Losses widen at Allied Esports in first quarter
Allied Esports Entertainment, the esports event business that includes World Poker Tour (WPT), has posted increased losses and lower revenue for the first quarter of 2020, due in part to the novel coronavirus (Covid-19) global pandemic.
Revenue for the three months to 31 March amounted to $6.0m (£4.9m/€5.6m), down 3.2% from $6.2m in the opening quarter of 2019.
Allied Esports said that the decline was primarily a result of a drop in in-person revenue, which fell 16.1% year-on-year to $2.3m due to measures linked to the outbreak. Its flagship esports venue, the HyperX Esports Arena Las Vegas at the Luxor Hotel & Casino, temporarily closed in March as a result of the outbreak - after 91 events were held at the venue - while in-person WPT events were also cancelled. The business then shifted its schedule online, holding 24 digital events from 14 to 31 March.
However, the decline in-person revenue was partially offset by growth across its multi-platform content and interactive services segments, which were able to continue operating despite the pandemic.
Multi-platform content revenue climbed 10.5% year-on-year to $1.2m, as more accessed content on television and via streaming while they were at home due to shelter-in-place orders.
Interactive revenue also jumped 5.8%, to $2.5m in the first quarter, with Allied Esports noting a rise in social gaming revenue due to the mandatory quarantine measures imposed as a result of the coronavirus outbreak.
Turning to spending in Q1 and total costs and expenses amounted to $14.1m, up 39.6% from $10.1m in the same period last year, primarily due to $4.0m in extra spend associated with stock-based compensation.
General and administrative costs climbed by 14.0% to $4.9m, but in-person costs were down 15.7% to $987,442 and multi-platform content spend fell 20.5% to $461,374. Interactive expenses were up 11.3% to $992,500 and online operating expenses hiked 71.6% to $324,953, but selling and marketing costs were slightly down.
Lower revenue and higher spending meant Allied Esports posted an operating loss of $8.1m for the quarter, more than double Q1 2019's $3.9m operating loss.
After accounting for $682,940 in interest expense, total comprehensive loss for the period came in at $8.8m, compared to $3.9m in 2019.
Commenting on the first quarter results, chief executive, Frank Ng said despite the negative impact of coronavirus during the period, he expects Allied Esports to emerge stronger, highlighting its ongoing business via its interactive and multi-platform content segments.
“While the Covid-19 pandemic impacted our results in the first quarter, I am reassured by the tremendous popularity of esports and poker, including WPT’s meaningful subscriber growth in March, as the nation and world remains at home,” he said.
“I firmly believe that our unique position will not only carry us through the difficulty and uncertainty driven by the pandemic, but will also provide an opportunity to expand our customer base once the crisis ends and life returns to normal.
“We look forward to continuing to serve our customers and the gaming community and emerging from this challenge as a stronger company.”
Shortly after the end of the quarter, the WPT revealed plans to stage its first online series on GVC's PartyPoker platform, as the immediate future of its traditional events remains in doubt due to the coronavirus. The new WPT Online Series began on 10 May and will run to 26 May, featuring a guaranteed overall prize pool of $7m.