense base,” said Yinghua Chen, the Company’s
Chief Executive Officer. “Moreover, as part of our strategic vision
to be a leading and trusted entity in the gaming and entertainment
industries, AGAE now consists of three fully owned subsidiaries:
Allied Esports International, Allied Experiential Entertainment,
and Allied Mobile Entertainment. This restructuring aims to
optimize our resources and provide investors with greater clarity
on our business outlook and direction.”
Second Quarter 2023 Financial Results
Revenues: Total revenues of $3.3 million increased 182% compared
to $1.2 million in the second quarter of 2022. The year-over-year
increase was primarily attributable to the release of the second
season of the Company’s original content series, ELEVATED, along
with the execution of a more lucrative long-term arena sponsorship
agreement.
Costs and expenses: Total costs and expenses were $4.7 million,
a decrease of 2.4% compared to the second quarter of 2022. The
improvement was inclusive of additional expenses incurred during
the quarter related to Season Two of ELEVATED which were not
incurred in the second quarter of 2022. The additional expenses
were more than offset by decreases in other expense categories,
including live event production costs, which declined by 31.1%,
general and administrative expenses, consisting principally of cash
and stock-based compensation, which declined by 19.6%, and
depreciation and amortization expense, which declined by 73.7%.
Net loss for the second quarter of 2023 was $0.7 million
compared to a net loss of $3.7 million in the prior year period.
Net loss in the second quarter of 2023 includes approximately
$715,000 of interest income earned on short-term investments.
Furthermore, adjusted EBITDA loss was $1.1 million for the
second quarter of 2023, a significant improvement from a loss of
$2.7 million in the second quarter of 2022. The improvement
consists principally of the gross margin recognized on content and
events production and an increase in arena sponsorship revenue
coupled with reductions in the Company’s general and administrative
expenses. 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 June 30, 2023, the Company had a cash and short-term
investments position of $82.2 million, including $5.0 million of
restricted cash. This compared to $86.8 million in cash and
short-term investments at December 31, 2022, which also included
$5.0 million of restricted cash. At June 30, 2023, the Company had
a working capital position of $74.7 million compared to $79.1
million at December 31, 2022. AGAE’s working capital positions on
June 30, 2023 and December 31, 2022 were reduced by operating lease
liabilities of $1.3 million and $1.2 million, respectively,
recorded in connection with the Company’s implementation of the new
leasing standard (ASC 842) on December 31, 2022. As of June 30,
2023, the Company had approximately 37.4 million shares of
outstanding common stock.
During the second quarter, the Company bought back a total of
372,436 shares of its common stock at an average selling price of
$1.08 for a total cost of $404,010, excluding broker fees. Moving
forward, the manner, timing and amount of any purchases will
continue to be based on an evaluation of market conditions, stock
price and other factors.
Operational Update
Allied Esports experienced strong demand and produced 99 events
in the second quarter of 2023, with 41 proprietary events and 58
third-party events. Third-party events were highlighted by EStars
presents Elder Scrolls Online, Ross Video Customer Appreciation,
WPT Event, Final Two Episodes of ELEVATED, Licensing Awards
Reception, Golden Knights Watch Party and TL LOL Champions of the
Rift Community Event.
During the quarter, Season 2 of ELEVATED, Presented by
Progressive Insurance, was released. Each episode was hosted by a
different One True King member, who have a collective reach of over
35 million followers across their channels. Since the debut, the
season has generated a total viewership of 12.7 million, with 89.5
million live minutes watched and 11.9 million total unique
viewers.
Also during the quarter, the Company announced the extension of
its exclusive naming rights agreement with HyperX/HP, which ensures
that AGAE’s flagship arena will remain known as HyperX Arena Las
Vegas. Moving forward, HyperX/HP gaming related products will also
be available for sale inside the arena.
Second Quarter 2023 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 second quarter
2023 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
Allied Gaming & Entertainment’s Investor Relations site at
ir.alliedgaming.gg. Additionally, financial information presented
on the call will be available on Allied Gaming &
Entertainment’s 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. Eastern Time on Thursday, August 24, 2023, by
dialing 1-844-512-2921 (United States) or 1-412-317-6671
(International) and using the replay passcode: 13739538.
About Allied Gaming & Entertainment
Allied Gaming & Entertainment Inc. (Nasdaq: AGAE) is a
global experiential entertainment company focused on providing a
growing world of gamers with unique experiences through renowned
assets, products and services. For more information, visit
alliedgaming.gg.
Non-GAAP Financial Measures
As a supplement to our financial measures presented in
accordance with U.S. Generally Accepted Accounting Principles
(“GAAP”), the Company presents certain non-GAAP measures of
financial performance. These non-GAAP financial measures are not
intended to be considered in isolation from, as a substitute for,
or as more important than, the financial information prepared and
presented in accordance with GAAP. In addition, these non-GAAP
measures have limitations in that they do not reflect all of the
items associated with the company’s results of operations as
determined in accordance with GAAP. Non-GAAP financial measures are
not an alternative to the Company’s GAAP financial results and may
not be calculated in the same manner as similar measures presented
by other companies.
The Company provides net income (loss) and earnings (loss) per
share in accordance with GAAP. In addition, the Company provides
EBITDA (defined as GAAP net income (loss) from continuing
operations before interest (income) expense, income taxes,
depreciation, and amortization). The Company defines “Adjusted
EBITDA” as EBITDA excluding certain non-cash charges, such as
stock-based compensation, inducement expense, extinguishment losses
and impairment losses.
In the future, the Company may also consider whether other items
should also be excluded in calculating the non-GAAP financial
measures used by the Company. Management believes that the
presentation of these non-GAAP financial measures provides
investors with additional useful information to measure the
Company’s financial and operating performance. In particular, these
measures facilitate comparison of our operating performance between
periods and help investors to better understand the operating
results of the Company by excluding certain items that may not be
indicative of the Company’s core business, operating results, or
future outlook. Additionally, we consider quantitative and
qualitative factors in assessing whether to adjust for the impact
of items that may be significant or that could affect an
understanding of our ongoing financial and business performance or
trends. Internally, management uses these non-GAAP financial
measures, along with others, in assessing the Company’s operating
results, measuring compliance with any applicable requirements of
the Company’s debt financing agreements in place at such time, as
well as in planning and forecasting.
The Company’s non-GAAP financial measures are not based on a
comprehensive set of accounting rules or principles, and our
non-GAAP definitions of the “EBITDA” and “Adjusted EBITDA” do not
have a standardized meaning. Therefore, other companies may use the
same or similarly named measures, but include or exclude different
items, which may not provide investors a comparable view of the
Company’s performance in relation to other companies.
Management compensates for the limitations resulting from the
exclusion of these items by considering the impact of the items
separately and by considering the Company’s GAAP, as well as
non-GAAP, financial results and outlook, and by presenting the most
comparable GAAP measures directly ahead of non-GAAP measures, and
by providing a reconciliation that indicates and describes the
adjustments made.
Forward Looking Statements
This communication contains certain forward-looking statements
under federal securities laws. Forward-looking statements may
include our statements regarding our goals, beliefs, strategies,
objectives, plans, including product and service developments,
future financial conditions, results or projections or current
expectations. In some cases, you can identify forward-looking
statements by terminology such as “may,” “will,” “should,”
“expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,”
“potential,” “intend” or “continue,” the negative of such terms, or
other comparable terminology. These statements are subject to known
and unknown risks, uncertainties, assumptions and other factors
that may cause actual results to be materially different from those
contemplated by the forward-looking statements. These
forward-looking statements are not guarantees of future
performance, conditions or results, and involve a number of known
and unknown risks, uncertainties, assumptions and other important
factors, many of which are outside our control, that could cause
actual results or outcomes to differ materially from those
discussed in these forward-looking statements. The inclusion of
such information should not be regarded as a representation by the
Company, or any person, that the objectives of the Company will be
achieved. Important factors, among others, that may affect actual
results or outcomes include: risks associated with the future
direction or governance of the Company; our ability to execute on
our business plan; the substantial uncertainties inherent in the
acceptance of existing and future products and services; the
ability to retain key personnel; potential litigation; general
economic and market conditions impacting demand for our services; a
change in our plans to retain or invest the net cash proceeds from
the WPT sale transaction; our inability to enter into one or more
future acquisition or strategic transactions using the net proceeds
from the WPT sale transaction; and our ability, or a decision not
to pursue strategic options for the esports business. You should
consider the areas of risk described in connection with any
forward-looking statements that may be made herein. The business
and operations of AGAE are subject to substantial risks, which
increase the uncertainty inherent in the forward-looking statements
contained in this communication. Except as required by law, we
undertake no obligation to release publicly the result of any
revision to these forward-looking statements that may be made to
reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events. Further information on
potential factors that could affect our business and results is
described under “Item 1A. Risk Factors” in our Annual Report on
Form 10-K for the year ended December 31, 2022, as filed with the
SEC on March 24, 2023, as well as subsequent reports we file with
the SEC. Readers are also urged to carefully review and consider
the various disclosures we made in such Annual Report on Form 10-K
and in subsequent reports with the SEC.
Allied Gaming & Entertainment Inc. and Subsidiaries
Condensed Consolidated Balance Sheets June 30,
December 31,
2023
2022
(unaudited) Assets Current Assets Cash and cash
equivalents
$
21,192,610
$
11,167,442
Short-term investments
54,500,000
70,000,000
Interest receivable
1,494,049
677,397
Accounts receivable
1,013,805
72,739
Prepaid expenses and other current assets
231,637
459,274
Total Current Assets
78,432,101
82,376,852
Restricted cash
5,000,000
5,000,000
Property and equipment, net
3,202,048
4,005,622
Digital assets
49,300
49,761
Intangible assets, net
685,739
72,786
Deposits
379,105
379,105
Operating lease right-of-use asset
5,376,317
5,845,549
Total Assets
$
93,124,610
$
97,729,675
Liabilities and Stockholders' Equity Current Liabilities
Accounts payable
$
576,545
$
317,561
Accrued expenses and other current liabilities
1,731,728
1,645,379
Deferred revenue
119,752
108,428
Operating lease liability, current portion
1,320,272
1,227,164
Total Current Liabilities
3,748,297
3,298,532
Operating lease liability, non-current portion
5,857,779
6,527,075
Total Liabilities
9,606,076
9,825,607
Commitments and Contingencies (Note 4) Stockholders' Equity
Preferred stock, $0.0001 par value, 1,000,000 shares authorized,
none issued and outstanding
-
-
Common stock, $0.0001 par value; 100,000,000 shares authorized,
39,085,470 shares issued at June 30, 2023 and December 31, 2022,
and 37,398,120 and 38,503,724 shares outstanding at June 30, 2023
and December 31, 2022, respectively
3,909
3,909
Additional paid in capital
198,598,596
198,526,614
Accumulated deficit
(112,820,573
)
(110,235,568
)
Accumulated other comprehensive income
221,555
219,675
Treasury stock, at cost, 2,059,786 and 581,746 shares at June 30,
2023 and December 31, 2022, respectively
(2,484,953
)
(610,562
)
Total Stockholders' Equity
83,518,534
87,904,068
Total Liabilities and Stockholders' Equity
$
93,124,610
$
97,729,675
The accompanying notes are an integral part of these
condensed consolidated financial statements.
Allied Gaming &
Entertainment Inc. and Subsidiaries Condensed Consolidated
Statements of Operations and Comprehensive Loss
(unaudited) For the Three Months Ended For
the Six Months Ended June 30, June 30,
2023
2022
2023
2022
Revenues: In-person
$
1,267,773
$
1,129,371
$
2,461,103
$
2,182,437
Multiplatform content
2,000,322
28,463
2,000,424
1,387,451
Total Revenues
3,268,095
1,157,834
4,461,527
3,569,888
Costs and Expenses: In-person (exclusive of depreciation and
amortization)
643,831
933,314
1,316,053
1,672,288
Multiplatform content (exclusive of depreciation and amortization)
1,517,311
43,364
1,517,707
989,876
Selling and marketing expenses
66,941
62,131
121,539
131,169
General and administrative expenses
2,223,025
2,766,422
4,766,372
6,364,292
Depreciation and amortization
212,218
808,233
790,778
1,616,845
Impairment of digital assets
-
164,411
-
164,411
Total Costs and Expenses
4,663,326
4,777,875
8,512,449
10,938,881
Loss From Operations
(1,395,231
)
(3,620,041
)
(4,050,922
)
(7,368,993
)
Other Income (Expense): Other income (expense), net
(11,113
)
(73,225
)
16,342
(79,932
)
Interest income, net
715,126
4,315
1,449,575
8,777
Total Other Income (Expense)
704,013
(68,910
)
1,465,917
(71,155
)
Net loss
(691,218
)
(3,688,951
)
(2,585,005
)
(7,440,148
)
Other comprehensive income: Foreign currency translation
adjustments
-
(71,595
)
1,880
(58,631
)
Total Comprehensive Loss
$
(691,218
)
$
(3,760,546
)
$
(2,583,125
)
$
(7,498,779
)
Basic and Diluted Net Loss (Income) per Common
Share Continuing operations
$
(0.02
)
$
(0.09
)
$
(0.07
)
$
(0.19
)
Weighted Average Number of Common Shares Outstanding:
Basic and Diluted
37,199,100
39,116,907
37,559,922
39,090,830
The accompanying notes are an integral part of these
condensed consolidated financial statements.
Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA are non-GAAP financial measures and
should not be considered as a substitute for net income (loss),
operating income (loss) or any other performance measure derived in
accordance with United States generally accepted accounting
principles (“GAAP”) or as an alternative to net cash provided by
operating activities as a measure of AGAE’s profitability or
liquidity. AGAE’s management believes EBITDA and Adjusted EBITDA
are useful because they allow external users of its financial
statements, such as industry analysts, investors, lenders and
rating agencies, to more effectively evaluate its operating
performance, compare the results of its operations from period to
period and against AGAE’s peers without regard to AGAE’s financing
methods, hedging positions or capital structure and because it
highlights trends in AGAE’s business that may not otherwise be
apparent when relying solely on GAAP measures. AGAE presents EBITDA
and Adjusted EBITDA because it believes EBITDA and Adjusted EBITDA
are important supplemental measures of its performance that are
frequently used by others in evaluating companies in its industry.
Because EBITDA and Adjusted EBITDA exclude some, but not all, items
that affect net income (loss) and may vary among companies, the
EBITDA and Adjusted EBITDA AGAE presents may not be comparable to
similarly titled measures of other companies. AGAE defines EBITDA
as earnings before interest, income taxes, depreciation and
amortization of intangibles. AGAE defines Adjusted EBITDA as EBITDA
excluding stock-based compensation and impairment expense.
The following table presents a reconciliation of EBITDA and
Adjusted EBITDA from net loss, AGAE’s most directly comparable
financial measure calculated and presented in accordance with
GAAP.
Three Months EndedJune 30, Six Months EndedJune 30,
2023
2022
2023
2022
Net loss
$
(691,218)
$
(3,688,951)
$
(2,585,005)
$
(7,440,148)
Interest income, net
(715,126)
(4,315)
(1,449,575)
(8,777)
Depreciation and amortization
212,218
808,233
790,778
1,616,845
EBITDA
(1,194,126)
(2,885,033)
(3,243,802)
(5,832,080)
Stock compensation
66,856
153,093
71,982
554,389
Impairment expense
-
164,411
-
164,411
Adjusted EBITDA
$
(1,127,270)
$
(2,731,940)
$
(3,171,820)
$
(5,277,691)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230809685655/en/
Investor Contact: Tyler Drew Addo Investor Relations
ir@alliedgaming.gg
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